HC Deb 12 May 1969 vol 783 cc1139-63

11.45 p.m.

The Under-Secretary of State for Scotland (Mr. Norman Buchan)

I beg to move, That the Fertilisers (United Kingdom) Scheme, 1969, a draft of which was laid before this House on 29th April, be approved. This Scheme continues for a further year the fertiliser subsidy which the House has approved regularly since 1952. The current rates of contribution which have been in force since June, 1967, have been amended following the decision at this year's Annual Review to reduce the subsidy by £3 million over the year. Otherwise the Scheme is the same as before. The amount of subsidy continues to be based upon the phosphoric acid and nitrogen content of the fertilisers and the proportion of subsidy to total cost will be approximately the same for each nutrient.

The consumption of fertilisers is still rising and even at the reduced rates the amount which we expect to spend on this subsidy during the coming year will be about £32½ million, an amount similar to the average for the past three years. This level of contribution meets about 22 per cent. of the gross cost of subsidised fertilisers, including compounds, and offers a substantial inducement to farmers to maintain and improve the productivity of their land.

Although prices of fertilisers increased substantially between March, 1957, and January, 1968, I am glad to say they have remained fairly constant since then. In fact, the price of nitrogen, which is the most widely used nutrient, has gone down slightly and it is cheaper now than it was five years ago. The effect of this year's reduction in subsidy will be to increase net prices overall by just over 2½ per cent., or by about 12s. per ton. I do not expect this comparatively small price increase on fertilisers to check the increase in demand.

I am sure that the House will agree that a high rate of fertiliser usage is essential to productivity and that we should continue to foster this by continuing the subsidy for a further year.

11.45 p.m.

Mr. J. B. Godber (Grantham)

While my hon. Friends are grateful to the Under-Secretary for the limited amount of information he has given, we are somewhat shocked at his apparent complacency and assumption that all is going well. I doubt whether we can agree about that; and unless, when replying to the debate, the hon. Gentleman is able to provide better explanations about these proposals, we may have to express our concern by calling a Division. We would not normally take such a step on a proposal which conveys new subsidy arrangements, but in this case the House has been treated in a rather cavalier fashion.

I am sure that the hon. Gentleman did not intend to adopt that attitude, but he told us remarkably little. He said that consumption of fertilisers was still rising and that he did not expect the increase of 2½ per cent., or 12s. per ton, to affect consumption. He must supply more information to show on what he bases that assumption.

Hon. Members must consider the background against which this discussion is taking place. We are debating a cut in the fertiliser subsidy. That cut must be related to the Government's general agricultural policy, which it would not be appropriate for us to discuss at this time.

Mr. Buchan

indicated assent.

Mr. Godber

I am not surprised, in view of the feelings which the Government's general agricultural policy has aroused, that the Under-Secretary does not want us to debate it.

However, we must relate this cut in the subsidy to what Ministers have been saying in recent months. For example, last November the Minister of Agriculture, Fisheries and Food talked of expansion and virtually committed the Government to endorsing the proposals made in the little "Neddy" report on agriculture.

Among the interesting points made in that report on the subject of fertilisers it was said that if we were to realise the targets set in the Government's plan, there would have to be increased expenditure of about £40 million on fertilisers during the five-year period. On 12th November the right hon. Gentleman indicated that, broadly, he accepted those proposals. He must, therefore, have been anticipating a substantial rise in fertiliser consumption. If so, are the Government now saying that that substantial rise—of between 4 per cent. and 5 per cent. per year—in fertiliser consumption is to take place against a background of a cut such as this? We are, therefore, debating whether this determination has any relationship to what the Government have said.

Very little was said in the Annual Price Review White Paper about fertilisers. In the only paragraph on the subject, it was said that fertiliser usage had continued to rise and that, as a result, expenditure on the fertiliser subsidy had gone up. However, it added that it was general policy to reduce the rates of subsidy to contain the subsidy cost. I assumed from that paragraph that the Government were considering the whole question of fertilisers in that Price Review on the same basis as they had looked at the subject in previous years. In other words, the Government were completely ignoring the Minister's undertakings as recently as 12th November that he was taking account of the little "Neddy" report and the proposals therein for increased fertiliser usage.

We have been told nothing about this. Do the Government really expect fertiliser usage to go on increasing on the lines necessary for the full implementation of the little "Neddy" report? If not, how much do they expect that fertiliser usage to go on rising? This is what the House ought to be told tonight and this is what it will need to be told before it can allow the Government to have the Scheme.

If we are being told that the Government are now going back on the pledges of last November and that, concerning fertiliser usage, they are not proposing to implement those proposals, this has very far-reaching implications indeed about their general attitude towards agricultural expansion.

I tell the Under-Secretary and the Joint Parliamentary Secretary, who I assume will participate at a later stage in the debate, that the House must be told more than it was told in that very brief opening statement.

The Under-Secretary said that consumption of fertilisers is still rising. That may be so up to the latest published figures. But can he tell us that he has the assurance of those in the industry that over recent months consumption really has continued to rise? I wonder whether he can. I do not think so, because my information is that farmers are not buying fertilisers to anything like the same extent at present.

I can understand that, after a season like the last one, there would be a setback in the uptake of fertiliser. I should not deny that for a moment. If there has been a steady rise over this period of years, which should be continued, all that should do is to bring it back to a plateau. But if there is a net fall in farmers' orders, as I understand there to have been in recent months, that would indicate a serious state of affairs.

I think that it is tied up with what I was saying earlier, namely, that the Minister gave the farming community to believe that a big expansion programme was under way and he has failed to implement it. At the same time, we know that farmers' incomes are down and, therefore, expenditure on any item—fertilisers or anything else—will be watched very carefully. If they have to pay another 12s. a ton for fertilisers as a result of this cut, it is bound to affect the fertiliser uptake over the coming months. If it affects fertiliser uptake, what will happen to the outturn of agricultural production? We know that there is a close relationship between the fertiliser uptake and the final outturn in a normal year. If there is to be a reduction in the farmers' uptake, how is it possible to contemplate for a moment that those targets in the little "Neddy" proposals, or even the Government's somewhat lower targets, have any possible hope of being realised? This is the matter which should be giving the House concern now, and this is what the Under-Secretary did not begin to face up to.

I ask the Parliamentary Secretary: what is the evidence of the last three months' actual purchases of fertilisers by farmers compared with the corresponding three months a year ago? Also, what does he contemplate that this means in terms of crops that are being sown now and are due for harvesting this year?

This has to be related to the tillage acreage, which appears in the March forecasts this year where we see that the amount of cereal sown shows a substantial drop compared with the outturn of June last year. If we have a lower acreage and lower consumption of fertilisers, what hope is there for the selective expansion programme about which the Minister has talked so glibly, even since the Annual Review came out? The Minister promised many things last November. He has somewhat limited his promises since March of this year, but if, as I believe, the fertiliser position is showing a fall, how can we expect any of the Government's own targets to be achieved?

I ask the Parliamentary Secretary to address his mind to that when he replies to the debate. I ask him to tell us what the latest information is, and whether this information was available to Ministers when the decision was taken to make this cut at the Price Review. Were the decisions at the Price Review taken, as the Price Review White Paper appears to say, on the normal lines of previous years, that because the fertiliser subsidy had risen again it was to be cut back to roughly the same figure? Or was the decision taken with a real appreciation of what the Minister promised as recently as last November? These are the things about which we ought to be told. We were told none of these things by the Under-Secretary of State.

Without wishing to delay the House unduly, I must tell the Under-Secretary that his statement did not tell the House what it needs to know. We must therefore press the Parliamentary Secretary to give us a lot more information when he replies to the debate. He must re-assure us and the farming community about what the Government really want from farmers, because with the indications of a fall in the use of fertilisers and in tillage acreage, and with the knowledge that the income of farmers is down, set as it is against high borrowing costs for farmers, there is a real danger that farmers may cut back still further in their use of fertilisers and make even more illusory the Government's own targets.

This is one of the worst aspects of the Price Review. In normal circumstances it might have been looked upon as reasonable, but after the promises of last November it has left a bitter taste in the mouths of farmers. The Government must give us far more information before we shall be willing to acquiesce in this Scheme.

11.57 p.m.

Mr. R. T. Paget (Northampton)

I congratulate the Minister in so far as he has reduced these subsidies, and I do not congratulate him in so far as he has left them there at all. I believe that these subsidies are a great mistake, and this is not in the least because I do not believe that public money should be used for supporting agriculture. I think that more should be used if we wish to build up import substitution, but it should be applied at the right place, and that is to the price. When the subsidy has been applied to the price, it is the farmer's job to decide how he most efficiently and economically earns that price.

To take one factor of his expenditure, and to distort the economics of his process by subsidising one factor seems to be, first, treating him like a fool, and, second, bringing about a number of objectional consequences. Here we are picking on the factor of artificial manures, not fertilisers generally. There is no subsidy on the product of the midden. There is simply a subsidy—

Mr. Michael Jopling (Westmorland)

Is the hon. and learned Gentleman aware that one of the products to which this Scheme gives a subsidy is North African phosphate, which is a natural product? What is artificial about North African phosphate?

Mr. Paget

Whether it is dug out of the ground or produced in a chemical process does not make the slightest difference. What is different is to take something which is artificial to the process of agriculture and add it to the land—something quite different from what is produced naturally by cattle. I am not saying that there is not a rôle for artificial manures. Whether they are dug out of the ground in North Africa or made in a factory, it does not make the slightest difference. Of course, there is a rôle for artificial manures, in the same way as there is a rôle for natural manures. One has to weigh the advantages of using more manures—which I call natural because they come from the farming process—and using less of what I call artificial manures, because that is the usual name used for them. These are perfectly good economic decisions to be made by the farmer. Why distort the process by giving a subsidy to one and not to the other? This has always been my criticism of this kind of thing.

Let us have the full price support put at the price end. Then let the farmer make up his own mind how best he earns the price that he is offered. Do not distort the process by subsidising one factor chosen arbitrarily, which may in one instance need expanding, and of which in another instance there is too much. In my district we have had a good deal too much of the use of artificials in view of the texture of the soil. It has been taken too far in too many districts. This results largely from the absurd price of the land. Anybody who buys land at about £350 an acre—

Mr. Deputy Speaker (Mr. Harry Gourlay)

Order. The hon. and learned Gentleman had better relate his remarks a little more closely to the Scheme, which deals with fertiliser subsidies.

Mr. Paget

If you are a little patient, Mr. Deputy Speaker, I shall relate my remarks precisely to the Scheme in a moment. When land costs £350 an acre, nobody can buy it for any reason—

Mr. Deputy Speaker

Order. The hon. and learned Member must obey the Ruling of the Chair.

Mr. Paget

I am, with respect, doing so, and a little patience on the part of the Chair would lead him to the conclusion that the interruption was perhaps unnecessary.

I am saying that where the land is bought at this price, it has got to be ploughed up in order to get the money back. Then, in order to get that money back, it is flogged by putting more and more of this fertiliser into it. After about six or seven years of white crops which are extracted in these circumstances, this excessive use of fertiliser has soured up the land. We have seen many instances of that sort in my part of the country.

Therefore, I hope the Ministry will rethink this question of picking out artificials as a special factor for subsidy, and instead apply support where it ought to be applied.

12.3 a.m.

Mr. Marcus Kimball (Gainsborough)

I am pleased to follow the hon. and learned Member for Northampton (Mr. Paget) on this question, although I can think of several occasions in the winter when I have been very glad of any excuse not to follow him in another sphere.

I am one of those who, like the hon. and learned Member for Northampton, would like to see this Scheme phased out. I should like to see the value of the fertiliser subsidy added to the end product which the farmer gets from the market, so that the farmer gets a proper price for what he produces, instead of an artificial price for the cost of production.

One thing which worries me about the fertiliser Scheme is the amazing business of actually buying the fertilisers. Many big farmers are buying their fertilisers at a much lower price than that at which some of the local merchants can supply them. There seems to be such a vast discrepancy in the prices charged and the discounts given, and the various ways of invoicing fertilisers through to different farmers, that I doubt very much whether the Scheme works satisfactorily.

If one can have fertiliser subsidies for growing mushrooms, under paragraph 3, why is not the Scheme extended to forestry? In all good forestry practice today, particularly on the poorer lands that we are rapidly being encouraged to plant, it is normal to put two ounces of fertiliser on a plant.

Mr. Deputy Speaker

Order. In discussing a Scheme of this kind one can discuss only what is in the Scheme, and not suggest extending it to something like forestry, as the hon. Gentleman has done.

Mr. Kimball

I can explain how forestry comes into this, Mr. Deputy Speaker. Most of us who have both forestry enterprises and a farm are so incensed that the subsidy is not received for fertilisers for forestry that they are merely invoiced through the farm. I suggest that this is a fairly common practice, and there seems to be an enormous leakage in the Scheme. It would be far better to accept that this is done. One is advised to fertilise one's trees, and the most judicious way of buying one's fertiliser for forestry is through the agricultural grants schemes. It would be far more advantageous to the nation to have a subsidy for trees rather than mushrooms and the like.

I echo what my right hon. Friend the Member for Grantham (Mr. Godber) said about the falling use of fertilisers. There is a lack of confidence in the future of farming, and a drop in the tillage acreage and in the use of fertilisers are the first signs of this. One starts to squeeze one's fertiliser bill at such times.

I hope that the Minister replying to the debate will say something about the veiled threat of failure to pay one's Agricultural Training Board levy being connected with the fertiliser subsidy. I can see nothing about that in the Scheme.

12.8 a.m.

Mr. Michael Jopling (Westmorland)

I am sorry that we did not have a much more elaborate opening speech. The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food gave us a much more adequate opening speech last year, and made an interesting but contentious winding-up speech, containing some most offensive remarks about an earlier speech by me. I am sure that he has since shuddered at his intemperance and the extravagance of his language. He took the greatest exception to my suggestion that the Price Review White Paper indicated that the usage of fertilisers would be likely to fall. I pointed out that the figure for 1968–69 was estimated at £32 million, whereas in the previous year it had been forecast to be £32.4 million. He explained that this was: … because figures are rounded off in giving estimates, which is the normal method. The figure is about the same as last year, when it was £32.4 million … there is likely to be an increased use of fertilisers, as there has been in the past."—[OFFICIAL REPORT, 7th May, 1968; Vol. 764, c. 369.] But what happened? The subsidy payments for last year and the year before clearly show the figures. Whereas in 1967–68 the fertiliser subsidy came to £33.9 million, the latest forecast for 1968–69 is £32.7 million.

While the rate of subsidy was the same, the amount of the subsidy seems to have dropped by something like 3½ per cent. It must be absolutely clear that fertiliser usage dropped last year, otherwise I cannot think of any other way of explaining why the expenditure by the Government on this subsidy over the year should have dropped by £1.2 million.

I turn to a matter which I have raised many times before. I have for many years been very concerned about the tolerances which are allowed to fertiliser manufacturers on which these subsidies are paid. They are paid on the advertised analysis of individual fertilisers for various plant foods. The tolerance allowed is plus or minus 10 per cent, with a maximum of 1.75 per cent. variation from the advertised analysis.

If one looks at the subsidy being proposed in this Scheme, and one sees what that means in a ton of fertiliser with a maximum deficiency of 1.75 per cent., it means theoretically that a total of 21s. 7d. a ton can be paid out in subsidy for plant nutrients which are not there.

I am not saying for a moment that manufacturers cheat over this. I think the majority—and certainly the big ones—are scrupulous in keeping as close to the advertised analysis as they can. I had the opportunity to go to one of the largest plants in this country, I have seen the check figures that come off and it has proved to me clearly that at that plant the product is very close indeed to the advertised analysis. But there is a strong temptation for the smaller fertiliser mixers to work to the bottom end of the tolerance, and if a manufacturer chooses to do this, certainly the farmer is paying a great deal more for his fertilisers than is really necessary.

I turn now to this year's changed rates, and draw attention to the fact that, according to the figures in the Schedule, the subsidy on nitrogen is reduced by around 11 per cent., and for water-soluble phosphates by 2.6 per cent., whereas the subsidy for insoluble phosphates is increased by 3 per cent.

Why is it that nitrogen has had such a very big reduction in subsidy as opposed to the two grades of phosphates? What advice has the Minister had which has made him decide to hit nitrogen much harder than phosphates? My impression was that over the country much better returns can be obtained by farmers by using nitrogen, and in many cases I think the figures show that a great deal of land has as much residential phosphate in it as is necessary. Why has the Minister taken this very curious step in hammering nitrogen much harder than phosphates? And why is it that the rate of subsidy for basic slag is virtually unaltered? There is a difference of perhaps 2d. a ton subsidy. This is very little indeed, and it will be generally agreed that the basic slag subsidy remains exactly the same.

I want to know why phosphates—certainly soluble phosphates—have been reduced in compound fertilisers, whereas in basic slag the subsidy on phosphates has been kept on more or less the same level. This is a strange situation, which I do not understand. I wonder if the solution comes in page 3 of "Fertiliser Statistics 1968", which I have read with great interest. In the second paragraph, referring to basic slag, it states: But there are indications that the general trend of consumption is downwards". Could it be that the purpose of leaving the subsidy on basic slag the same is to try to boost sales of basic slag? Has there been special pressure from the nationalised steel industry, in which basic slag is an important by-product, on the Government to increase the subsidy for basic slag as opposed to compound fertilisers? This is a strange decision, and I hope that the Minister will say why he has singled out basic slag for special assistance.

The picture concerning the present usage of fertilisers is not wholly satisfactory. The arable areas do not have an ideal rate of usage, but generally it is agreed that it is satisfactory. However, in the grassland areas the picture is very different. Thirty-five per cent. of the acreage in grassland areas gets no nitrogen and 55 per cent. gets less than 40 units, and most of us who know something of the science of grassland management would agree that that was a woefully small figure. Fifty-three per cent. of permanent grassland never sees nitrogen, 56 per cent. gets no phosphates and 66 per cent. gets no potash. This is very unsatisfactory, and it shows what tremendous scope there is on our grassland areas, particularly on permanent grassland, for greater production of commodities for import saving which is so important. The picture is similar, but not anything like as bad, on temporary grassland. We certainly cannot be complacent about the rate of fertiliser usage on permanent grassland.

My right hon. Friend the Member for Grantham pointed out that we are debating a cut of about 9 per cent. in the fertiliser subsidy. This is a very big cut—down by £3 million to about £33 million. Farmers have very severe credit problems, and one fears that the use of fertilisers, particularly of phosphates and potash, will be cut as farmers have to face credit restrictions, as they are doing now. It is a very bad time for the Government to cut the fertiliser subsidy, and perhaps we shall think very seriously of dividing the House on the Scheme.

12.18 a.m.

Mr. Charles Morrison (Devizes)

My hon. Friend the Member for Gainsborough (Mr. Kimball) and the hon. and learned Member for Northampton (Mr. Paget) regretted that there was a fertiliser subsidy. I would have every sympathy with what they said if farmers were getting a far better return for their products. But, unfortunately, they are getting an extremely low return on their capital and for their efforts. Therefore, they must look to every possible source for some means of maintaining their already small income.

Paragraph 63 of the Price Review White Paper opens with the sentence: Proper use of fertiliser is essential if expansion is to be achieved with maximum efficiency". Fertiliser usage has in fact gone on rising". In other words, farmers are farming with more and more efficiency. Therefore, one might expect that they would get a pat on the back for the use to which they have put their fertilisers. Instead, this year, they have been given a slap in the eye.

The Review states, and the Under-Secretary confirmed, that the subsidy rate is to be reduced by £3 million and so yet again farmers are being castigated for doing what they have been continually urged to do—to employ the latest techniques and increase production and productivity. The subsidy cuts are bound to increase farmers' costs and to affect the future pattern of fertiliser use. There are strong indications that fertiliser use is already beginning to decline.

If fertiliser usage were increasing, I suppose that it might be said that a cut in the subsidy did not matter, or that it was not surprising as increasing use of fertiliser was bound to steady off and, equally, that crops would benefit proportionately less with larger applications. That may be true, but there are still many areas where fertiliser use is thoroughly inadequate and where it should be encouraged.

The latest figures from the Fertiliser Manufacturers' Association show that in 1966–67, the latest year for which figures are available, the eastern area did best with an average fertiliser usage of 141 units. Wales was worst with an average input of only 66 units and Northern Ireland was second worst with an input of only 67 units. If one could go on the statistics alone, and I appreciate that one cannot do so with agriculture, Wales and Northern Ireland would be seen clearly to require the greatest increase in fertiliser use, but they have not only the lowest use, but the lowest increase in use in the ten years 1956–57 to 1966–67. This is worrying because these areas are mainly grassland areas. If the Minister wants to increase beef production, these are the areas where production on grasslands and uplands must be stimulated and this can be done only by the use of more fertilisers.

The general picture gives greater cause for concern because the areas with the lowest total of plant nutrient applied were the northern area, the south-western area, the West Midlands, Wales and Northern Ireland. These are all areas with a greater proportion of grassland and therefore are the areas to which the Minister is bound to look if he expects to achieve his selective expansion programme targets.

These fertiliser subsidy proposals are likely to cut the potential increase in fertiliser use and thus to limit the potential for growth in output, particularly in the areas which I have mentioned, but in the rest of the country, too. I believe that the day is not far removed when the Minister will come to regret what he is now doing.

12.24 a.m.

Mr. Hector Munro (Dumfries)

My right hon. and hon. Friends have torn the Scheme asunder. I believe that the brevity of the Under-Secretary's introduction of the Scheme showed his lack of conviction that it was right. It is one of the major pieces of false economy in agriculture which the Government have made in recent months. Especially in the present climate, when we naturally want to move to general economies, this is one which should not take place unless the Government are prepared to move to a new system of agricultural support and to bring in the levy. All hon. Members who have spoken tonight have understood how important are fertilisers to the general farm economy and how the Government have been wrong to discourage the use of lime which must go with fertilisers to get the best results.

There is no doubt that if we are to step up production as the Government say we should, although they do nothing to make it possible in practice, we must see that there is an incentive to the use of fertilisers rather than the disincentive produced in this Scheme.

Farmers realise the value of fertilisers and their prudent use and it is wrong of the Government to discourage their application and not to give farmers the confidence to use their own judgment in the kind of fertilisers they should buy. Like my hon. Friend I am certain that there is a fall in the use of fertilisers. In has reached the levelling off point and is perhaps falling back this spring, and this is particularly the case in grassland management. It is here where the Government have their best opportunity to step up production of beef and mutton. Only about 75 per cent. of temporary grassland is receiving an adequate supply of fertilisers and perhaps less than 50 per cent. of permanent grassland. That is a state of affairs the Government cannot accept with equanimity. They should be encouraging the use of fertilisers here. Farmers have the advice of the colleges of agriculture and of N.A.A.S. but the quickest incentive to getting more fertiliser on the land is to keep the subsidy at its present level or to increase it. I hope the Parliamentary Secretary will deal with the pertinent question of how this reduction measures up to the statement of the Minister of Agriculture in November calling for a big increase in agricultural production.

How can we get this expansion without the use of more and more fertilisers? I hope the Parliamentary Secretary will give us a straight answer with no more nonsense. We are so used to waffle in his replies. Reading last year's debate, we look forward to his withdrawal of the criticism he made of my hon. Friend the Member for Westmorland (Mr. Jopling) who made the most effective speech that evening. I hope he will scotch for good and all the rumour that the Training Board levy might be tied up with a reduction of the fertiliser subsidy.

Mr. Speaker

Order. That would be difficult The hon. Gentleman must talk about fertilisers.

Mr. Monro

The Minister should look at this again and see if he is not working against the best interest of agriculture by reducing the subsidy.

I would like him to deal with the cost of administering the subsidy. The hon. Member sighed when he was asked about that, but he has had two years to think about it. Can he say whether the present system is the most economical, with the supplier filling in part of the form and part of the tear-off receipt and sending it to the farmer to fill in in the original form and another tear-off receipt and sending the two to the nearest office of the Department, the Ministry of Agriculture, and then all those going back to another office?

There is a great deal of postage, some 4d. some 5d. and much office work. Is this the most efficient way to administer the subsidy? How much does it cost, and what has been the increase in costs over the last few years? I cannot welcome the Scheme because it is against the interests of the farmer, and I hope that the Parliamentary Secretary will try to justify its introduction much more than the Under-Secretary did in his opening remarks.

12.30 a.m.

Mr. Alasdair Mackenzie (Ross and Cromarty)

I regard the cut in fertiliser grants as by far the worst feature of the Price Review and I am very disappointed that we have this Scheme before us. It must be clear to anyone with experience of farming that the increase in production in the marginal and hill areas is due chiefly to the sugstantial increase in the use of fertilisers. At one time we used to think we could not go on cropping year after year unless we used farmyard manure. Now we have discovered that the judicious use of lime, phosphates and potash enables us to go from year to year, producing good crops. This is why it is so important to encourage the increased use of fertilisers.

The Parliamentary Secretary and I were colleagues on the Board of Management of the North of Scotland College of Agriculture, before coming to this House. The Parliamentary Secretary was Chairman and I was a humble back bencher, but I remember all the things he used to say about encouraging farmers and smallholders in the use of fertilisers. He was right, and tonight I hope he will live up to all the wise things he used to say. I do not know whether the Scheme can be withdrawn, but if it can be it would be a wise move. I would hate to see the House dividing over this important question. We should pull together on this. With these hints to the Parliamentary Secretary, I will await his comments.

12.33 a.m.

Sir John Gilmour (Fife, East)

My hon. Friend the Member for Devizes (Mr. Charles Morrison) read out the first part of paragraph 65 on page 16 of the Price Review dealing with fertiliser subsidies. I want to go to the end of that paragraph where, after saying that the subsidy is to be reduced by £3 million over the year it goes on: In their determinations on the commodity guarantees, the Government have made allowance for this reduction. I wonder whether I could have an explanation of this wording. It would appear that on an ordinary interpretation, having taken down the approved fertiliser subsidy, something extra has been given in the commodity guarantees. This does not appear to have happened. Those farmers who grow sugar beet—and I declare an interest as a sugar beet grower—will receive exactly the same price for their produce.

Mr. Speaker

Order. It is interesting to talk about the Price Review, but not on this Scheme.

Sir J. Gilmour

May I point out that in the paragraph dealing with fertiliser subsidies it particularly mentions the reduction and says that this has been taken into account? With respect, I should have thought that the amount of fertiliser subsidy has an effect on the final return that farmers receive for their product.

Mr. Speaker

Order. I am sorry to be hard. We are not talking about the farm Price Review, but about the Scheme.

Sir J. Gilmour

I bow to your Ruling, Mr. Speaker. May I simply ask the Joint Parliamentary Secretary, if the fertiliser subsidy is used in this way, how it can be that the prices are adjusted?

In arriving at the total amount of fertiliser subsidy which is to be paid out this year, which is to be £35 million in spite of the reduction in the amount per ton of the fertiliser subsidy, when taking into account the total returns paid out on the main crops of wheat, barley, oats and potatoes, it is difficult to see how there will be an increase in the total amount to be paid out in fertiliser subsidy when the total guarantees paid out for these crops are to be reduced. This appears to be a contradiction in terms. If the Minister can explain this, I shall be grateful.

12.36 a.m.

Mr. Paul Hawkins (Norfolk, South-West)

I welcome the opportunity to say a word on this matter, coming as I do from the arable East, where we use probably far more fertiliser per acre than anywhere else. This is a most important matter for my constituency and other constituencies in East Anglia.

I rather agree with the hon. and learned Member for Northampton (Mr. Paget), who is no longer with us, that it would have been far better to have done away with the subsidies and to pay a decent end price. If, however, we are to have this system, of which the fertiliser subsidy is part, I do not feel that in this year, with the Government pressing for an expansion in agriculture, there should have been the cut in subsidies which is set out in the Scheme. It seems quite wrong that this cut in subsidies should have come at the same time as an increase in the price of some of the artificials as well.

I am convinced, not from usual pessimism and not from trying to get at the Government, but because of the weather, that we shall have bad yields this year in many of the crops which need great applications of fertiliser. In my district, we are three or four weeks behind in the drilling of sugar beet and the planting of potatoes, both of which crops need a large amount of these fertilisers. I fear that the unexhausted value of the remnants of fertilisers for other crops will have been leached out during the bad winter and more fertilisers than usual will be needed.

These fertilisers take more money than practically anything else that one does to the land for these crops. In other words, the application of fertilisers per acre is one of the largest items of expenditure that a farmer has for these two main expensive crops. It is almost impossible at present to obtain credit for fertilisers, and credit is necessary because that is the way farmers have always taken their fertilisers, paying for them after the crop has been harvested.

To me the Scheme, coming at a time when we have been asked to expand, is most extraordinary. But for the fact of preventing farmers from getting any subsidy, I would have hoped that we would show our disapproval of the cut in fertiliser subsidy by voting against the Scheme.

12.39 a.m.

Mr. Peter Mills (Torrington)

The Scheme is a very important one and will have a quite profound effect on agriculture. Of that there is no doubt. We did not hear enough from the Under-Secretary in his opening speech of the effects of the Scheme on agriculture. I believe that it could have quite serious effects. The right use of fertilisers is surely the key to success in agriculture. I believe that this will undoubtedly mean that there will be a reduction in the amount of foodstuff which is produced.

This is what I think is wrong about this Scheme—that it is brought forward now; at this time, when the Government are seeking to expand agriculture, they bring in a Scheme to reduce subsidies. There is no doubt in my mind that this will mean a reduction in the amount of fertiliser used, and consequently production from the farms will be reduced. Therefore, this Scheme will have serious effects on agriculture and will work against what the Government are trying to do—or ought to be trying to do—and that is, increasing agricultural production.

I notice that there is nothing about lime. It may, perhaps, in a sense, be out of order to make the point, but one cannot use fertilisers without lime, and the reduction which is going on at present in the use of lime could have serious effects on the use of fertilisers.

I notice, too, that paragraph 2 talks about "an association of farmers". It may be, as some of my hon. Friends have mentioned, that with difficulties of credit, and of buying fertilisers—difficulties which will be greater with the reduction in subsidy—farmers, to finance the use of fertilisers, will take advantage of associations of farmers, that they will bulk their orders, and perhaps use co-operative associations more and more, to overcome the cut in subsidy, and the extra costs they will have to pay.

It would be interesting to hear from the Minister whether the firms themselves will make up somewhat for the cut in the subsidy rate and help the farmers to carry on buying fertilisers by absorbing some of the cut themselves.

Then, right at the end of the Scheme—my hon. Friend the Member for Westmorland (Mr. Jopling) mentioned this—comes the problem of basic slag. This is a very important item, particularly in the South-West of England, and I for one welcome the fact that subsidy is not being cut, or has been cut only very slightly, because slag is very important in the wetter areas, particularly, as I said, in the South-West, and also in Wales, and in the part of the country my hon. Friend represents so well I would have thought it necessary to use more and more slag. So I am grateful to the Government that they have not cut this subsidy. It is important that slag should continue to be used. It is a strange thing that where compound fertilisers will not work, slag will work, and will produce the grass so necessary for our livestock. I welcome the fact that there has been no reduction there, and I hope that farmers will take advantage of it and use slag more and more, because it certainly does produce the grass.

There is another thing I should like to mention and I hope the Minister may answer this question. I am looking at "Fertiliser Statistics, 1968". Why, in the South-West and the western areas, are we dropping so far behind in the use of fertilisers? I see that we are well down the list, and this needs an explanation. It gives cause for concern, because we ought in the South-West to be making a higher application of fertilisers to produce the grass so that we can produce cheaper milk and fatten our cattle. I think the Minister should give us some explanation why the South-West is slipping behind in this way. I quote from "Fertiliser Statistics": While it may be expected that present growth rates will not continue at the same high levels in the east as has been the case over the last ten years, there is clearly much leeway to be made up in the western half of the United Kingdom. This is a serious problem. We must produce milk and beef from grass, and the only way to do this is through increased fertiliser application, which we are not getting in the South-West. Perhaps the Minister will tell us why this is so and what his officers are doing to encourage farmers to use more fertiliser, particularly in the South-West.

12.46 a.m.

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

I am sorry that hon. Members opposite have found fault with the admirable brevity of my hon. Friend in putting forward the Scheme; they have certainly made up for it.

The right hon. Member for Grantham (Mr. Godber) was his usual depressing self. Some of the points which he made may have been out of order—you were not in the Chair at the time, Mr. Speaker. He said that we talked glibly of expansion. When he and his party were in office, I do not know whether they talked glibly then, since they had no expansion in the sense of encouraging; they forced farmers into expansion—

Mr. Speaker

Order. We cannot discuss on this Scheme the whole agricultural policy.

Mr. Mackie

I anticipated that remark. The right hon. Gentleman also spoke about the use of fertilisers and asked me for particulars. In the five years, 1960–64, there were cuts in fertiliser subsidy amounting to £10½ million. For the five years up to this year the cuts have amounted only to £7 million. The total subsidy for the five reviews up to 1964 was £159.5 million, and the subsidy today from—

Mr. Peter Mills

Will the Minister give way?

Mr. Mackie

I will not give way. I have sat patiently for 1¼ hours listening to hon. Members. They should listen to me with the same patience. The total for the last five years is almost exactly the same, £159.7 million. There is this difference. In the five years 1960–65 the uptake of fertilisers increased by 182,000 nutrient tons a year. Between 1964 and the end of 1967 it increased by 191,000 tons a year. By the end of 1968 the forecast is an increase of 85,000 nutrient tons, and the forecast for 1969 is an increase of another 49,000 nutrient tons.

The right hon. Member for Grantham may say that that is a reduction in the increase, but hon. Members opposite who claim to have a knowledge of farming know that the variations in farming are so great that one year must not be taken alone.

In reply to the hon. Member for Torrington (Mr. Peter Mills) on the reduced uptake of fertilisers in the South-West, as he has told me several times, last year was one of the best years for grass in the South-West, and no one will slap on fertilisers if the weather is good.

Mr. Peter Mills

Will the Minister give way?

Mr. Mackie

No, I am not giving way. My hon. and learned Friend the Member for Northampton (Mr. Paget) compared artificial fertilisers and organic fertilisers. I would be out of order if I were to comment on that subject, intriguing as it is.

The hon. Member for Torrington said that it was impossible to fertilise without applying lime. We have been looking at the reduction in lime use, and there is a peculiar pattern over the country. The main reason is that a tremendous amount of lime has been used during the last two decades, so that the lime content of the soil has been brought up to a much higher level than before. The reduction is because that content in many areas is now being kept up by the addition of much smaller quantities of lime.

Several hon. Members asked why nitrogen had gone down so greatly as against phosphate. Nitrogen was more highly subsidised than the other nutrients, and we rounded it off. A number of speakers were pleased that we had left slag alone. One hon. Member suggested that this was because of pressure from the Steel Board, but it was nothing of the sort. We thought slag could be left as it was.

The hon. Member for Gainsborough (Mr. Kimball), among others, asked what we had done to encourage the use of fertilisers. We have dealt with the matter on the end product. We have raised the price of cereals, potatoes, wheat, barley, and have also raised the price of beef and sheep. This will encourage the use of fertiliser to grow food for animals and to increase the crops. This is what the Price Review has done, and I am certain that it will have an effect.

The hon. Member for Westmorland (Mr. Jopling) went back a year ago in commenting on what I said. I will leave that alone and deal with his remarks this year. I do not know whether he has received an Answer to the Question he put down, but I am sure that that Answer will satisfy him. He, too, raised the matter of the different treatment as between nitrogen and phosphate, to which I have already replied.

A number of hon. Members emphasised that grassland is one of the best areas for the use of fertilisers. The increase in the price of stock particularly beef and sheep, will help in that respect. Frankly, I am amazed that hon. Members, who claim such tremendous knowledge of agriculture, have so little faith in their fellow farmers that they think they would cut the one thing which we all know we should not cut. Anybody who seeks thrift in his farming would not wish to cut fertilisers, and I do not think that farmers will make any such cuts.

The hon. Member for Devizes (Mr. Charles Morrison) raised the matter of lower tonnage. The answer is that this year we have increased the tonnage. I admit that last year was a year of bad weather which had its effects on farming, but one cannot take one particular year and quote it as an example. One must take results over a reasonably lengthy period. The use of fertilisers has been increased by 6 per cent. a year in the last decade.

The hon. Member went on to say that instead of giving farmers a pat on the back, we had given them a slap in the ear. I hope that he will remember that he and his party slapped the farmers to the tune of £10½ million. We have slapped them only to the tune of £7 million.

Mr. Peter Mills

Will the hon. Gentleman give way?

Mr. Mackie

No, I will not give way.

Mr. Speaker

The hon. Gentleman can only talk about fertilisers on this Order.

Mr. Mackie

The hon. Member for Devizes put a simile about fertilisers and said that it was a slap in the ear. The hon. Member for Dumfries (Mr. Monro) said that it was a false economy to economise on fertilisers, and I agree. But I do not think farmers will economise in that way. He also emphasised its use on grass, and again I agree with him. He added that we should put the onus on the end product, as in fact we have done.

He then asked about the cost of administration. It amounts to about £250,000. We have looked at other methods of applying the subsidy. One attractive method is to pay it to the manufacturer rather than to the farmer. But there are many other uses for fertilisers such as on sports grounds, gardens, and so on. The law is that it has to be used for agriculture. That answers the hon. Member for Gainsborough who asked why it was not used in forestry. That is not in the Act. I shall not comment on his remarks about people buying it for agriculture and then using it for forestry.

The hon. Member for Fife, East (Sir J. Gilmour) asked about the award figure. The net figure was £34 million, but the award on prices is £37 million. If one subtracts the one from the other, one is left with £3 million, which represents the cut in the fertiliser subsidy.

The hon. Member for Norfolk, South-West (Mr. Hawkins) raised the question of the end price, a matter with which have already dealt.

Mr. Hawkins

rose—

Mr. Mackie

No. I said that I would not give way. I have listened patiently to the points made by hon. Members and I hope that they will do me the courtesy of listening to my reply.

The hon. Member for Norfolk, South-West also referred to the results of bad weather and emphasised what I have said about the effects of using fertilisers. We had a bad season last year and a lot of leaching occurred. We may see—indeed, I have already seen this—some yellowing of corn as a result of leaching. We should certainly put on an additional amount to replace leached-out nitrogen. Like him, I have faith in farmers and I am sure that they will put on more nitrogen.

I think that I have answered all the questions asked by hon. Members. If I said more I might find myself out of order, particularly if I replied to some of the points raised by the right hon. Member for Grantham. I need only add that the farmers welcome this subsidy. The total of the subsidy has not been cut. Considering the additional use of fertilisers, we expect the £30 million figure to be exceeded. Like our predecessors in office, we have kept the figure at about £30 million. We are, therefore, keeping the subsidy figure at the rate at which we want it and are not making a cut.

Question put and agreed to.

Resolved, That the Fertilisers (United Kingdom) Scheme, 1969, a draft of which was laid before this House on 29th April, be approved.