§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Dobson.]
§ 12.56 a.m.
§ Mr. John Hall (Wycombe)I am sure I have the sympathy of everybody when I say that I do not like Adjournment debates. I am not fond of late nights, although over the many years I have been privileged to be a Member of this House I have often had to take part in late and, indeed, all-night sittings. That experience has not lessened my distaste for debating important matters at an hour when honest men are abed. Therefore, it would have been masochistic of me to have balloted for an Adjournment debate if I had not been moved by the importance of the question I tabled about the small, efficient farmer, on 11th March, and had not been stirred to indignation by the inadequacy of the Minister's reply.
The Minister will not require me to remind him that I asked him then for his
… estimate of the average profit to be made by an efficient farmer, before charging any salary to himself or his wife, from milk production with a herd of 50 cows on some 80 acres of average grassland in the Home Counties, for the years 1968 and 1969 …"—[OFFICIAL REPORT, 11th March, 1970; Vol. 797, c. 1320–1.]When the Minister was pressed to say whether he thought there was any future for the small farmer, he indicated, rather doubtfully, in the view of many hon. Members, that there was. I am not sure what are his grounds for that qualified optimism. He did not give us those grounds in his reply. Certainly it is not the experience of my constituents, many of whom have been struggling to survive for many years and who have now come to the bitter conclusion, based on the evidence of their own accounts, which 1170 are borne out largely by the figures to which the Minister referred me, that there seems to be no place for the small farmer in British agriculture.This stark evidence of the figures seemed to be supported by the Home Secretary, who is himself a farmer—I gather he farms 130 to 140 acres—when he spoke on 31st January at Cardigan, in remarks which were reported widely at the time. I quote from the Farmer and Stockbreeder of 10th February, in which he is reported as saying to a Mrs. Mossman, whose husband ran a herd of 50 cows:
Go home and tell your husband not to work like a slave. Milk should come from larger herds than yours.That quotation, whether or not it is correct, was certainly widely circulated and caused a great deal of anxiety throughout the country. It seemed to small farmers and to my constituents to mean that the Government had decided that there was not future for them.Last January I received a letter from a small farmer constituent of mine which I used as the basis of my Parliamentary Question, because it seemed to represent the case of many such farmers with similar holdings not only in my constituency but in other parts of the country. For that reason I want to quote the relevant part of the letter. It says:
We took over this 80-acre farm six years ago with limited capital. Working for the first year without hired help and subsequently a young lad we have increased our dairy herd from 14 to 55 cows. However, our profits have not increased for the size of business, but, in fact, we have reached the stage of not having to pay income tax. I would say here that we do our costings with the N.A.A.S. and B.O.C.M. and our figures are well above average. We have made economies where possible and have spent our small profits on making our business more efficient, but we have now reached the stage where it is impossible to accumulate any capital and make any further improvements. The most distressing feature is the sheer hopelessness we feel about the present position. We must be assured of a fair income, so that we can plan ahead. We cannot stand still, but must have more money to plough back into the business, not to mention a fair return for the long hours of hard work.Figures received from the N.A.A.S. just to hand show a 9 per cent. return on capital; with Bank interest at 10 per cent. and overdrafts increasing rapidly, this is just not on.In a later letter the writer corrects the figure about the return on capital and says that having discussed this with the 1171 accountants and having again consulted the N.A.A.S. adviser it was found that some large items of expenditure were not taken into consideration, and that a truer figure for return on capital employed would be 5½ per cent.That is a letter from a hard-working young farmer, regarded by the N.A.A.S. as efficient and, what is more important, regarded by his fellow farmers as a very efficient farmer. I visited that farm, examined the accounts and talked to the farmer and his wife. I visited other similar small farms in my constituency. I spoke to seed merchants, fertiliser suppliers and machinery suppliers, and from every one I got the same story—a story of rapidly rising costs; a story from the merchants of the increasing difficulty they were having in getting their accounts paid by the farmers, for whom they had every sympathy; a story from the fertiliser suppliers that the farmers were having to cut down on essential fertilisers, with possible long-term consequences upon soil fertility, and a general understanding from all the people who are concerned with the farming industry that the farmer's income was falling although the amount of work he was having to put into his farm was in all probability increasing.
What is regarded as a reasonable income for a small farmer with a viable acreage? What is regarded as a fair wage for the farmer and his wife, for the labour and management skills put into the farm by the farmer and the assistance given on most farms by the wife? What is regarded as a reasonable return on invested capital in a farm? The N.F.U. suggests a minimum of about £1,500 a year as a fair wage or salary for a farmer aided by his wife. The Heathrow firemen—who, I suggest, do rather less in the course of a year—earn a much higher income. That is certainly the case with dockers and the car workers in Coventry.
The Ministry of Agriculture report, in the table to which the Minister referred me, which goes up to 1968, showed that the total return that can be expected for a 50–60 acre farm is under £1,300 a year. It has varied over the years from 1966 to 1968 from about £1,132 to just under £1,250. That income is not enough for the wage alone, if it is agreed that an adequate wage for the farmer and his wife is the £1,500 which the N.F.U. has 1172 quoted. It does not provide for a return on the capital invested or for any savings which must be ploughed back for expansion—and all this against a background of a borrowing rate of between 9½ and 10 per cent.
Since 31st October, 1967, 3852 farmers have applied under the Government's grant and annuity scheme to opt out of farming altogether. Do the Government want more small farmers to do this, and let their holdings be merged? Would the hon. Gentleman not agree that, generally, the production per acre on the well-run small farm is higher than on the large farms? It is often said that the best fertiliser is the farmer's boots. He can get around his own small farm, in which he takes a great personal interest, far better than the man who runs thousands of acres, generally through a manager.
In the end, could not the increasing merger of smaller farms result in a fall in the total food production rather than an increase? If so, should we not make great efforts to ensure that the small farmer can operate under conditions which allow him to stay in business? Would the hon. Gentleman say that the Home Secretary was wrong to say that the small farmer, and his particular example—the man with a herd of 50 dairy cows—could and should no longer exist? Would he say that, against a background of the recent Price Review, the efficient small farmer with a viable acreage can expect with some confidence to get from his work a minimum wage for himself and his wife of about £1,500 a year, which is certainly no more and may be less than the couple could get in industry?
Would he say that, in addition, the farmer might get a reasonable return on his capital? The N.F.U. suggests that 15 per cent. is a fair return, and I would not put it even as high as that. Is the small farmer likely to get more in return for capital employed than he pays to borrow money? If not, he has not much future. If the hon. Gentleman cannot say that the small farmer with a viable acreage—I agree that talk of small farms is misleading, because some will never be viable: what I mean is a sufficient acreage of the right ground—can make a reasonable living with about 70 1173 to 100 acres, and perhaps less for specialised farming?
If the farmer cannot look forward to a reasonable future, with a reasonable wage and a reasonable return on capital employed, it is just as well to be honest and to tell him that he should take advantage of the grant and annuity scheme and get out of farming while there is still time.
§ 1.4 a.m.
§ The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. John Mackie)The hon. Member for Wycombe (Mr. John Hall) raised this subject a fortnight ago at Question Time and I am grateful to him for raising it now, because I could not reply fully before since you, Mr. Speaker, are not keen on long replies at Question Time. It was difficult to give him the studied reply which he wanted on this subject. The hon. Gentleman was not satisfied with my Answer. He has quoted what I said in another supplementary answer to his right hon. Friend the Member for Grantham (Mr. Godber), when I used the words "I think". I did use those words, but in answer to the hon. Gentleman himself I was quite definite in what I said, that farms of this size have a future.
I did also deal with what my right hon. Friend the Home Secretary said. The Home Secretary was surrounded by a crowd of shouting farmers who were throwing eggs and tomatoes at him. One woman went down on the pavement in front of my right hon. Friend, and both my right hon. Friend and the woman gave their reports to the newspapers. She said that when she told my right hon. Friend that her husband was working like a slave my right hon. Friend said that he should not do so but should seek a bigger herd. My right hon. Friend thought she said 30 cows and not 50, but the hon. Gentleman is sensible enough, I know, not to lay great stress on an incident like that, whether it concerns a Minister of the Crown or a shadow Minister. I hope we shall now have heard the last word on that subject.
In my reply a fortnight ago, I referred him to the Report on Farm Incomes which we produce every year. I am glad to have this opportunity to go 1174 into some of the figures in more detail. I can now also refer to the figures for 1968–69, which were published at the same time as the Annual Review announcement last week.
The hon. Gentleman has expressed anxiety about the future of the small efficient small farmer—and I underline the word "efficient". I should also like the hon. Gentleman to look at the word "small", which he has also used. There are about 80,000 farmers farming less than 20 acres, but there are also those who have between 80 and 110 acres. The writers of the letter he quoted said that they started with limited capital. This often happens. People start with limited capital and can then get into difficulties if interest rates rise—and I shall not go into details of why interest rates rise. These people then have to borrow for their gear, and so on, and, as I say, can get into difficulty. It should be fairly well known by now that the average incomes of efficient farmers are at least five times higher, and often much more, than those of the least efficient. It seems to me that farmers like that are earning perfectly adequate incomes.
In his original Question, the hon. Member referred to the milk producer with 50 cows, so I have looked at our Report on Farm Incomes to see just what the position is. The figures may surprise the hon. Member, and I recommend him to study them; they are set out in pages 81–87 of the Report on Farm Incomes in England and Wales in 1968.
In the farming type and size groups closest to that quoted by the hon. Gentleman in his Question, the most efficient farmers had an average dairy herd of 46 cows. Their average valuations amounted to some £9,100, and their average net income was £3,150. This, of course, had to cover both the return on their capital and the reward for the farmer's own labour and that of his wife. Even if we allow a 15 per cent. return on capital, which is an arbitrary figure for which I do not claim any particular merit, the net income left to the farmer and his wife for their labour would be £1,800. That does not seem to me to be such a wildly inadequate reward—I have a dairy man who is earning more than that, but that is beside the point—particularly when that farmer 1175 is also getting a substantial return on his investment.
We can take the figures for even smaller full-time farms. Efficient farmers with a dairy herd of 26 cows and average valuations of £4,900 were earning an income of £2,100 on average in 1968–69. If again 15 per cent. is allowed for return on capital, the return for labour is £1,350.
We hear much about grossly inadequate returns which farmers are getting, but efficient farmers can earn a reasonable living. Let me take one more measure. For every £100 of gross output a farmer can earn £32 net income. That is not a bad return. For 1969–70 a general improvement in incomes is forecast. If the hon. Member studies the White Paper he will see that dairy incomes generally are expected to be up as a result of higher milk sales and good prices for fat cows and calves. We do not make special forecasts for the efficient farms, but I have no doubt that if they could improve their average incomes against the general trend in 1968–69 they will improve them still further in 1969–70.
The hon. Member asked me what we think and what is our policy. I think I have said enough to show that the efficient small farmer is not doing too badly, but I do not wish in any way to appear complacent. We all recognise that small farmers face special problems. The hon. Member mentioned some. One which he mentioned is low capitalisation and low turnover. Often the best solution to these problems will lie in greater intensification in order to increase turnover and profits. By and large this is what the efficient farmer has done. One thing which is clear is that our price guarantees cannot be set at levels which will enable the small farmer to get by without making any great effort. This would discourage efficiency. It could lead to over-production and over-production is in no one's interest.
In July, 1962, there was a debate on the small farmer. In that debate I said:
I want to help the small farmer in the only way I think he can be helped—that is to make him big."—[OFFICIAL REPORT, 19th July, 1962, Vol. 663, c. 792.]In 1965, after we took power, we recognised this problem of the small farmer trying to win a livelihood from insuffi- 1176 cient land. He would find it hard to keep pace with technical advance and find it more and more difficult to maintain a standard of living in keeping with modern times. All this remains true today. As a result, we brought in new measures to counteract this in the Agriculture Act, 1967, to offer these farmers help in three ways: to enlarge their farms where they can get more land; to co-operate with others to get some of the benefits of farming or marketing on a bigger scale; to resettle or retire from farming where they want to give up an unrewarding struggle.Through these measures we have tried to ensure that small farmers can either continue in business or, if they wish, give up agriculture. I emphasise that no one will be forced to stay in agriculture or to leave it. We have tried to create conditions in which farmers are given the opportunity to go on to obtain some of the economies of scale and through greater efficiency to earn a reasonable living or to retire or direct their abilities and resources into other fields. I think the hon. Member will agree that that is a sound policy for many farmers with farms which will never be viable.
Finally, I must say a few words about what we have done in the 1970 Review, which will also help. The determinations which my right hon. Friend announced last week will benefit this particular type of farmer—the efficient livestock producer and the dairy farmer. It is up to the industry to help itself by taking advantage of the Government's measures in the Review. The determinations are likely to increase the efficient farmer's returns on the 50-cow dairy farms by £470–£480. On the smallest fulltime dairy farms returns should be increased by about £250 a year, or £5 a week. The hon. Gentleman will agree that these are substantial sums. They should mean a considerable increase in the average income of these farmers. It is an increase which we recognise they have earned and which we have therefore made possible in the Review.
The hon. Gentleman has asked me what the future is for this type of farmer. The facts which I have set out show that there is a good future for this efficient size of farm. I do not want to use the word "small", because it covers such a huge bracket of farmers. I am using 1177 the size that the hon. Gentleman referred to. I emphasise the need all the time that such a farmer must watch his efficiency. The industry cannot stand still. What may seem at the moment a large enough farm to be worth working, one which will supply the farmer with a reasonable living, will not be so for ever. That is only too obvious. As the hon. Gentleman probably knows, about 60,000 farms have gone out of production or been amalgamated since the end of the war. This process will continue.
We have put forward a scheme to make it easier for people to go out of farming—to get "redundancy" payments. I think this was the right thing to do. Any man going into farming today must take a long-term view of the situation and appreciate that this might happen. However, where small farmers can produce economically their future is as assured as that of any other farmer.
The hon. Gentleman argued that the small farmer produced more per acre. I know that production per acre is a fairly good criterion, but it is not the only criterion. There can be a tremendous input of capital and effort to secure a certain production per acre. Although the American farmer has more land than we have, his whole criterion is production per man. A combination of the two is the right measure, not just a concentration on production per acre.
I repeat that where small farmers can produce economically, their future is as assured as that of any other farmer, 1178 bearing in mind what I have said about the future. It is absolutely essential for these farmers to make use of the cooperative schemes that we have and to make use of N.A.A.S. If the hon. Gentleman studies the 1968–69 figures and studies carefully what I have said about this size of farm—that is, the 80–110 acre farm with 50 cows, with the farmer doing the job as well as the 25 per cent. at the top—he will see that there is an immediate future for these farmers. They have to watch it very carefully, because there is this progress in amalgamations going on—not only Britain, but in the world as a whole.
This process of amalgamation went on in the years between 1945 and 1950 and also in the years up to 1964, but the Tory Government did not do much to help those concerned. They had a small farmers' scheme, it is true, but they did nothing about redundancy. We think that our scheme has done much to alleviate much of the heartbreak that arises because of farmers having, for various reasons, to go out of business—bad land, bad climate, a whole host of reasons.
The hon. Gentleman can go back to his constituents and tell them the figures I have set out. He can tell them that they can get the figures from the N.A.A.S. I think the hon. Gentleman will agree that the size of farm that he chose has a future.
§ Question put and agreed to.
§ Adjourned accordingly at twenty-five minutes past One o'clock.