AGRICULTURE (FERTILISERS) (Hansard, 12 May 1971)

§ The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Anthony Stodart)
I beg to move, That the Fertilisers (United Kingdom) Scheme, 1971, a draft of which was laid before this House on 21st April, be approved. The purchase of fertilisers for agricultural use has been subsidised by one means or another for the past 30 years, and it may be a measure of the success of successive schemes that, since they were first introduced, more than twice the amount of fertiliser is being used.
Like its predecessor, this Scheme provides for subsidy based on the nitrogen and phosphoric acid content of all inorganic fertilisers used in agriculture.
The House will recognise, it is not administratively practicable to subsidise organic fertilisers which vary enormously in nutrient content. During the latter half of the 1950s fairly massive increases in the level of subsidy were introduced in order to stimulate both the production and consumption of fertilisers. By 1959, when it was clear that the expansion in their use was gathering momentum, the annual cost of the subsidy had reached £30 million.
550 At the same time, prices were beginning to fall, and since 1960 it has been the practice to adjust the rates of subsidy from time to time so as to keep the annual cost at about £32 million.
The one year increase in fertiliser subsidy from 19th March, 1970, was introduced following the 1970 Annual Review as a means of injecting £9 million additional capital into the agricultural industry in a way which would benefit the great majority of farmers. The decision did not indicate a departure from the general policy of containing the cost of fertiliser subsidy in the United Kingdom at about £32 million. From 19th March, 1971, the subsidy rates reverted to the previous levels. With a few setbacks, the general upward trend in consumption has continued throughout the past decade and there is little doubt that most farmers are now fully aware of the importance of inorganic fertilisers.
I want to pay a tribute to the industry for the part which it has played in enabling me and many other farmers to produce more than twice the amount of food we used to, with half the number of hands.
The concentration of granulated fertilisers has played a very conspicuous part in the agricultural revolution. All the same, there is still room for further expansion in their use, particularly on grassland, and, although the subsidy is only one of the many factors affecting consumption, I hope the House will agree that the Scheme should be continued for a further year, with subsidy payments in 551 accordance with the Annual Review decision at the present rates, expressed, of course, in decimal terms, as proposed in the draft Order now presented for the approval of the House.

§ Mr. Michael Barnes (Brentford and Chiswick)
We support what the Parliamentary Secretary has said about the contribution made by fertilisers to the agricultural revolution. I wish to ask only one question. A fertiliser manufacturer has just announced a sharp increase in the price of his products from 1st June this year amounting to 7½ per cent. This follows a 10 per cent. increase last January. Other manufacturers are likely to follow suit, if they have not already done so.
My right hon. Friend the Member for Anglesey (Mr. Cledwyn Hughes) negotiated an agreement with the fertiliser manufacturers in March, 1970, that they should hold down prices, for a period of 12 months, which may have been overtaken by events. One appreciates that certain increases are inevitable after a period of price restraint. Increases of this magnitude are very great indeed, particularly since from the farmers' point of view the extra subsidy which was paid last year is not payable during the current year. However, we must hear in mind that fertiliser prices are lower here than in many other countries. Does the hon. Gentleman feel that we have now reached a situation of reasonable price stability?

§ Mr. Anthony Stodart
I am grateful for the hon. Gentleman's support. The March, 1970, agreement provided that unless special circumstances arose, manufacturers would do their best to hold down prices, and they did so. However, perhaps as a result of holding down the price for so long these increases have been forced on them by the inflationary causes we all know so well.
Despite this we still have the lowest fertiliser prices in Europe. A measure of advance warning has been given and it would still be possible for farmers to take in supplies at existing prices. The increased price which has been announced will not affect any of this year's crop. I hope that we will have reached a position of stability, but it will depend 552 upon the Government's success in combating high wage claims and trying to hold down inflation.