HC Deb 21 May 1969 vol 784 cc615-28

12.47 a.m.

Lord Hamilton (Fermanagh and South Tyrone)

The House is only too conversant with the recent problems afflicting Northern Ireland. However, neither the headlines nor the television cameras have focussed attention on the prevailing problems of agriculture, since these problems do not constitute that all-important word "sensationalism", although they are seriously affecting the health and morale of our biggest industry, agriculture.

These problems represent a mixture of geographical disadvantage, ineptitude of Government action and the size of the average farm holding. Again, the lack of will and determination to implement the Anglo-Eire Free Trade Agreement continue to hit the industry.

The remoteness from our main market, Great Britain, which consumes more than 80 per cent. of our annual £125 million production, represents a farm income disparity of £7 million per annum compared with average prices in this country. This is a most serious and alarming situation as the net income of Northern Ireland agriculture was £26 million in 1966–67.

Every farm commodity, except pig production, suffers from this price disadvantage which, through inflation, continues to expand. For example, returns on fat cattle and sheep are approximately £4 million less and the milk producer receives 4½d. per gallon less than his counterpart in this country, while feeding-stuff costs are at least £2 million per annum more.

The remoteness grant meets only £l¾ million of this disparity, since the disadvantage of remoteness is still costing the industry £5½ million per annum, which represents a loss of income of 20 per cent.

It must be realised that the cost of transporting the processed product across the Irish Sea has to be borne by the Northern Ireland farmers, for, unlike other industries, agriculture is unable to pass on this additional burden through increased prices.

As a result of the debate on the high cost of imported feedingstuffs, initiated by my hon. Friend the Member for Antrim, North (Mr. Henry Clark) on 3rd July, 1968, the Joint Parliamentary Secretary to the Ministry of Agriculture gave an assurance that an examination would be carried out jointly by Whitehall and Stormont into the question of farming costs in Northern Ireland. According to reliable Press reports the result of this examination was an agreed differential of £2 million per annum. The Northern Ireland farmer is now waiting impatiently for the Government to take action to close this yawning gap.

It must be recognised that Northern Ireland is a country of smallholdings and therefore a small farmer is particularly dependent on imported feedingstuffs, as he is forced into intensive production of either pigs or eggs, both of which require high concentration of imported feeding-stuffs.

The result is that he is having to pay at least £1 per pig and 2½d. per dozen eggs more on higher feeding costs. The output of the pig and poultry industries account for almost 42 per cent. of the farming output of Northern Ireland. It must be remembered that these industries were developed during the days of parity in feedingstuff costs with Great Britain. During the past year, production of pigs in Great Britain has increased by between 7 per cent. and 10 per cent., while production in Northern Ireland has remained static. It is vital for the preservation of a healthy agricultural industry that Government action is taken to alleviate this handicap in feed costs. Almost all farm capital investment has to be found out of income. To keep pace with new developments there is a constant need for further capital injection but it is extremely difficult to meet this need owing to the lower profitability of Northern Ireland farms and as a result, capital expenditure is static and shows a downward trend in real terms.

The Government are fully aware of the feelings and reaction throughout Great Britain about this year's Price Review. I can assure the Minister that when an inadequate award is given, with price levels failing to provide incentive and investment, the results are disastrous in Northern Ireland. There is a real threat, and this is no exaggeration that agriculture in Northern Ireland might become a depressed industry. The Government must realise that owing to our remoteness from our main markets, we have to be ahead of the rest of the United Kingdom in efficiency and productivity. This is impossible under present conditions. If our financial returns were on parity with Great Britain we could be investing to the tune of £5,500,000 per annum in stock and capital equipment without loss of personal income.

There is much concern about the future of the egg industry. When the guarantees are phased out by March, 1974, the advent of a free market after March, 1971, will make it more difficult for remote areas to continue in egg production. Northern Ireland transports 90 per cent. of its £17 million per annum production to Great Britain. The result of the Government's intended policy would have serious social and economic consequences. Since egg production is carried on by 55 per cent. of all farm holdings, the only alternative source of revenue for a small acre specialist is in pig production, which does not present a favourable outlook owing to the lower guaranteed prices and the high capital investment.

The recent Price Review was a bitter disappointment for the Northern Ireland egg industry, which produces a higher quality commodity than in Great Britain. There is widespread suspicion that the Government's intention is for production to fall and for any deficiency to be met from increased levels of imports, which will only aggravate our balance of payments further and hit the small farmer particularly hard.

I welcome the Government's intention to contribute towards the cost of sea transportation across the Irish Sea, but this grant must be both realistic and on a long-term basis; it must represent the full cost of sea transport by all routes used and take into account future cost increases due to inflation. This subsidy should not identify Northern Ireland egg production as the lame duck of the industry, but should be a recognition of our efficiency and quality. If the Government's proposed central authority materialises, I trust that the authority will be run with the minimum of expense, since Northern Ireland egg producers will be contributing towards the cost of the authority. Northern Ireland should have representation on the authority. The Government must realise that the whole future of egg production in Northern Ireland is in the balance.

Ten years ago, egg producers could have left the industry overnight. Today, because of high capital involvement in equipment, housing and stock, it is economically impossible to do so, in spite of the future instability of the market and the fact that margins of profitability have been falling in recent years.

Egg production in large units near cities would increase demands on the scarce resources of labour and space in these areas. This would be in direct contrast to the Government's declared policy of industrial development certificates. There would be an inevitable manure disposal problem. Furthermore, this concentration of egg production into relatively few large units would endanger supplies from the disease risk point of view, and enhance the distinct possibility of monopoly, which would not be in the interests of the consumer.

The need to maintain and develop further a viable meat export industry in Northern Ireland results from the increasing difficulties in shipping live cattle, the saving in the transport costs of meat as opposed to livestock and the all-important employment aspect. It is estimated that the transportation saving on meat on the hook is £1 16s. 9d. per ten cwt. animal.

The effects of the Anglo-Eire Trade Agreement are undermining and endangering the viability in the whole of the dead meat industry.

In 1968, the Eire meat plants received subsidies on meat exported to Great Britain amounting to £5½ million. The British Government alone paid the Eire Government about £1½ million for 25,000 tons of beef and 5,000 tons of mutton, as agreed in the Agreement. The Eire producer receives a small proportion of this subsidy whilst the dead meat industry receives the major benefit of the payment, which enables the industry to subsidise exports of meat to the British market.

In 1968, the subsidy paid to the Eire plants averaged a little over 3d. per pound, whereas in the same year, the Northern Ireland meat plants received a direct subsidy of about ½d per pound. As a result, the Eire dead meat industry is in the unfair position of manipulating the market price as and when they desire, thus undermining selling prices.

The increase in the guaranteed price of beef in the 1969 Price Review will tend to increase the advantage enjoyed by the Eire meat plants in that the subsidy paid to them has in the past been based on the British deficiency payment.

When Britain devalues, decimalises or abandons Greenwich Mean Time, Eire complies. Now is the time for the Government to ensure that Eire complies in the correct allocation of the subsidy by making sure that the subsidy goes to the producers and not to the dead meat industry.

12.58 a.m.

Mr. Henry Clark (Antrim North)

I am obliged to my hon. Friend the Member for Fermanagh and South Tyrone (Lord Hamilton) and endorse his admirable, detailed speech, in which he men- tioned the handicaps suffered by the Northern Ireland farmer. Every farmer suffers handicaps but I am not being a Jeremiah when I say that the Northern Ireland farmer suffers from more handicaps for more of the time than most other farmers in the United Kingdom.

The figures recently produced by the Government were seasonally adjusted for the disastrous weather suffered last year by the English farmer. I hope that the figures for recent months will be slightly more optimistic and that they will be seasonably adjusted for the remarkably fine weather which we enjoyed in Northern Ireland last year, which made things look better than they would normally be.

My hon. Friend has pointed out that there is a 20 per cent. shortfall between Northern Irish farmers and farmers on this side of the Irish Sea. Farming is a varied industry. It would be incredible if that 20 per cent. were evenly spread throughout the industry. There are, therefore, inevitably many farmers who are 30 and even 50 per cent. worse off than their counterparts, who are equally efficient and work equally hard, on this side of the Irish Sea. Some farmers are suffering real hardship and losing on their operation.

There are a number of alternatives which have been made clear to the Government which they could follow. They could—they have been generous in this in the past and they could do it again—increase the standard quantity of liquid milk in Northern Ireland so that a better price could be paid to the farmers. They could prohibit all egg imports into the United Kingdom. They could retain eggs as a Price Review commodity and see that the price achieved for them was balanced in the Price Review every year even if no guarantee was actually made.

The Government could force the Southern Irish Government to observe not only the letter, but the spirit, of the Anglo-Irish Trade Agreement. They could take steps—and various steps have been outlined at various times—to bring the cost of feedingstuffs in Northern Ireland in line with the cost of feeding-stuffs in other parts of the United Kingdom. Finally, they could, possibly, increase the remoteness grant to a realistic level, although this is the last thing, I think, that the Northern Irish farmer wants.

We in Northern Ireland are quite prepared for a reasonable level of drift from the farm to the factory. We know that in this modern age that is inevitable. The Under-Secretary of State may remember some of the speeches I made in Committee on the Agriculture Bill. He knows something of the structure of Northern Ireland. I will not repeat what I said then. If the rate of drift from farm to factory, or from the farm to unemployment, increased by any considerable amount at this difficult time in Northern Ireland, we would have a steep increase in unemployment and a real degree of hardship and difficulty all through the countryside in Northern Ireland. I hope sincerely that the Under-Secretary has listened to the remarks of my hon. Friend.

1.2 a.m.

The Under-Secretary of State for the Home Department (Mr. Elystan Morgan)

The House will be grateful to the noble Lord the Member for Fermanagh and South Tyrone (Lord Hamilton) for initiating what he described as an unsensational debate and drawing our attention to some of the current problems of agriculture in Northern Ireland. I will return presently to the specific points which both the noble Lord and his hon. Friend the Member for Antrim, North (Mr. Henry Clark) have raised.

The Government fully recognise the supreme importance of agriculture to the economy of Northern Ireland. It remains the largest single user of labour despite the energetic efforts which have been, and are being, made to increase employment in the industrial sector. The Government also recognise that agriculture in Northern Ireland faces very real problems.

The basic causes of those problems will be familiar to the noble Lord and his hon. Friend. As he knows better than I, the climate of Northern Ireland is less suitable for cereals or horticultural production and agriculture must, therefore, depend substantially upon livestock. There is also the different pattern of costs.

Furthermore, there exists the problem of farm structure. There are about 40,000 farming units in Northern Ireland. Of these, 18,000 are regarded as being too small to be viable in the sense of yielding a full-time livelihood to the farmer, but about half of those 18,000 provide the only source of income for their occupiers. Even of those units which can be regarded as viable by that standard, many are still very meagre holdings. Finally, there is the difficulty caused by the remoteness of Northern Ireland from the main markets for agricultural produce.

We must, however, remember that similar conditions face farmers in other parts of the United Kingdom. There is sometimes a tendency to talk as if the problems were peculiar to Northern Ireland, but Great Britain has a considerable number of small farm units and production costs are not the same in every part of the United Kingdom. The wetter and hillier areas of England, Scotland and Wales are limited in the amount of crops they can produce.

As a private Member, I have sought to draw attention on a number of occasions to the different production costs in Wales. Feeding costs in Wales tend to be £3 a ton higher than the average in the United Kingdom, and the cost of milk production about 3d. to 4d. a gallon higher, while the return on any product is also different. The price for fat cattle is about 7s. or 8s. lower than the average for the United Kingdom.

What differentiates Northern Ireland is that the problems are concentrated in a smaller area and this means that a number of the grant schemes designed to help less favoured areas are often of assistance to Northern Ireland. These include the Small Farmer Scheme and its successor, the Small Farms (Business Management) Scheme which is being extended for another year and is now due to run to August, 1970. These have been widely used.

Then there are the grants introduced in the Agriculture Act, 1967, to encourage voluntary farm amalgamations and thus create economically more viable holdings. These should be of special value in view of Northern Ireland's farm structure.

In addition to these general measures, and to the usual United Kingdom guaranteed price and production grant schemes, there is the special support to agriculture in Northern Ireland afforded by the special assistance, or "remoteness" grant. We have been told that this is now running at £1¾ million a year. The purpose of this grant is specifically to offset the disadvantage of Northern Ireland producers, arising from the remoteness of the main United Kingdom markets over and above the disadvantages of producers in other parts of Great Britain. Most of the money is used to help livestock producers and is spent on schemes to encourage good marketing and good quality production.

I should like to turn to some of the special points raised by the hon. Member for Fermanagh and South Tyrone. First there are farm incomes. It is true that farmers in Northern Ireland have average incomes lower than those in England and Wales, but it is fair to remember that not all the factors which distinguish Northern Ireland agriculture from that of the rest of the United Kingdom are to the disadvantage of Ulster. Furthermore, although the Government can take no credit, we should not forget that last summer's harvest was the best this century for Northern Ireland, and in spite of what the hon. Member for North Antrim said, I would suggest that this is a not unimportant part of the total picture of current agricultural fortunes in Ulster.

The basic problems of farm structure involve factors which cannot be readily redressed. In particular, it must take a considerable time to strengthen the holdings, although considerable progress is being made. But Northern Ireland farmers have at least benefited from the relatively favourable experience of livestock producers compared to arable producers in the last two years. In 1967, as hon. Members will concede, there were substantial increases in average incomes for all main types of farming enterprise in Northern Ireland, and the trend is expected to have continued in 1968. Although average incomes continue to lag behind in Northern Ireland as they do in other remote areas of the United Kingdom, farmers there are now doing as well as those in similar situations in Great Britain. This certainly represents not only an absolute, but also a relative improvement for Northern Ireland, and I think we may take it as an indication that the measures which the Government have taken over the years have borne fruitful results.

The noble Lord has suggested that the Northern Ireland producers are at a dis- advantage because of the higher costs of feedingstuffs there. This problem has been studied by the Ministry of Agriculture for Northern Ireland with assistance from the United Kingdom Ministry of Agriculture and agreement has been reached on the technical facts. In brief these amount to the acknowledgement that there is a disparity between the costs of feedingstuffs in Great Britain and in Northern Ireland assessed at £½ million in 1962–63, then increasing to about f2½ million in 1967–68. Recently, however, the gap appears to have narrowed. The action, if any, which should be taken to offset this disparity is still under consideration.

Another point which the noble Lord raised was the question of the Anglo-Irish Trade Agreement.

Mr. Henry Clark

rose—

Mr. Morgan

I am in competition with the clock, and I am sure the hon. Gentleman will understand if I do not give way. There is a great deal to be said about the Anglo-Irish Trade Agreement, but I confine myself to the comment that when this was discussed in this House in 1964–65 the Conservative Party did not see fit to object to that agreement as a whole, and many of the conditions which have been mentioned—

Mr. R. Chichester-Clark (Londonderry)

At the time we presented strong objections, or rather warnings, on the subject of agriculture, and virtually forecast exactly what has happened.

Mr. Morgan

There were some rumblings of discontent. I was not a Member then, but I am not aware of a Motion of censure having been moved with regard to that important matter.

The noble Lord mentioned the difficulties which meat plants in Northern Ireland are experiencing, and he referred particularly to the effects on their competitive position of the subsidy paid by the Government of the Republic of Ireland on exports of carcase beef. The concern which has been expressed in Northern Ireland about the effect of the subsidy is well understood both by this Government and the Government of Northern Ireland. My right hon. Friend the Minister of Agriculture has been discussing with his opposite number in the Republic the whole question of the balance and the phasing of the trade in cattle and beef, with particular reference to the effects of this subsidy. The Ministry of Agriculture in Northern Ireland has been associated with these talks throughout, and I assure hon. Gentlemen opposite that the particular problems which arise there have been kept firmly in mind. Active consideration of this problem is still continuing. I am afraid, however, that for that reason I cannot expand on this statement tonight.

I should like also to say a word about eggs, referred to by the noble Lord. This commodity represents a particularly significant proportion of the total farm output of Northern Ireland—15 per cent. as against 8 per cent. in Great Britain as a whole. It is noteworthy that the Reorganisation Commission for Eggs was impressed by the efficiency of Northern Ireland producers and by the high quality of their products. My right hon. Friend the Minister of Agriculture informed the House on 22nd January that the Government accepted the Reorganisation Commission's recommendation that it would be right to move to a free marketing system. The Government have accepted that there is a special problem for egg producers in Northern Ireland in the context of the transition to such a system.

As my right hon. Friend announced, the Government are discussing with the Northern Ireland authorities the provision of special assistance towards sea transport costs for Northern Ireland producers. This is not, however, a problem that will present itself until 1971, since the Egg Marketing Board has been asked to continue until then with the present arrangements, which include equalisation of transport costs.

I should like also to say a word on the awards on livestock at the last two Annual Reviews which have been beneficial to Northern Ireland, relying as she does on her large grassland areas and her traditional skill in producing bacon pigs.

For beef, the guaranteed price has been increased by 26s. per live hundredweight over these two years, the hill cow subsidy has been increased by £3 per head, and the beef cow subsidy by £2 10s. per head. The maximum acreages on which these subsidies can be paid have been increased by 25 per cent. this year. We are confident, therefore, that the expansion in the beef herd, which has already been taking place at a higher rate than in the United Kingdom as a whole, will continue.

For pigs, at the last two Reviews we have aimed at a steady expansion towards the large numbers we need. But we have sought to avoid speculative increases which can readily lead to market instability. In two years we have raised the basic guarantee by 1s. 6d. per score; but our main strategy has been to give confidence to the regular and efficient producer that he can expand without running into heavy cuts in his effective return under the flexible guarantee system. We have done this by raising the ceiling of the middle band by 700,000 forecast certifications to 14½3 million pigs. This obviously favours the committed producers such as those in Northern Ireland, as opposed to the "in-and-outers". It is reflected in the latest Northern Ireland census figures for March, 1969, which show nearly a 5 per cent. increase in the total breeding herd compared with the revised figures for March, 1968, and also an increase of about 30 per cent. in the number of gilts in pig.

I am not denying that there are real problems in Northern Ireland. Nor do I belittle them. But I hope that I have said enough to show that the Government recognise their existence. It does not, however, necessarily follow that the solution to the agricultural problems of Northern Ireland lies simply in the provision of extra financial assistance. Quite apart from the urgent need to restrict public expenditure, it may not be economic sense to look simply at the symptoms of disparity of development. We must also look at the deeper causes and seek to promote the correct changes and adaptations over the course of time.

This may seem to be a gradual and lengthy process, but I believe that the general trend in Northern Ireland agriculture shows that we are moving towards the attainment of our goals. I have, nevertheless, listened with great interest to the noble Lord's views and I will certainly see that they are borne in mind. While there may be particular problems affecting agriculture in Ulster—

The Question having been proposed after Ten o'clock on Wednesday evening and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

House adjourned at seventeen minutes past One o'clock.