§ 1.47 a.m.
§ Mr. James Molyneaux (Antrim, South)My reason for raising the problems of Northern Ireland's agricultural industry at this juncture arises from the fact that the common agricultural policy of the European Economic Community has just begun to apply, and it is right that the many constituents in almost every constituency in Northern Ireland who are affected should know that their anxieties and concerns are fully known and understood in London and Brussels. If there has been a lack of enthusiasm for EEC entry in Ulster one reason has certainly been the anxiety felt about the Province's agriculture.
In order to place the points I shall raise in perspective I must say a word about the special features of the industry.
Agriculture is the biggest single industry in Northern Ireland. It provides directly about 10 per cent. of the Province's employment and about a further 10 per cent. indirectly in processing and packing and so on. The sum of £200 million, or approximately 9 per cent. of the Province's total gross product, comes from agriculture.
But agriculture is a shrinking industry. There are still many small units constantly at risk, and there are crucial problems. Average net farm income is well below that in England and Scotland. Earnings are the lowest in the Kingdom. The area is climatically unsuitable for producing cereals, so a high proportion of feeds has to be imported. Hence transport costs on imports and exports play an alarming role in farmers' margins. Moreover three-quarters of Ulster's agricultural activity is in livestock and livestock products and is thus heavily dependent on imported food. By con- 434 trast, under half of England's agricultural activity is in these products. Though it may be true that the industry will have to shrink further, this is a very inauspicious time to lose any employment in the Province.
A final and unique problem is created by the fact that Northern Ireland is the only part of the United Kingdom with a land border with another member of the EEC. There is great concern to see that farmers in the Republic are not put at an advantage in relation to their northern colleagues because of the differences in their transitional arrangements.
It has long been recognised that Northern Ireland has a special problem of remoteness from her markets in the United Kingdom. At present the industry has a special grant of £1.75 million a year to offset export disadvantages—the so-called remoteness grant. This grant is due to end in 1974, and it is understood that the form of the grant may not he approved under EEC rules. However, if no substitute is found there will be very serious consequences for Ulster farms. I hope that my hon. Friend the Under-Secretary can give at any rate an indication that the Government will treat as a matter of urgency the need to give Ulster farmers an assurance that adequate help will be given if the remoteness grant comes to an end.
More than 80 per cent. of Ulster's feed has to be imported. Minimum import prices for cereals put Northern Ireland at a clear disadvantage because of transport costs. I understand that cereals will cost Ulster farmers up to £3 a ton more than farmers in Great Britain under full EEC conditions. The future of the pig and poultry industries or, to put it another way, of 14,000 jobs depends on finding a way of ensuring that Ulster farmers can obtain feedingstuffs at comparable prices with those paid by competitors in Great Britain. Government decisions have created these feed cost problems, and I hope that my hon. Friend will assure me that further decisions will ensure that they are solved, whether in London or in Brussels.
The future of the remoteness grant and the long-term feed cost problem lead naturally to the beef industry. It has been argued that Northern Ireland beef farmers have the greatest potential benefit to come from EEC entry, yet at present it is in 435 this sector that there is now grave concern about the future.
In the short term there are a number of uncertainties. The brucellosis payment is due to be phased out in March this year. There is uncertainty about the future of the remoteness grant after March 1974 and of other production grants under EEC rules. The supply of stores from the Republic has virtually dried up and a new supply has to be built up in the North in the next two years. All these factors have led to a feeling of uncertainty about the future. Profit margins on exports across one stretch of water appear to be at risk, let alone any margin which may exist for exports across two stretches of water to Europe.
On a more administrative front, there is apparently still great confusion about how the CAP intervention arrangements will work for beef. Perhaps the Under-Secretary can take action to see that those affected fully understand the mechanics.
A specific complaint which has been raised with me is the system for allocating licences for lorries carrying produce to Europe. Clearly, if the Northern Ireland beef industry is to have any chance of competing in Europe, it will be essential for Northern Ireland carriers to be in a position to offer a good package deal for transporting meat. I understand that at present there is an impression that the United Kingdom quota of such licences is being allocated inequitably in the case of Northern Ireland and that the shortage of licences is already creating difficulties for beef.
I turn to one or two items of EEC policy in which Northern Ireland has a great interest. There is much talk about Western Ulster and its economic problems. One of these arises from the large areas of marginal land which does not qualify for full subsidies because it is not in the hills. These areas are suitable for sheep and, more important, the production of store cattle. The special Northern Ireland Breeding Herd Scheme and the United Kingdom Beef Cost Scheme have been a great help. Can the Minister give an assurance that something like these schemes will continue? Can he also undertake to press for a 436 definition of marginal land in any new EEC schemes which will include, for example, the areas of Fermanagh, West Tyrone and South Armagh which at present are excluded from the hill schemes?
Since Northern Ireland agriculture has hitherto benefited largely from production grants geared to improve the structure of the industry and deal with special disadvantages, there would naturally be great enthusiasm for any proposals to persuade Europe to adopt this mechanism. Ulster farmers hope that the Government will bear in mind the special structure of past marketing practice which has functioned well in the Province when plans are being settled for the future of marketing in the United Kingdom as a whole. Perhaps my hon. Friend will comment on these points.
The egg industry throughout the United Kingdom is in difficulties and Northern Ireland egg producers want to make common cause with their colleagues. The Province's egg producers have not been recovering enough from their packers to enable any profit to be made. Feed costs are not being covered. Producers are being pressed by packers for payment of arrears and it looks as if many of the laying flocks will not now be replaced.
I hope no one in Great Britain is under any misapprehension that the special help afforded to Northern Ireland egg producers this year gives them any special advantage over their counterparts in other areas. Whenever a chill economic wind blows across any sector of the United Kingdom economy it becomes an icy blast by the time it reaches Northern Ireland because of transport and feed costs and related problems. This has been the case with egg producers and the special assistance may help to save some of the 2,000 jobs at risk, with all that that means in terms of Ulster's employment position. In any case there looks like being a substantial loss of employment.
I do not want to say much about milk at this point. The returns have decreased comparatively in recent months and I know that this sector of the industry is anxiously awaiting the result of the 1973 Price Review. Suffice it to say that the Northern Ireland milk producers have 437 virtually sunk back to the poor neighbour position they occupied in relation to their English colleagues a year ago.
The fact that 30 per cent. of production goes for liquid sales and 70 per cent. to manufacturing purposes—the reverse of the position in Great Britain—makes it inevitable that Northern Ireland milk producers will suffer as a result of Government policies consequent upon our entry to the EEC, particularly because of the low intervention price for butter. That leaves them most vulnerable to unfair competition from the Irish Republic. I hope that the Minister has this in mind.
I come to planning legislation. Considerable concern has been aroused among farmers about the new planning arrangements. It is understood that farm buildings are to be-excluded from planning control only if they do not exceed a certain area and meet other stringent requirements. I hope that the Minister will use his influence to ensure that the arrangements are suitable for farming in Northern Ireland, where development of farmyards takes place over long periods in off-peak spells when labour is available. If too bureaucratic an approach is applied to farm development, such development could cease entirely.
Ulster is not immune from the threat of land value increases, a problem now causing concern throughout the United Kingdom. There has been about a 350 per cent. increase in the last six years and if the current trend continues and the profitability of farming does not improve, the future for agriculture in the Province could be bleak. It is not just a question of return on capital invested. Rising land values mean a catastrophic tax imposition on smallholdings when they are sold or when they pass on at death. There is an urgent need for an examination of ways in which land being transferred for further use for agricultural purposes—for example from father to son or from farmer to farmer—could be shielded from the swingeing effect of these taxes. There are various ways of tackling the problem, for example by a concessionary rate of tax or by special tax abatements. The whole problem seems to need an urgent Government inquiry.
438 Will the Minister take another look at the position of the modified Land Rovers in the Province? The special needs of Northern Ireland farming make these vehicles more useful than elsewhere and the new licensing arrangements tend to make their cost prohibitive. In Northern Ireland there is much uncertainty about the future of agriculture. Entry into the EEC involves so many possible changes. Any reassurance that the impact of these changes is fully understood by the Government at Westminster will be warmly greeted in the Province.
Northern Ireland farmers have been greatly encouraged by the arrival on the scene of my hon. Friend the Under-Secretary. They have welcomed him as one who understands their difficulties and speaks their language and they respect him for the ability which hon. Members have long recognised. In our critical problems ahead we shall need all his help and all his sympathy.
§ 2.2 a.m.
§ The Under-Secretary of State for Northern Ireland (Mr. Peter Mills)First I wish to thank my hon. Friend the Member for Antrim, South (Mr. Molyneaux) for his kind remarks at the end of his speech. I am also grateful to him for raising the important topic of agriculture in Northern Ireland because, amidst the sensational headlines which come almost daily from Northern Ireland, the good solid advances being made in many directions are only too often overlooked. Agriculture is an industry of vast importance to Northern Ireland and immense progress has been made in it in the last 50 years. Steady, encouraging, rewarding progress is now being made in spite of all the problems imposed by the troubles.
The tragedies of the last three years have had remarkably little effect on agriculture, except in certain respects to which I shall return later. So I very much welcome tonight's debate as being an opportunity to pay a strong and sincere tribute to all concerned with agriculture—the farmers, the merchants, the processors and the exporters—for the steadfast way in which they go about their business and for the hope that gives me for the future of Northern Ireland.
439 My hon. Friend semed a little concerned over farm incomes and profitability. Farm incomes in Northern Ireland have shared in the general improvement of farm profitability in the United Kingdom since 1967 and if my hon. Friend looks at the index base he will see that various sections of farms in Northern Ireland have progressed very well. Incomes on dairy cattle and sheep farms have continued to improve largely as a result of increased stock numbers and better market prices. Farms with substantial commitments in pigs and poultry have shared less well and it is only right to admit it. Broadly, however, I expect this pattern to continue in the current season.
My hon. Friend spoke of a shrinking industry. I hate to disagree with him but he is wrong there. It is not a shrinking industry. Numbers employed may be shrinking, but if he looks at the preliminary results of the agricultural census in December 1972 he will see the remarkable progress that is being made in production. To give just one illustration, the number of beef heifers in calf is up by nearly 50 per cent. This is a remarkable achievement. While the numbers of people on the farms may be shrinking, production is rising. But one has to look at the problem of employment, and I for one—and I believe that my hon. Friend will share the view—believe that it is important to try to manufacture and process as much as we possibly can in Northern Ireland so that perhaps people can be diversified from the farms to the processing industry. But it is a very healthy picture there.
For fat cattle and beef we have had high prices which have been very welcome to the farmers. Again, if one looks at the census I have mentioned, one sees that in the whole range of cattle there has been a very real expansion. I believe that there is a very good future for fat cattle and beef production in Northern Ireland. Certainly, as my hon. Friend has said, there will be a shortage of stores because the Republic of Ireland is holding on to more of its cattle and not so many will be exported on the hoof. Again, this means that we have to give every encouragement to the home producer in Northern Ireland so that this shortfall can be made up.
440 My hon. Friend said that not all farmers understand the intervention aspect. I can appreciate that, but that is a matter for the Intervention Board, which is giving details. I understand that leaflets will be prepared in order to make quite clear to farmers what it means. In the days ahead I shall certainly in my speeches go into this side of the matter in some detail so that farmers may be quite clear what intervention entails and what are its advantages.
The tendency is for a slight increase in the sheep herd. This is good and I welcome it. I hope that more sheep and mutton will be produced in Northern Ireland. We have good prices at present, with a ready demand. I am therefore keen to see expansion. and I believe that there will be real advantages in exporting the right sort of lamb to the Community. Therefore, as with fat cattle, I believe that there is a very good opportunity for further expansion, with prices which will be of real benefit to the farmers.
Milk is the backbone of most farming enterprises in Northern Ireland. A record quantity has been produced and there is every sign of this trend continuing in the future. There is room to replace foreign and Commonwealth supplies of butter and cheese. I admit that in the early stage the transitional arrangements appeared somewhat awkward, but I remind my hon. Friend that the intervention price of butter puts a very real floor on the market. It means, too, that there will be no dilution of prices to the farmer, and this is the first time we have had this provision. It is not as had as some people make out.
There is a real future for milk production in Northern Ireland, particularly when it is coupled with the increased value of calves and cull cows that the dairy farmer is enjoying. Only last week I went to a new cheese factory in Lisnaskea, which shows the confidence of the firm concerned in the future of milk and cheese production. It is not true to say that Northern Ireland is the poor neighbour of the United Kingdom. There is a real future for milk, and farmers through their calves and cull cows will be able to cover their increased costs.
My hon. Friend mentioned pigs, eggs and poultry. The position here is more 441 difficult because of the cost of imported feeding-stuffs—and this applies in Great Britain as well. I am aware of the problems of the egg industry. With the excellent Ulster bacon I believe that the prospects are good. As red meat is dear at present, the price of pig meat will rise and the pig farmer will get an adequate return.
The egg situation in the United Kingdom as a whole is difficult and arises from over-production. Chick placings have been reduced and the number of birds is less. That is already having an effect on the market. We have given certain aid to the egg industry. The poultry meat side seems to be going very well.
Looking at the various commodities in Northern Ireland, the message must be that we have to produce more from grass. That is in line with the EEC policy of the production of items for which the country is most suited by reason of its climate, soil and temperature. There is no doubt that Northern Ireland can produce grass. It has the right climate for it. Therefore, the production of milk, beef and mutton will go ahead.
My hon. Friend mentioned EEC problems. Ministers and officials have taken part in Brussels meetings and we shall be going there as often as necessary. So Northern Ireland is being, and will in future be, represented in Brussels. I attended a meeting in January when accession problems were settled, particularly those of compensatory amounts, and the outcome was not unsatisfactory.
Then there is the question of support by EEC institutions. It is not at present possible to say what proportion of agricultural support may become liable to be borne by EEC measures. The plain fact is that the common agricultural policy still has to be developed in many ways and whole sectors of assistance, such as aid for beef and for mountainous areas, are currently under examination in Brussels and the outcome has still to be reached. Our aim is to obtain the maxi- 442 mum benefits, and we shall see to it that Northern Ireland is not forgotten.
Obviously, Mr. Deputy Speaker, it would be out of order for me to talk about prices at present with the Annual Price Review in progress, because 1 cannot possibly anticipate its findings.
My hon. Friend mentioned remoteness grants and he is right in saying that £1,750,000 is given annually in this way. The three-year period closes at the end of the 1973–74 financial year, and the future of the grant after that must be renegotiated during the 1973–74 year. I am fully aware of the importance of these arrangements to Northern Ireland farmers and will bear in mind what my hon. Friend has said.
The House must remember the sensitivity of the EEC to regional aid of all kinds. I can give an assurance that the need for appropriate help is fully accepted by the Government, and it is a firm assurance. My hon. Friend mentioned transport to Community countries and I am aware of the problem. Indeed, it is a problem not just for Northern Ireland but for the United Kingdom as a whole. Discussions are taking place and I hope for a satisfactory outcome.
My hon. Friend raised one or two other questions about Land Rovers and land tax. Perhaps I can reply to them in writing to him, since I can then go into rather more detail than is possible in a few words now.
I believe that the picture as a whole is one of reasonable optimism, tempered with some doubts—
§ The Question having been proposed after Ten o'clock on Tuesday evening, and the debate having continued for half an hour, Mr. DEPUTY SPEAKER, adjourned the House without Question put. pursuant to the Standing Order.
§ Adjourned at seventeen minutes past Two o'clock.