§ Mr. Speaker
I have not selected the amendment in the name of the right hon. Member for Devon, North (Mr. Thorpe) and others.
Thirty-one right hon. and hon. Members have asked to speak in this debate.
§ 4.19 p.m.
§ Mr. Francis Pym (Cambridgeshire)
I beg to move,That this House calls on Her Majesty's Government to take immediate steps, especially in the livestock sector, to safeguard the future supplies of home grown food for the consumer.If the prime duty of a Government is to defend the realm, their next duty is to ensure adequate supplies of food for the population. This is a responsibility of world importance as well as national importance.
Over many decades, we in Britain have been fortunate in being able to obtain plentiful supplies of food from other countries at advantageous prices. Those supplies are not quite so readily available now and the era of cheap food is over.
In those circumstances an increasing supply of home-grown food takes on an even greater significance than before, not dissimilar to the necessities of war-time conditions. I do not have to spell out the reasons because the House is well aware of them. During the last war there was a massive increase in production and since then successive Governments have helped agriculture to become the highly efficient industry it is today.
In the 1960s there was a period of comparative stagnation. In 1970 the last Government set about the task of further large-scale expansion. I gave the figures of that expansion in the last debate. They are on record for all to see. In round terms the net product went up by about 25 per cent. in the last five years, which was a remarkable achievement by all those who work on the land.
1578 We pursued that policy because it was, as it still is, in the national interest to increase the supply of home-grown food for the benefit and advantage of every family in the land both directly as consumers and indirectly as citizens of the United Kingdom. That increase was not achieved quickly or easily. That is not possible because of the nature of the industry. It took time, patience and the will to do it.
What we are witnessing now, and what we criticised so vehemently, is the strangulation of that expansion.
Those who have devoted their time to creating or building up an enterprise, be it farming or anything else, can be forgiven for feeling angry or cheated when through no fault of their own they see the fruits of their labour destroyed before their very eyes.
The charge the right hon. Gentleman has to answer today is that through misjudgment or inactivity, or because of the political requirements of his colleagues, he is wrecking the home food expansion programme.
We know the right hon. Gentleman. We know his heart lies with the industry. We do not doubt that. But he must be the unhappiest man on the unhappiest Treasury Bench this House has known for a long time. I am sorry about that personally, but it does not matter very much. What matters is the safeguarding of the supplies of food for our people The right hon. Gentleman is not doing that. That is why we press him today to take immediate action.
In the past few months I confess to discovering one problem, that of conveying to most families in Britain the direct connection between what is happening on our farms today and what the implications of this are for the shopping basket in 1975, 1976 and beyond. If it were not so difficult, if people only realised the implications, there would be such a protest around the right hon. Gentleman's ears that he would have an even hotter time than he has already. It is because people are not aware, because food has always just turned up on the shelves, and because the right hon. Gentleman has felt apparently that he can afford to ignore the protests of the farmers that he has survived for the moment.
1579 Let me put this on the record today. The right hon. Gentleman is not at present safeguarding the future supply of home-grown food for the consumer. It is perilously late to retrieve the situation, but retrieved it must be.
The first mistake of the right hon. Gentleman was the 23rd March agreement. I have acknowledged previously the difficulties facing him when taking over in mid-stream a negotiation already in hand and begun by somebody else. That is not easy, I know. But he settled an arrangement which he ought to have known would be damaging and unacceptable to beef producers. He has acknowledged this mistake in his statement last week to the extent that he altered the guide price for beef to what he should have agreed in March. That alteration by itself, without intervention, is of no value, but, unfortunately, it is too late now. The damage has been done, with subsidised cattle coming in from Europe and affecting our markets.
I have heard tell of one foreign dealer who has purchased 4,000 head of cattle to ship to our markets this week, all with the benefit of the higher subsidy to be paid out of Community funds until the end of this week.
The depression that the flood of imports causes to our markets ought surely to give real urgency to a decision by this House on the O'Brien Report, because our producers are suffering both ways at present.
The first aspect of what the Minister described last March as a reasonable settlement was the removal of any floor in the beef market. That knocked the confidence out of the producers, and its psychological effect has been appalling. We warned him of that at the time, and ever since then. Last week he had to say he would support the market. He ought never to have taken all the guarantees away, whatever his view on intervention.
When we took the guarantee away we did so on the clear understanding that it was replaced by the guarantee in the common agricultural policy. That was a solemn undertaking. We stick to that.
Today the Minister must say how and when and at what level the support will operate, a question he did not answer last week.
1580 When the right hon. Gentleman made a statement I welcomed that part of it dealing with long-term matters in relation to the common agricultural policy. He made proposals for a new regime for beef involving variable subsidies and grants. I support the ongoing process of modification and agree that these and other proposals should be fully considered in the Community institutions by Community procedures. But what is not practicable or acceptable is that there should be any delay in taking emergency interim measures now. The situation we have arrived at demands that. The crisis is occurring now, not next April, which the Minister talked of. We must get to next April. The Minister will support the market meanwhile, so there is no time to work out anything very new or sophisticated. With the further falls in the market in the past two weeks something simple and immediate is required.
Will the Minister propose an immediate flat-rate slaughter premium, or a variable one as he has suggested, or a combination of both? Something on those lines is necessary now.
We read in the Press this week that some of the Minister's senior officials are to-ing and fro-ing to Brussels. We hope he will have an immediate success to report.
When we left office the market price for fat cattle averaged £19 per cwt. This week the average is £17.22. It is a copper or two up on last week's price. But some markets are well below that.
Yesterday I received a letter from the Carmarthenshire branch of the National Farmers' Union setting out its position. It reads:Slaughter of calves is running at the rate of 3 to 1. as compared with twelve months ago. There will inevitably be a shortage of beef within eighteen months.It continues:last week only 1 store animal in 4 attracted a bid … 75 per cent. were returned unsold. … the price of beef was to £13 per cwt.—more than £5 per cwt. less than the cost of production.
§ Mrs. Elaine Kellett-Bowman (Lancaster)
Is my right hon. Friend aware that in Lancashire, very close to my own home, three calves were sold for a total of 77p? I have a photograph of one which realised a net 9p.
§ Mr. Pym
I saw that report, which my hon. Friend drew to my attention.
In a number of markets the prices have fallen very low. In Northern Ireland the situation is bad. The price there dropped several pounds over the last two weeks. The average is now £16.30 per cwt. In addition, the Northern Ireland farmers will lose their £1.76 per cwt subsidy given them by the right hon. Gentleman as a result of his March negotiations. That was a good feature of those negotiations. But the slaughter rate is still too high for the protection of future supplies and the slaughterhouses are uncomfortably overloaded. We wish to know how the Government will sustain the market and stop the rot.
The pig sector is in similar difficulties. I have acknowledged on an earlier occasion the problems which arose last autumn and winter. Pig producers made good profits last year, and, despite high feed costs, were not losing money between November and January.
In January and February my right hon. Friend the Member for Grantham (Mr. Godber) was actively engaged in negotiating a lasting deal. We fully recognised the need for action, and we were taking it. The Minister's action in March was inadequate and short term. He hoped—so did I—that the subsidy for pigs would do the trick. It did not succeed as he had to admit last week. In fact, the subsidy has had little effect. Slaughter continues at a very high level. In the first two weeks of June this year 18,200 were slaughtered, compared with 12,800 last year. Of course, we welcome the extension of the subsidy, but, again, it is short term and markets have dropped, so that half of the subsidy has been eroded already. Prices this week have dipped to £2.56 per live score. Will the Minister take account of this and increase the subsidy to make good the fall? That would certainly make extra help immediately available.
I am sure that I share the Minister's desire to get back to a sound long-term policy for pig producers. What work has he done to bring back a feed formula? This matter should be re-examined in today's conditions of cost explosion. The Labour Opposition raised no doubts or representations about it before, and circumstances have changed. When circum 1582 stances change it is right to re-examine. What will be the position in October and November? It must be little less than a gamble for a producer to make replacement plans when he does not know what is going to happen when the subsidy ends. I know that the Minister does not deny the problems, and producers will be anxiously and hopefully waiting to hear what he says today.
This is a difficult year for sugar, and 1975 could be even more critical. There is a world problem here. I would like to know, first, what are the prospects of receiving 1.4 million tons under the Commonwealth Sugar Agreement this year. All sides of the House support the agreement, but with world prices more than £100 a ton above the price paid to Commonwealth producers there is a risk that we shall not see full delivery. The Government must take urgent steps to ascertain what deliveries will be and what the producer countries expect to be able to achieve. I hope that the Government can do a deal with Australia. My right hon. Friend was working to achieve this, but the amount involved is not so great, and that brings me to the importance of the home market.
Unfortunately, the crop will be down this year in quantity and, therefore, in profitability. I understand that the fall is estimated to be about 15 per cent. But the need for more home-grown sugar will be even greater next year, and to achieve that increase two things are necessary. First, we must ensure that there is a full take-up of the acreage available, and that means advancing the price to a more realistic level compared with world and Community prices and in relation to cereal prices. I suggest that for next year we should give our farmers the same level of remuneration for their beet as that paid to farmers in the rest of the Community, and that will safeguard future supplies.
The second thing which needs to be done is to take decisions on acreage and price in the next few weeks, so that farmers will be able to see that sugar will be a worthwhile crop to grow next year and can plan accordingly. Obviously, an adequate supply of sugar is essential, and the home-grown crop is of great importance agriculturally.
Will the Minister give us his assessments and intentions for poultry? Poultry meat producers are losing about 3p a 1583 pound, and processers are sharing this loss in an effort to maintain supplies and employment. Egg producers now face losses of about 7p a dozen, and there is a consequent increase in the slaughter of laying birds, which further depresses the poultry market. Again, the basic cause is the price of feeding stuffs, but an adequate supply must be ensured, and I am told that chick placings in the first half of June are well down.
We also face shortages in the milk market, not only for liquid milk but, even more, for manufacturing milk. The subsidy, reckoned to increase demand for liquid milk by 30 million gallons, is a very uneven and ineffective method of helping those in need. Subsidies on cheese and butter will put up demand for these products, which will become in even shorter supply. What steps is the Minister proposing to safeguard the national dairy herd and encourage producers to expand milk production? Of all the commodities it seems that milk is the one where a shortage will hit the consumer most abruptly.
I come now to the horticulture sector, with its dependence on oil. Undoubtedly, the 6p a gallon reducing to 4p has been a real benefit to growers, but what do the Government intend to do at the end of the period? I have no doubt that the right hon. Gentleman does not intend to leave a vacuum thereafter. Oil prices continue to rise, and the industry is concerned to know upon what basis it can claim from the end of the current scheme. If the Minister or the Secretary of State for Scotland could say something about that this afternoon it would be helpful.
Some of the difficulties of the industry derive from the fact that we face the same costs as Community producers, and in some cases much higher cost rises than other Community countries, but we do not enjoy the same prices. The time has come to consider an acceleration of the transitional period on a selective basis. Certainly the industry wanted such a transition period originally, but now a faster transition would be sensible in the circumstances to safeguard supplies. I recognise that problems can arise for consumers in certain commodities, but they arise for producers, too, and that is why I suggest a selective approach.
In view of the difficulties being faced in other countries as well as in Britain, 1584 and the problems that have been created by the enormous increases in cereal, oil and other prices, ought we not to be working towards a special review in the Community sometime later this summer or in the early autumn?
I cannot recall a time of so much widespread anxiety and concern in farming. The worries of the industry are deep and the present situation need never have arisen. It is bad for the farmers and the farm workers—
§ Mr. Pym
I totally reject what the hon. Member said. The Labour Party made no representations of any kind and my right hon. Friend certainly would have negotiated a satisfactory arrangement for the farmers. I totally repudiate his sedentary intervention. But the real significance of the present state of the industry lies in the risks for the consumer in the future. In the Queen's Speech and again last week in an article in my part of the world the Minister stated his aim of encouraging the maximum economic production of food in the interests of the national economy. That aim, so far from being fulfilled, is, under his authority, far less likely to be achieved. On 25th March he spoke of safeguarding future supplies of food, but he knows now that what he decided then has not provided any safeguard—quite the reverse.
I am glad that last week the right hon. Gentleman went back on some of his March negotiations and that he intends to sustain the beef market, but he has much more work to do yet. He has an opportunity here and now to spell out the Government's programme for restoring confidence and securing once again future supplies of home-grown food.
The motion calls upon the Government to take the immediate steps that are necessary, and we sincerely hope that the right hon. Gentleman accepts that and will take them. If he does not, if he fails to take this opportunity, a heavy responsibility will lie on his shoulders, and every family in the land will suffer as a result.
§ 4.40 p.m.
§ The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart)
The right 1585 hon. Member for Cambridgeshire (Mr. Pym) has made a rather intemperate speech. [Interruption.] I should like to follow the debating points on it if hon. Members will listen. I listened very carefully to what the right hon. Gentleman said. He spoke about food production records in the post-war period. I would remind him that it was a Labour Government who laid down the basis of the legislation which gave the farming community long-term guaranteed prices and assurances. It is since his Government came into power that many of those guarantees have been ended.
§ Mr. Pym rose—
§ Mr. Peart
I have only just started. After all, the right hon. Gentleman hits hard. As he knows, I am always courteous but I have a right to reply to him.
I recognise that this is an important debate. When we debated the state of agriculture on 8th May, as the right hon. Gentleman said, I outlined the Government's approach to agricultural policy, just as the right hon. Gentleman has outlined his party's broad approach. I was then able to set out in broad terms the Government's approach. I said that our aim was to encourage the maximum economic production of food from the land in the interests of the national economy. That is the aim which will determine everything we do.
I want today to remind the House of the situation which had developed during last autumn and winter, to outline what we have done to grapple with the problems we found on taking office, and to say something about our intention to ensure that the industry can make its full contribution to our food supply and to our economy. We look to the farming industry to provide an increasing proportion of the nation's food. That is why we are determined to do everything that is necessary to restore confidence to the industry and to regain the momentum of expansion that was lost last winter.
The difficulties in the livestock sector began when the price of cereal feed went up sharply last autumn. I do not blame the previous Government for that. It was the effect of developments on the world market over which they had no control. But I do blame them for their inaction during the long winter months. 1586 By the beginning of March the damage was there for all to see. By March the dairy herd had fallen in numbers and was producing 6 per cent. less milk than a year before. A belated attempt to recover the position had been made at the annual price review, but by then the damage had been done.
Pig producers had been in difficulties for months, yet nothing had been done to help them. The feed formula had been abandoned just when it was about to be needed. It is all very well for the right hon. Gentleman to say that I should bring back the feed formula. The decision to end it was a decision of his Government. He was Chief Whip or a Minister at that time, and it was his Government which ended it. The December livestock inquiry showed that the breeding herd had declined since September. Through January and February pig prices continued to fall and the sow slaughtering rate rose. We now know that by March the herd had fallen by 9 per cent. since September, yet nothing was done.
In the beef sector, the previous Government accepted the ending of the guarantee arrangements, the tried and tested system of support which until then had given the beef producer a firm assurance of fair returns. The Conservative Party now claims that it would have replaced this assurance by a system of permanent intervention. I shall say later what I think of that.
This, then, was the situation we found. The dairy herd and milk production were down because action had been too long delayed. The pig breeding herd had been cut back because no action had been taken to relieve the difficulties of pig producers. The beef producer was left with only the possibility of intervention.
What I say today will be concentrated on those three commodities—milk, pigs and beef; and I will deal with some of the questions which the right hon. Gentleman has put to me. As he quite rightly said, my right hon. Friend will deal with others when he replies, if he has the time.
I should like to deal with two examples where the Government have taken effective action to assure supplies, and I will touch briefly on other livestock commodities. I remember the right hon. Gentleman in a previous debate using the phrase, "You are tinkering with the situation". He will recall that I 1587 anounced on 11th April the introduction of a temporary subsidy on oils used for glasshouse heating. This was needed to cushion the immediate impact of the sharp increases in the prices of fuel oils which are such an important element in the cost of producing glasshouse crops. Our provisional estimate of the cost of the subsidy is £7 million. That was a major decision and what we did for our farmers was far more generous than was done in other parts of the Community. The right hon. Gentleman asked me to look at it again in relation to the conditions, and I will always do so—but we did provide the subsidy.
I come now to the lime subsidy. I have looked again at the decision of the last Government to end the lime and fertiliser subsidies. I can understand their decision on the fertiliser subsidy, where the subsidy was very small in relation to the price. But I would say to the right hon. Gentleman and the Conservative Party that I find it quite incomprehensible that they should have decided to end the lime subsidy. I believe that many hon. Members in his own party—and I know the Liberal Party have felt very strongly on this—feel that a wrong decision was made. I believe that this subsidy is an investment in the structure of the soil and in the future supply of food, particularly from the hill areas. I represent some of those areas and know some of their problems.
It is not true to say that I have refused to talk to the farmers.
§ Mr. Peart
The right hon. Gentleman used strong language and said that I had ignored their protests. I have never ignored what they said, even when they have spoken strongly to me. I have always considered their point of view and do so still, with the NFU and through regular contacts.
I believe that the lime subsidy is an investment in the structure of the soil, for without adequate liming the soil would be impoverished and our national resources depleted. I regard the termination of the subsidy now as a thoroughly bad and shortsighted decision and I have therefore decided to reverse it. I propose to continue the lime subsidy at its present level. The cost, £5 million, is in my 1588 view an excellent investment—[An HON. MEMBER: "Waste"]—Somebody said "waste". I do not believe it. An Extension of Period Order will be needed and will be laid before the House in draft very shortly.
I turn now to poultry, eggs and sheep. The poultry industry is going through a difficult period. Feed costs are high and margins and prices are below the peaks of a few months ago. I am confident that the poultry meat industry will see its problems through and bring production into line with future demand. Theirs is a short production cycle. The egg cycle is longer, as Members will know, and more difficult for producers to control. We saw in 1973 how a long period of low returns can be followed by a doubling of prices and high profits. Violent fluctuations of that kind are undesirable, but essentially it is for producers themselves to try to moderate them. The Eggs Authority has given good advice and I hope that we shall avoid a repetition of the violent cycle of 1972 and 1973.
I turn now to sheep. Fat sheep prices have also fallen with an increase in supplies on the market. Prices have, of course, been exceptionally high for some time, and if they fall further producers will have the safeguard of the guaranteed price and deficiency payments. Again, I believe the long-term prospects are good.
I turn now to milk, pigs and beef, starting with milk. I have already referred to the situation last winter and to the action, which I support, that the last Government eventually took at the annual review to increase returns to the producer. In the months since the review milk production has not recovered as much as it might have done. That has been because of the effect of dry weather on the grass. But I recognise that the main concern of milk producers is over the level of profitability that they can expect for the year as a whole.
At this time it is not possible to predict what the outcome will be. The level of feed costs during the coming months and through the winter will be a crucial factor in this matter. There has been some easing of the prices of dairy compounds in recent weeks, but how prices will move in future will depend heavily on the cereals harvests in the northern hemisphere.
1589 For the moment I would say only this to the dairy farmer: it is in the national interest that the dairy herd should expand and milk production increase. The long-term prospects are excellent. Our industry is more efficient than its counterparts in most other countries and we have a climate that suits milk production. The Government are committed to a policy of expanding agricultural production and will be looking to the dairy sector to play its full part. We shall be ready to do whatever is necessary to ensure that that aim is fulfilled.
I come to deal with pigs. When we came into office the most acute of the problems was that facing the pig producer. We therefore secured at once the agreement of the Council of Ministers to a special subsidy of 50p. per score deadweight. We then expected—and the industry and trade expected—that returns from pig production would improve materially within three or four months.
The period of subsidy was planned with that in mind. I agree with the right hon. Member for Cambridgeshire that the market did not improve. Instead, prices went down, and although the price of compound feed also went down a little, the pig producer was still in need of substantial direct help. We met the situation by retaining the full rate of 50p. As the right hon. Gentleman knows, it is not easy to get a national direct subsidy from the Community. It is argued that such a subsidy operates aganst free competition. But I did it. I achieved that, and I think I was complimented by hon. Members. At last week's Council meeting in Luxembourg I again secured agreement to our continuing at that full rate until 1st September and then to phasing down over the following nine weeks into early November.
I remind the House that this special subsidy will have cost £30 million in all. I regard that as a considerable sum of money, a large amount of national aid. That is the measure of our determination to do what is necessary to relieve the worst effects of the pig cycle and to assure a future supply at a level that can be sustained.
I do not want to claim too much for the subsidy. I fully realise that even with this help many producers are not making profits. In a basically free market there are bound to be times when net 1590 returns are low and times when they are high. Conservative Members are the great defenders of the policy of no State intervention and of free enterprise. The task of Government is to act promptly, as we did in relation to national aid, to prevent returns from going so low that future supply is put at serious risk. I introduced the subsidy as soon as I could, less than a month after taking office.
I very much wish that the previous Government had introduced it earlier. The Conservatives say now that they would have reduced the monetary compensatory amounts instead. But the monetary compensatory amounts now stand at less than 25p per score, and the reduction they had in mind could not have raised producer prices by even as much as that. It would have been no substitute for the prompt and effective help we were able to give.
I believe that prospects for the pig producer will improve. Pig marketings are certain to fall in the months ahead. The main competitors in our market—Denmark and the Irish Republic—have also had declining breeding herds, though the Danish herd may be on the up-turn now. Although the Continental pig market is weakening, ours should not.
Since March, too, compound feed prices have fallen by £4 per ton. Predicting future feed cost movements is always hazardous—especially at this time of the year—but feed prices seem more likely to go down than up.
Here I should like to pay tribute to the prompt response of the compound feed manufacturers to my recent plea that any falls in raw material prices should be passed on for the benefit of livestock producers. The prospects, therefore, are far from gloomy. If producers' total returns are still not all that they would wish, they are at least higher than they were earlier this year. No doubt these are the reasons why sow slaughterings have eased back below the rate we had before the subsidy came in. They are still higher than we want to see, but I hope that the falling trend will be maintained.
I come to the beef situation, the area where our immediate difficulties are greatest. It is, of course, the beef situation which is at the root of most of the current problems. The tone of the beef market sets the pattern for the meat 1591 market generally. But the problems facing the beef sector have not developed suddenly over the past four months. Our beef herd has been expanding rapidly during the past year or so, and calf slaughterings had fallen to extremely low levels as farmers built up production.
As a result we were facing the prospect of an upsurge in marketing in the second half of the year. Thanks, partly to the weather, it is already with us. And the problems of the fatteners who are selling beef now are the greater because they paid high prices for calves and stores last year in the expectation that the market this year would be even firmer than it was then.
Much of the complaint about current losses comes from this factor. But the responsible people in the industry know that we cannot compensate for past errors of commercial judgment, however understandable they may have been. The Government's job is essentially to ensure long-term supplies. Nor is the problem of over-supply confined to Britain. Supplies of beef are increasing in other member countries and throughout the world.
§ Mrs. Kellett-Bowman rose—
§ Mr. Peart
I am about to make a statement on beef in which I am sure the hon. Lady will be interested.
This prospect of difficult months for the beef fatteners had one obvious risk—that there would be a massive reaction depressing the price of stores and leading to a rate of calf slaughter that would mean a beef shortage within two years. We were determined to prevent that by direct action to secure the retention of calves for future production. We increased the rate of calf subsidy by £10 a calf. The first calves eligible for this higher payment will be coming forward in the next few days. The importance of this has been neglected while all eyes have been on the market price.
The calf subsidy increase was prompt action to ensure the future supply of food, and I believe it has been effective. Only yesterday the responsible Press drew attention to the merit of the action I have taken here. I agree, of course, that calf slaughterings are running at higher levels than during the last two years. But those were years of rapid expansion which have 1592 led to the present over-supply. Calf slaughterings this year have been far lower than in the late 1960s, even though many more calves are being born now. The extra £35 million that the higher calf subsidy will cost is a real investment in the future.
§ Mr. Peter Mills (Devon, West)
Before the right hon. Gentleman leaves that point, may I ask him whether, since his announcement that there was to be another £10 a head on calves, the rate of slaughter has decreased?
§ Mr. Peart
I am not prepared to commit myself to a figure as yet. I think it is a bit early to judge. The calves subject to the subsidy are just coming forward. This is welcomed by the industry. So, too, is the action we have taken to bring forward the date for the increase in our guide price to 1st July. The right hon. Gentleman twitted me a lot on that but I think he is glad I did it. From that date, our guide price will be £19.25 per live cwt. This will give a greater measure of protection against the pressure of beef supplies from the Continent and third countries and link our market more effectively to those in other member countries. But the future supply of beef can be fully assured only if the whole industry has confidence in future profitability. I agree with the right hon. Gentleman on that point.
The sharp fall in market prices over the past fortnight has been a blow to that confidence. The basic problem is that more beef is coming on to the market than consumers are prepared to buy at prices that would give a fair return to the industry. This is an urgent problem. Unless the beef producer obtains a fair return, he will not go on providing the supplies that we need. It is also a Community problem. The best answer to those who say that we should have operated permanent intervention is to point to the beef markets of other member countries in the Community. For example, last week in the Irish Republic, where they have a higher guide price and permanent intervention, the market price was a good deal lower than the price in this country. All that intervention has done is to fill the stores of the Community with a degraded product, whose value has been much 1593 reduced by the very process of intervention.
Even if permanent intervention had been successful in pushing up the market price, I would still regard it as a fundamentally wrong approach. Beef is for people to eat, not to pile up in stores. One does not cure an over-supply by choking off demand. I note that one of the responsible commentators in the Sunday Press described the whole European policy as being… almost criminally out of control at a time when the threat of world food shortages grows steadily worse.The whole Community, not simply the United Kingdom, must find a better way—some interim measure—to give beef producers the assurances which they need.
I outlined in Luxembourg the form that a long-term beef regime might take. But a long-term arrangement will take time and there is need for action now—not intervention policies which the right hon. Gentleman supports. I warned the Council last week that the Community might have to act quickly, and the events of recent days have proved that I was right to do so. I shall now be pressing the Commission and my colleagues in the Council to agree on some direct action to help.
I have instructed my officials to be in a state of readiness to undertake the necessary certification procedures for whatever arrangements are decided upon. I know this is what my friends in the union want. We need to be in a position to give producers the assurance over a period that their returns will not drop below about £18 per live cwt for clean quality cattle. That is the right way to deal with the problem of short-term over-supply.
§ Mr. Peter Hardy (Rother Valley)
I am sure that all hon. Members will welcome that statement by my right hon. Friend. Can he give some idea of the certification procedures which will have to be pursued and the time scale involved so that farmers may know when they will get "Peart premiums"?
§ Mr. Peart
As my hon. Friend will know, it is necessary to arrange for a country-wide network of certification of cattle in live and deadweight centres. We need to prepare the necessary documentation and payments. This is a complex 1594 operation which needs careful preparation. I hope that the arrangements will be completed in about a month. I shall give farmers the support for which they are asking. I shall also suggest that the Community should do something as well. I hope that this is the right way to deal with the problem of short-term oversupply.
Therefore, I hope that in the light of what I have said, those who speak for the industry will recognise their responsibility to help maintain the confidence of producers in the future. I make no apology for repeating this plea. It is in the interests of the industry and of the nation that they should do so.
I have tried today in this short debate to set out what the Government have done in the few short months since we came to office and to show what we intend to do to assure the future prosperity of the agricultural industry and the future supply of food. I have referred to subsidies totalling £77 million during my term of office. We have tough problems which the Conservative Government left it to us to solve. I am not ashamed of what we have done. I am proud of what I have done so far. I am proud of what I have done in terms of renegotiation within the Community to improve that structure as well. I give a pledge that we shall go on doing what needs to be done in the interests of the nation. That is why I am glad to accept the motion which is before the House today.
§ Mr. Pym
I should like to clarify one matter on the subject of beef. Whatever the right hon. Gentleman is to negotiate will be backdated until today—or at least I think that is the implication of what he said. When he talks of accepting the motion, does he make that proposal on the basis of the assurance he gave the House on beef? That assurance will be welcomed, although no details have been given. Since there was no reference to his doing anything in this respect in terms of milk, pigs and poultry, is he accepting a motion which talks of safeguardingthe future supplies of home-grown feed for the consumer.
§ Mr. Peart
I am certain that the House and the industry will welcome what I said. I have been pressed by hon. Members on both sides of the House in various parties, particularly by friends from 1595 Northern Ireland, such as the right hon. Member for Fermanagh and South Tyrone (Mr. West), who was a former Minister of Agriculture, with whom I have worked in the past. I have done what they want, and I believe that I have done what many of my friends in the Liberal Party want—indeed, let me say that I believe I have done what many Conservatives want. I cannot give an exact pledge today, but I shall be discussing this matter immediately. Progress depends on the industry. A lot of money will be needed. The right hon. Member for Cambridgeshire knows all about the difficulties, but I think that what we are doing should meet with his approval.
§ 5.8 p.m.
§ Mr. Charles Morrison (Devizes)
The right hon. Gentleman the Minister of Agriculture made a remarkable statement at the end of his speech when he said that he accepted the motion, for he gave no hope to producers, other than producers of beef.
I wish to begin by repudiating what the right hon. Gentleman said about the record of the Conservative Government. The fact is that in the past few months the position of agriculture has changed drastically from a position of expanding production, high investment and growing confidence to a situation in which we have swiftly moved to reducing production and falling investment and no confidence.
I agree with the Minister that these problems did not begin immediately when the new Labour Government came into office. Many of our problems today stem from the vast increase in world cereal prices. It should not lie in the right hon. Gentleman's mouth to claim that the Conservative Government left him with insurmountable difficulties. They did not, and their record in office was better than that of any post-war Government. Between 1970 and 1973 farm income doubled, output was expanding swiftly and investment in that period increased two and a half times. At present, on the other hand, we have a crisis both of cash and confidence. Today we have the problem of glut and low return with high costs. I should like to emphasise some of the difficulties facing producers in respect of some commodities. The Minister rightly 1596 said that beef was the area where current difficulties were greatest. He has said that sort of thing before, and he has already voiced his desire to see an expansion in production. However, I doubt whether what he said today will have the effect of halting the reduction in production which will undoubtedly take place as a result of calf slaughterings.
On 8th May, the right hon. Gentleman said at the Farmers' Club:We want all the beef we can get from our farms in the future, and I accept that we must be prepared to pay reasonable prices for itIn that context, the right hon. Gentleman may care to remember the comment contained in the report on beef prices published on 10th January 1973, which said that the information which its writers… were given indicates that prices of the order of £20 per live cwt represent to the fattener what would normally be regarded as a commercial return on investment.Since then, costs have increased enormously.
I wonder how the right hon. Gentleman reconciles his statement to the Farmers' Club and what he has said on previous occasions with what he said in this House on 8th May. On that occasion he said:We shall be watching developments very closely to see what, if any, temporary measures may become necessary".—[OFFICIAL REPORT, 8th May 1974: Vol. 873, c. 420.]to prevent market prices for beef falling to unrealistic levels. In the light of the report on beef prices, even what the right hon. Gentleman said today means that market prices will still remain at unrealistic levels.
It is relevant to point out that on 9th May, in Devizes market in my constituency, the average beef price was £17.90 per cwt. On 19th June, the right hon. Gentleman again gave an undertaking that he would take action if it seemed to be necessary. The day after that, on 20th June, the average price in Devizes had fallen by £3 per cwt to £14.89.
It is not surprising that, until today, comparisons of the words of the right hon. Gentleman with his lack of action have created a considerable loss of confidence. The consequence is that the position has 1597 been made even worse by many unfinished animals being brought forward on to the market in addition to the fact that calf slaughterings are up, as are slaughterings of cows and bulls.
The position of beef producers will be improved by what the right hon. Gentleman has said, but I trust that he will not sit back complacently now and assume that he has solved the problem. I do not believe that what he has done will be adequate to cope for the future.
§ Mr. Tom King (Bridgwater)
Is it not clear that the right hon. Gentleman, who is a great respecter of this House, having accepted the motion, will be bound by the message that it contains? Is not it clear, therefore, that his statement today, which obviously does not satisfy the terms of the motion, is merely an interim measure, and that as, at the end of the debate, it will be passed by the will of Parliament, the right hon. Gentleman will have to return as a matter of urgency to fulfil his pledge?
§ Mr. Peart rose—
§ Mr. Morrison
Before the right hon. Gentleman interrupts me again, perhaps I might say that I agree with my hon. Friend the Member for Bridgwater (Mr. King). We look forward to a series of statements from the right hon. Gentleman to show that he is living up to the terms of the motion. Does the right hon. Gentleman accept that he will be making statements shortly?
§ Mr. Peart
I have made several statements already, and I shall be keeping the House informed constantly, especially about our negotiations in the Community, which have a bearing on these matters. As for the motion itself, I have taken immediate action in relation to what we do now about support. I have taken action on fertiliser. What more immediately do the Opposition want? I shall make reports whenever necessary. I am never afraid to meet the House, because I believe that this is the right place in which to discuss these matters.
§ Mr. Morrison
Having listened to that, I am not convinced that the right hon. Gentleman has understood the motion. It calls upon the Government 1598… to take immediate steps … to safeguard the future supplies of home-grown food for the consumer.If the action which the right hon. Gentleman has proposed today does not have the effect of safeguarding future supplies of home-grown food for the consumer, he will have to come to the House with further proposals. I trust that he will think about that and take some action.
I turn away from beef to poultry and eggs. The producers of both are losing about £1 million a week, and clearly that cannot go on for much longer. The average broiler price is now about 16p per lb., compared with a production cost of about 21p. Turkeys are selling at about 20 per lb., compared with a production cost of about 26p. To get into perspective the cut in feed prices announced yesterday, it is worth noting that in broiler production a cut of £10 per ton in feed prices creates a reduction of 1p per lb. in the cost of production. As a result of current losses, chick placings have fallen very sharply in early June, at a time of the year when they are normally increasing. Therefore, a future shortage is possible. This will not only create difficulties for the consumer. It will mean a reduction in the poultry industry which undoubtedly will create some unemployment.
It is difficult to suggest what the right hon. Gentleman should do about it, but I have no doubt that the position of the poultry meat section is worsened by the lack of firmness throughout the meat market as a whole. Therefore, I hope that, as a by-product of what the hon. Gentleman proposes for beef, there will be some firming-up in poultry meat prices as well.
As for eggs, I have two questions to ask the right hon. Member for Kilmarnock (Mr. Ross). The first of them concerns how the negotiations on arsenical additives are going. The second relates to the number of imports of eggs from France. Although imports are relatively low, it is believed that they are having an adverse effect upon egg prices. Bearing in mind that the French ban imports from this country because of the use of arsenicals, will the Government introduce a ban on the import of French eggs until this problem about arsenicals is resolved?
1599 The Minister referred to milk production, and he recognised that, although the situation is not too bad at the moment, it could be affected adversely in the autumn as a result of high feed prices. However, the main worry in the milk sector is for the consumer—
§ The Secretary of State for Scotland (Mr. William Ross)
The weather has not helped.
§ Mr. Morrison
But there is a good deal of worry for the consumer over milk production. I hope that the Minister has been receiving reports of the evidence given to the Sub-Committee of the Expenditure Committee which is at present looking into milk production. That could help him in his judgment about what should happen. There is a considerable world shortage of milk and our ability to import milk products will be limited, so it is important that the right hon. Gentleman should take action on this count very soon.
The problems of agriculture lead me to conclude that, in spite of what the Minister said, production of many commodities will decline unless further action is taken. He has a mammoth task to protect the food supply for the consumer. There remain some doubts in our minds whether he is up to that task, but I hope that, instead of laughing at the motion or accepting it lightly, he will take it seriously and come back to the House with announcements of further measures in the interests of both the consumer and the farmer.
§ Several Hon. Members rose—
§ Mr. Deputy Speaker (Mr. George Thomas)
Order. Before I call the next speaker, may I draw the attention of the House to the fact that there is less than an hour and forty minutes left for this debate, including the winding-up speeches? I appeal to hon. Members to be as brief as possible.
§ 5.21 p.m.
§ Mr. Gwynoro Jones (Carmarthen)
As another Welshman, Mr. Deputy Speaker, I shall try to follow your strictures to the letter.
1600 Agriculture has been going through a difficult period. It has faced the consequences of inflation, increased production costs, changes in the support arrangements, and lower market returns over the past nine to 12 months. This has all added up, until today, to a massive loss of confidence. My right hon. Friend today has gone part of the way to meet some of the short-term points that I and many other hon. Members have been pressing on him.
How well my right hon. Friend has muted the noise of Conservative Members. The motion is in the name of a party which in Government month after month, refused to do anything until the election period came. The figures of falling milk production, decline in the breeding herd and the dramatic increase in slaughtering show that the situation was getting worse months before Labour came to power. I was an ardent critic of the inactivity of the previous Government, and my right hon. Friend will confirm that I have been complaining about his lack of action over the last three months. So at least I have been consistent. I am not sure how consistent the Opposition have been in their response to the concern and anxiety of the farming community.
The effect on the livestock sector is especially significant to Wales, which produces 36 per cent. by value of the milk production of the United Kingdom. 42 per cent. by value of total livestock products and 50 per cent. by value of total livestock production of the United Kingdom. If the livestock sector gets further into the troubled waters of past months, because of the preponderance of the Principality's agricultural output which lies in the livestock sector, Wales will suffer to a greater extent than other parts of the United Kingdom.
This point is further stressed when one realises that beef and milk production represent 62 per cent. of all Welsh agriculture. Furthermore, agriculture is relatively more important in Wales than in the United Kingdom as a whole. The latest estimates are that agriculture accounts for 12 per cent. of the Welsh gross domestic product—double the figure for the United Kingdom.
Agriculture is a major employer in rural Wales. More than 54,000 people derive at least part of their livelihood 1601 from the industry. In my constituency, 36 per cent. of those employed work in agriculture or connected services. In the old county of Radnorshire, 55 per cent. of those employed worked in agriculture, and in parts of Breconshire the figure was as high as 60 per cent. So what happens to the livestock sector and to agriculture generally is cruicially import- ant to Wales.
I regret the action of my county NFU in writing to Opposition Members only in the last few days. I know that the officers will concede that I am very concerned about agriculture in my constituency. My door is open to union officials and to farmers at any time, as it has been for the last four years. I want to stress to the farming community and its two unions in Wales that no one has a monopoly of interest and concern for this industry. We on this side have done as much for agriculture, certainly since the war, as the Conservative Party.
The danger signals for the agriculture industry in Wales are already there. Over the last half year milk production was down 4.2 per cent. on the figure for December to May 1973. In the United Kingdom as a whole there has been a decline of only 3.6 per cent., so it is relatively greater in Wales. The decline from December to February this year was greater than the decline from March to May. I could give the figures, but I am sure that hon. Members will accept what I say.
Slaughtering is a major point of concern. The number of slaughterings of steers and heifers over the first 18 weeks of this year increased by 15 per cent. over the same period in 1973. The slaughterings of cows and bulls—the future breeding herd—increased by 28 per cent. For calves, the source not only of the breeding herd but of the beef supply, the figure is over 90 per cent. The breeding herd is declining. The quarterly Sample Livestock Enquiry for England and Wales showed in March 1974 the first significant decline in the 1970s. This is the period when the previous Government were in power, and the decline was substantial. The figure reached a peak in September 1973 of 599,000, and had fallen by the March quarter of 1974 to 580,000
Costs have soared massively, causing much concern. It has been estimated 1602 that since the annual price review, which was a considerable under-recoupment review, costs have again increased. The estimated increase in costs in Wales since the annual review has reached almost £3 million. Over the whole of the United Kingdom the net increase in costs since the review is about £50 million. These include the price of fertilisers, which are up by 15 per cent.; machinery and repairs are up by 25 per cent.; and rents, labour—including the threshold wage agreement—marketing and transport costs are up by 10 per cent.
§ Mr. Robert Boscawen (Wells)
Does not the hon. Gentleman agree that that is a very good reason for calling upon his right hon. Friend for an autumn review for the milk producers?
§ Mr. Jones
I shall come to milk shortly. I will accept advice from many quarters, but I am not sure that I should accept advice on agriculture from the Opposition.
The action of my right hon. Friend today will bring back a measure of confidence to the beef producer. I hate to be churlish. The Opposition should also refrain from being churlish. The inquiry carried out a year ago mentioned a figure of £20 per live hundredweight as the economic point for farmers to produce beef. Probably £18.25 per cwt. is on the lower end of the scale, but certainly it is to be welcomed as a first step, as the basis of a floor to the market. The guide price is at £19.25. Clearly, no one in the House should condemn my right hon. Friend for his action today on the question of certification of fat cattle. I am sure that the Opposition and the two farming unions in Wales will accept that decision.
The hon. Member for Wells (Mr. Boscawen) asked about milk. I have the largest milk-producing constituency in Britain. Over 66 million gallons are produced in Carmarthenshire annually. That brings in about £8 million to the local economy of that county. I prophesy that there will possibly be difficulties in the autumn, as there were in the autumn and winter of last year. We were pressing the then Government to take action at that time, but they refrained front doing so. I hope that my right hon. Friend will consider cushioning any further increases in the cost of 1603 feedingstuffs over the coming months, especially in the autumn and the winter. I hope that he will give that assurance to the milk farmer. The figures are there for all to see. The profit margin has disappeared. The gross margin on milk in 1971–72 was 5p per gallon. By March 1974, one month after the Opposition had left office, it had disappeared and there was a loss of 0.9p per gallon. I hope that my right hon. Friend will consider the situation of the milk industry over the coming months.
Although the pig sector of the industry is facing major problems, in view of the shortness of time in the debate I cannot afford to pursue the argument, but this matter needs to be examined again by my right hon. Friend.
I welcome the lime subsidy, but I hope that my right hon. Friend will reconsider the situation in regard to fertilisers because it is worth a re-examination.
In regard to eggs, Eastwoods in my constituency has recently announced that it is having to cancel its planned expansion because of the problems in the egg industry. Producers are making an average loss of about 6p per dozen. The poultry meat industry is losing about £750,000 a week. This has had an effect upon expansion plans. Eastwoods, which employs about 1,000 people in Carmarthenshire, if not more, has decided that because of difficulties in the egg producing sector it will have to curtail plans. A representative of Eastwoods, talking about the impact on the local economy, said:We would undoubtedly have used local labour to construct the factory and taken on additional labour to run and supervise it.The intention was to build a further plant in Carmarthenshire.
I am glad about the limited action that has been taken by my right hon. Friend. I am always concerned about the future of the agricultural industry in Britain, but especially its future in Wales and Carmarthenshire. However, I want to warn my right hon. Friend gently that we must keep a very careful eye on the situation from now on because there is continuous pressure on costs. We must examine the situation month by month and, if need be, give further support to this important and great industry.
§ 5.35 p.m.
§ Mr. Walter Clegg (North Fylde)
In the interests of brevity I shall not follow up the remarks of the hon. Member for Carmarthen (Mr. Jones), though he must have the consolation that although I do not do that, the National Farmers' Union branch in Carmarthenshire will do it.
The position of the industry in my constituency causes me the greatest concern. A very short time ago the wives of farmers in my constituency who are members of one of the smaller branches of the NFU organised a meeting at a small village hall. It was packed by 150 farmers and their wives. In my experience as the Member for the constituency, I have never known such feeling as there was at that meeting. It was not only a feeling of anger. It was also very much a feeling of fear for the future. Anger and fear together are very bad companions.
Therefore, I judge what the Minister has said today not on the impact that it has had in the House of Commons but on the impact that it would have had if he had said it to that meeting. The farmers who attended the meeting were small farmers. In my part of the world they are mostly small farmers, with farms worked by families and very often by the wives.
To illustrate the state that they are in—and why I do not think that the right hon. Gentleman has met the situation today—I shall tell the House what one of the women at that meeting said to me. She said:My husband works for over 60 hours a week. He is a good farmer. He is not inefficient. He has expanded his activities. But now, when I go to him with a bill telling him that I want to pay it, he says to me, 'No, I cannot pay it. The bank has clamped down'.That is not just one case. There are many approaching this kind of despair. Some figures which have been sent to me illustrate this very well. They are quite recent figures for two smallish pig farmers. For one of them for the period from 1st April to 31st May 1974, the net loss was £768. On the other farm, from 1st March to 15th May 1974 the net loss was £1,014. If they had listened to the Minister's statement today, they would have had no comfort. They would have been reassured by him that there was a long-term future for the industry but that there was little or no 1605 short-term help—in fact, none—for them. They will be bitterly disappointed.
There was nothing in the right lion Gentleman's speech directly for the milk farmer. There are many of them in my constituency. There is peripheral help on the cattle side with the sale of cattle. But one thing which both major parties should take into account is how quickly this situation developed. The swing from prosperity to near desperation has been awfully quick by any standards. I do not believe that the machinery of Government as it is at present, is jigged to be fast enough to cope with this matter.
One of the best things we can do to help the farming industry is to speed up the reaction of the Government to the situation as it develops. Therefore, it is essential, if we are to have nothing for milk producers now, at least to have an autumn review of the milk situation.
I welcome the right hon. Gentleman's acceptance of the motion. It means that he has to keep a constant eye on agriculture and to come back to the House frequently. Of that, I have not the slightest doubt. I do not envy him his job. He has a very difficult job, and it would be foolish to underestimate it. But I do not think that enough has been done to help those who are in trouble.
I rely very much on the right hon. Gentleman to keep the promise he has made today to keep everything under review and to act quickly at the first possible moment, because I do not believe that he has yet done enough. If he does not do it, we shall continue to prod him. I want to emphasise that speed of reaction is what is necessary to get the farming industry back on the proper footing. Just to talk in long terms without action will bring no comfort to the farmers, and the Minister must back up what he has said today with action.
§ 5.42 p.m.
§ Mr. Emlyn Hooson (Montgomery)
When an industry is in such desperate straits as the livestock section of the agriculture industry is today, anything that can be done to help is very welcome. On that basis, I welcome what the Minister of Agriculture has said. He knows from the previous debate and from the private meetings we have had—he is always ready to meet hon. Members representing agricultural constituencies, 1606 who know his concern for agriculture—that in our opinion what he has done today is too little and too late. There is a great deal of artificiality about the debate. Of course, the right hon. Gentleman is right in saying that the crisis did not spring up overnight.
As far back as last September I warned the Conservative Government about the excessive slaughtering of in-calf cows and in-pig sows. I was accused of being a scaremonger. By last Mardi the situation had reached crisis proportions. On 30th April, when I asked a supplementary question of the Prime Minister about the state of the agricultural industry, he replied:The hon. and learned Gentleman is correct in saying that it is a very serious situation, which goes back further than the time of change of Government. I will not put it any higher than that. My right hon. Friend's concern with these problems has been made clear in debate and at Question Time, and they take a serious attitude to the situation. They are doing everything in their power to help."—[OFFICIAL REPORT, 30th April 1974; Vol. 872, c. 936.]Here we are nearly at the end of June before anything concrete has been announced.
There is a bizarre situation, with the Government accepting virtually what is an innocuous Motion by the Conservative Opposition. We had a similar debate a month ago and since then the crisis in agriculture has deepened. Hundreds of farmers have been or are being driven out of business. What the right hon. Gentleman announced today will help—I make no qualification about that—but let us look at the true position.
At the end of the last debate on agriculture, the whole of the parliamentary Liberal Party, every Member from the Scottish National Party, both Members from Plaid Cymru, and all but one hon. Member for Northern Ireland voted against the Government. Yet the Government won by a considerable majority. Why? Because the Conservative Opposition took care to ensure that there were enough abstentions to enable the Government not to be defeated. It was a chocolate soldier war, with everyone making sure on the Tory side that the Labour Government would carry the vote.
But the position today is different. The Government were afraid of being defeated on this motion, however innocuous it is, 1607 so they are accepting it and the whole debate takes place in a different kind of atmosphere. I have told the right hon. Gentleman privately in an official meeting, and I say again, that what is happening in agriculture will not be put right by what he has decided today.
The right hon. Gentleman is right about the lime subsidy. The Conservative Government removed the lime subsidy without any negotiation with the Common Market. Mr. Lardinois told me that there had been no preceding negotiations before it was withdrawn. The present Conservative Opposition have much to answer for. I am sorry that the right hon. Gentleman is not putting back the fertiliser subsidy as well. A great deal needs to be done to restore confidence to the industry.
I quoted from the Prime Minister's statement and referred to the previous debate in order to illustrate the time loss. Only now is the Minister of Agriculture sending officials to Brussels to negotiate an agreement with the EEC to enable him to help our beef producers. If he had decided to do that a month ago, the help could have been given today. But he would not. He would not accept our judgment of the agricultural situation, or he was overridden by his comrades in the Cabinet.
§ Mr. Peart
The hon. and learned Gentleman is usually reasonable but I cannot understand his view about me or my officials going to the EEC. I made my views known there and came back with a package. I have started to renegotiate and I believe that what I have suggested is right. I remind the hon. and learned Gentleman that the Liberal Party is a bigger supporter of the EEC than I am in the sense of wanting to remain in. Although I know that he himself is not a supporter of membership, the Liberal Party was quite prepared to go in without safeguards.
§ Mr. Hooson
The right hon. Gentleman knows perfectly well that my right hon. Friend the Member for Devon, North (Mr. Thorpe), the Leader of the Liberal Party—
§ Mr. Hooson
My right hon. Friend is here far more often than is the Leader of the Labour Party. My right hon. Friend made it clear that although the Liberal Party was overwhelmingly in support of the Common Market—save myself—it would be prepared to break regulations if necessary to protect British farming. But the problem faced by both Government and Opposition is that the Common Market has not yet agreed to the right hon. Gentleman's suggestion today. I know from Mr. Lardinois that it will be difficult to get agreement. The right hon. Gentleman knows that, too.
The crunch will come for this House when the officials come back. If they have not been able to get agreement, what happens then? I have no doubt of what should happen. If agreement is not reached, this country must take unilateral action to defend its own farmers. I think that all farming Members on both sides of the House would agree with that. It is, of course, why the Opposition put down such an innocuous motion. It does not spell out any single step which should be taken but is couched in the vaguest possible general terms. That is why the right hon. Gentleman has accepted it and has made a farce of the debate.
I am certain that what has been done today will start to restore confidence to the industry. But let no one think that the crisis is over. It is not. There is over-production of beef, which has been encouraged by both Labour and Conservative Governments and by all parties. There has been a series of misjudgments of the situation. We are still in the bizarre position of paying farmers £150 a cow to turn from milk to beef production at a time of beef glut, while, under Community regulations, the whole agriculture industry is in a chaotic state. It will need the dedication and cooperation of all parties in the House if we are to get out of the crisis.
We can all agree generally with the long-term package and the amendments proposed to Brussels by the right hon. Gentleman, but they will not start operating at the earliest until next April. It is in the meantime that the problem is acute. I ask the Secretary of State for Scotland, when he replies, to give his 1609 mind to the enormous liquidity problem facing farmers, and especially small farmers. They are desperate. Some of them have no income at present. They are selling their cattle for peanuts because they have no money. The bank managers have closed in on them. That is the situation.
The glib and sanguine nature of the approach of this House to the enormous crisis in agriculture makes one despair. I ask the Minister to consider with his Cabinet colleagues whether it is possible to help the liquidity situation by advance payments of the hill-cow subsidy, the beef subsidy, the sheep subsidy and the calf subsidy so that the farmers may get the money into their hands at an earlier stage. That would be some contribution to what is the real and not the artificial crisis in agriculture.
§ 5.52 p.m.
§ Mr. Thomas Torney (Bradford, South)
I have listened carefully to the debate, and my right hon. Friend's speech indicated clearly that there is considerable understanding of and interest in the farmers' problems within the Government. That explodes the myth that only the Tory Party is the friend of the farmer.
I am pleased to note the concession that my right hon. Friend has been able to make for beef. I am aware of the serious situation in farming. If I had not been aware of the situation until a month or two ago, the farmers themselves would have made it clear to me and to the back-bench group which I chair. We take that under our belt and we accept what they say. I agree with much of what the hon. and learned Member for Montgomery (Mr. Hooson) said. It is right that there is a crisis. However, what my right hon. Friend has said today will make a good contribution towards solving the problem. I am sure that we all wish the situation to be improved quickly.
I wish that my right hon. Friend could have looked deeper into the pig and milk situation. It has been said from the Conservative benches that the Minister is complacent. I can assure Conservative hon. Members that that is not in the nature of my right hon. Friend. I know him well. Even if he were complacent, 1610 there is a group on this side which would ensure that that complacency was very short lived.
The Government are aware of the situation and they are for ever pointing out the urgency for action. I fear, along with the hon. and learned Member for Montgomery, that the EEC may make problems when my right hon. Friend tries to do what he said he will do this afternoon. I should like to see the Government have the courage to act unilaterally if the Common Market tries to interfere with the lifeblood of British farming. I want to see progress made for British farmers and not added protection for French farmers. They are doing very nicely, thank you. I want to see us looking after our own farmers.
I listened carefully to the right hon. Member for Cambridgeshire (Mr. Pym). It seemed that he felt that we had been in office for four years and not four months. His memory must have been terribly short. It is true that he was not the Minister of Agriculture, Fisheries and Food in the previous administration, but I am sure that at some stage he must have liaised with his right hon. Friend who had that responsibility. All the farmers that I have met—and I met some as recently as this morning in the House—have pointed out to me that the main cause of the problem is the cost of feed. Farmers tell me that they appreciate that that problem has not sprung up since March of this year. The price of feed was going up phenomenally during the middle of last year. Which party was in power during the middle of last year? It was the Conservative Party for whom the right hon. Member for Cambridgeshire speaks. Therefore, there is a great deal of responsibility that must rest upon the shoulders of the Tory Party for the situation in which the farming community now finds itself.
The previous Government should have acted when they saw a suicide situation being created by the high cost of feed. Another point that must be emphasised is the headlong rush into the Common Market of the previous administration. The common agricultural policy—I would impress this matter upon my right hon. Friend if he were here, but I hope that my remarks will be conveyed to him—is useless not only to the British farmer 1611 but to the British consumer. I was pleased to hear my right hon. Friend speaking about the wrongness of intervention. I would call it the idiocy of intervention. I can see no future for the housewife or for the farmer in a policy that merely takes away surplus food and stores it in the storehouses of Europe only to go rotten or perhaps to be sold to countries outside the Market at a giveaway price. The balance is used to protect the French farmer and the deficit must be made up by the taxpayers of the EEC, including the British taxpayer.
§ Mr. Hamish Watt (Banff) rose
§ Mr. Torney
No, I shall not give way, I have very little time.
We now see that good Scotch beef is being exported to France and Germany—and I would not protest about that if we had a surplus—whilst French and German beef is being imported into Scotland and to other parts of the British Isles. The wicked stuff is supposed to be for manufacturing purposes, but judging by the stuff that is appearing on my table of late, I wonder whether some of the inferior Common Market beef is being sold to the British housewife for the Sunday joint.
I was impressed by the words of the hon. and learned Member for Montgomery on the overall situation. Of course, it has been said by Conservative hon. Members that something must be done for the future of farming as a whole and that perhaps Governments are not able to catch up quickly enough with a quickly changing situation.
I have some knowledge of the milk industry. Our arrangements for the distribution of milk are the finest in Europe and probably in the world. We have a planned system. No longer does the farmer wonder whether he will sell his milk in a time of surplus. He knows that it will be taken off his hands, and he knows what will be the price. That is thanks to the Milk Marketing Board. God forbid that the Common Market should interfere with the Milk Marketing Board. No country in the Common Market has anything like it. I understand from the treaty that the EEC could interfere with the board, but I fervently hope that we shall not allow that to happen.
1612 The farming industry as a whole needs some long-term planning. Gone is the time when we can afford to step up production when prices are high only to find that we have too much when prices fall. We must deal with the short-term problems quickly, perhaps more urgently than the Minister has been able to do this afternoon. I hope that the Government will set in motion machinery to enable long-term plans to be made for the farming industry as a whole, so that we get rid of the boom-and-slump cycle which is bad for the farmer and, in the long run, bad for the British housewife.
§ 6.2 p.m.
§ Sir John Gilmour (Fife, East)
I am sure that hon. Members on both sides of the House will be glad that the pressures that the agricultural industry has brought on hon. Members have at least borne some fruit. We should use the debate to consider the next step forward, which is how in future to avoid the present muddle and how to get out of the present muddle. We should consider whether we are still trying to get our agriculture on the cheap.
Before we went into the Common Market, the cost of our agricultural support system was over £5.50 per head of the population. The Common Market was spending over £14 per head of the population on agricultural support and at the same time paying 25 per cent. more for feeding stuffs. Since that time, we have withdrawn a certain amount of the support—that was done by the Conservative Government—and world prices have removed the need to support cereal prices. As a result, the contribution made by our taxpayers has fallen dramatically. In the United States support for agriculture is between £19 and £20 per head of the population.
We should be misleading the industry if we thought that what had been announced today would solve all the difficulties. We need to find out why the beef industry got itself into trouble. A year or 18 months ago farmers were being assured by people in agriculture and hon. Members that there was an unlimited market for beef and that they had no need to worry. They were told, "Go on producing; you can sell all you produce".
In Europe today there is a shortfall of 800,000 tons production, of which about 600,000 tons is taken up in Italy. 1613 We know what has happened to the Italian economy. When a high proportion of a shortfall is taken up in one country, that is a danger signal. We need to assess the beef requirements of the United Kingdom market and to know what are the export possibilities so that we can get our books into balance.
If the Minister finds it necessary to give support to pig producers and beef producers, it is equally necessary to give support to poultry producers. The firm of Eastwood has been mentioned as a big poultry producer. The firm operates in my constituency and I recently received a letter from the company which stated that it employed 5,000 people, approximately 1,000 of whom were employed in Fife. One cannot turn out the chickens into the fields in the summer as one can turn out cattle and hope thereby to save money. The Minister must acknowledge that, if there is a need to support beef and pig producers there must be the same need to support poultry producers.
No doubt the Secretary of State for Scotland will have seen the headlines in The Scotsman today and the article in which the chairman of the Scottish Milk Marketing Board, Mr. William Young, is reported as having said:Dairy farmers must receive more for their milk by 1st October at the latest if the present recession in the dairy industry is not to become a disaster.Last year we stuck to the rules, saying that we had to await the price review before making an adjustment in the milk price. Everyone knew that we were living in a fool's paradise. The basic cost of animal feedingstuffs in this country is set by the results of the northern hemisphere harvest which comes in September and October. By that time, the cost is known, and to postpone the adjustment for several months leads to hardship. Many farmers thought it unfair that, whereas bakers could come to the Government and say that the price of wheat had gone up and they must therefore charge more for their bread or make a loss, the livestock breeder was unable to do so and had to wait until a certain date.
We must get greater flexibility or make the adjustment at another time. If 1st September is a better time, the adjustment should be made then. That is the time when farmers in the northern hemis 1614 phere get an idea of what return they will get next year. Unless we do that, people will suffer from uncertainty, production will fall away and in the long run the housewife will suffer.
With the recent increase in wages and with the threshold agreements now operating, the cost of harvesting this year's crop of potatoes is entirely unrelated to the guaranteed price agreed at the last price review. This is a matter of particular interest to Scotland, and it should be examined again. If we do not do that, no potato crop will be grown in the future, and that would be a great tragedy, particularly for Scotland.
There are many other matters on which I should like to comment, but time is short. Let us hope that as a result of the debate we shall take the first step of getting out of our present muddle.
§ 6.8 p.m.
§ Mr. Mark Hughes (Durham)
I shall devote most of my speech to following along the lines followed by the hon. Member for Fife, East (Sir J. Gilmour). However, I commence by congratulating, in his absence, my right hon. Friend the Minister for the steps he announced. These go a long way towards restoring confidence in the hardest-pressed sector. Although one wishes that the steps had been more precise, one understands why they are not.
Agriculture is facing a series of imbalances, both cyclical and sectional, of a severity that has not been known for the past 20 or 30 years. If one takes, for example, the problem of different costs between summer milk production on grass and winter milk production on concentrates, unless the ratio of return given to the farmer for winter milk production is significantly increased this coming winter, we shall run into the possibility of a liquid milk shortage in the darkest months.
This phenomenon—we knew about it in the mid-1950s—had faded into less significance during the last 15 or 20 years. Therefore, I hope that my right hon. and hon. Friends in the Ministry of Agriculture already have plans to ensure that dairy farmers will get adequate returns this winter to enable them to produce a sufficiency of milk to meet the housewife's requirements. That is only one of many examples.
1615 We are looking for a solution within a framework of a desire to achieve two aims: an adequate return to farmers and farm workers for their capital and labour at prices that the housewife can afford to pay, and the fullest contribution that agriculture as a whole can make to the international and internal economics of this country.
We have tried the experiment of a market economy for agriculture during the last four years. The events of the last six months, with a succession of recurrent crises, have indicated the inadequacy, in the complex international situation, of allowing market forces to regulate agricultural production.
Four years ago last weekend, the then new Minister of Agriculture, Fisheries and Food was happily saying, "We want to get the Ministry of Agriculture out of the farmers' hair and allow the farmers to get the return from the market." Yet this afternoon the right hon. Member for Cambridgeshire (Mr. Pym) was, in effect, asking for the return of deficiency payments. His request might have been dressed up in some other way, but in reality that is what we were being asked to do.
Today there is unanimity between the two sides of the House. Both say, "Let us look at the situation again. Let us see that, in supporting agriculture, we are giving that long-term guarantee of earning capacity to the farmer that alone is his security for expanding production."
I turn now to one area that will benefit from the most welcome news about the continuation of the lime subsidy, the discontinuance of which was a disaster and a most foolish decision on the part of the previous Government, namely, hill farming, not only in the north of England, but in Wales and elsewhere. Hill farmers in national park areas have planning restrictions imposed upon their economic activities because of their presence in national parks. It seems quite inequitable that society at large should impose additional costs on them and provide no commensurate additional remuneration.
For example, a hill farmer may be required to build a cow byre in stone because it is the national parks policy that the town dweller should have a pretty view from his motor car. It is inequit 1616 able to ask the farmer to bear the differential price of having to build with more expensive materials. There is an urgent need for a major review of the additional costs that the national park farmer has to bear.
We need to look carefully at the level of farmers' incomes. I notice that M. Cointat introduced a law about 18 months ago to try to do something similar in France. Let us not pretend that the common agricultural policy has solved the problem of income differential between the arable and the hill farmer. It has made the situation worse on the Continent and, equally, it has in no way solved the problem in this country. That income differential is, if anything, getting wider. The growth of high incomes from barley and other cereal production has relatively depressed the hill farmer's income.
I should like the Government as a matter of urgency to consider what other methods are needed and what other procedures can be applied to ensure that the depopulation of hill and upland areas is reversed, that the concept that hill areas are merely an attractive scenic backcloth for occasional visitors is reversed, and that the hills are seen as the essential livestock reservoir areas from which hill and lowland farming must in the end get its genetic and other stocks. It is no use just putting on a higher fatstock price and hoping that ultimately it will filter back to the hill farmer. We must take direct action to increase his income.
I hope that before we have a further debate on agriculture my right hon. Friend will be able to announce additional assistance for the hard-pressed hill farmers.
§ 6.16 p.m.
§ Mr. R. J. Maxwell-Hyslop (Tiverton)
We need to adopt an agricultural policy which fulfils a number of considerations.
What is the national need? It is, first, to feed our population; secondly, to save imports; and, thirdly, to safeguard employment.
On the first need, to feed our population, let us leave out consideration of the price to the consumer, because if we do, the day will come when the supply simply will not be there. We must start at the production end.
1617 We have seen the alleged butter and cheese mountains built up in the news media as if they were an eternal reality, but they have disappeared within weeks, not months. We are told that there is a beef mountain. How long will that last, with the demands being made by Japan, North America and South America, with their increasing populations and increasing income per head which gives them the purchasing power to eat properly for the first time in their lives?
We must concentrate on supply. We cannot delay destroying the illusion about prices. The public must realise that food is not cheap to produce. Food subsidies wrongly applied merely perpetuate the myth that food is cheap to produce when in fact it is very expensive.
This is a matter of crucial importance. The subsidies on milk will run into an escalation in budgetary costs that the Treasury will be unable to meet. When that happens the housewife will come up against an increase in the price that she has to pay that does not represent a sudden increase in the cost of production but a sudden contact with the reality which has always been there, and is continuing.
With an adverse balance of trade of more than £4,000 million a year, how can we ignore the saving on imports that Britain's largest industry can make? If we are to have a sane policy, we cannot ignore that. Whether we are in the Common Market or not, the same desperate balance of payments problem faces us, is with us, and will continue to confront us. The best available contribution that we can make is from the most efficient agricultural industry anywhere in the world—that which exists in Britain.
We shall not get adequate expansion from temporary stimuli. We shall get it only if the necessary resources are provided and if continuity of such resources can be accurately foreseeable. The days are past when farmers or their bankers react in the way they used to react to a temporary measure taken by the Government of the day to make some line of production marginally more attractive than previously. I have never known bank managers so worried about their customers in the agricultural industry as they are today, and units which are known to be excellently managed and are 1618 on better than average land are now regarded as not being credit worthy.
Do not let us forget that employment throughout the nation which is connected with agriculture. About £700 million worth of products produced by other industries are bought by agriculture, including such items as farm machinery and fertiliser, and over 100,000 people are employed in the milk manufacturing industry. How many of them will be so employed next February? When the amount of liquid milk consumed is not much less than the total milk supplied, and when the tremendous capital investment in the milk manufacturing industry to deal with what was anticipated to be a consistent increase in milk production has not materialised, how safe is that employment?
What happens to our balance of payments when we have to import butter and cheese for which the capital equipment has been provided, for the manufacture of which skilled and semi-skilled personnel are employed, and for which we have the plant on our farms, but for which the milk output is not there? This is not a sort of nightmare of the future—it is the reality of what is happening before our eyes, and it needs action now.
Farmers need an income for them and their families to live on. This is sometimes overlooked. They have to service their capital. We should not look at the bogus figures of agricultural net returns which depend on a farmer having inherited his farm or having inherited the capital with which he works it. We need to take the costings of farmers who have had to borrow every penny which has gone into their farm and in the current financing of their farming operations. The interest which they have to pay gives the real figures in this respect. Then we should see whether there is any return left for them to live on, let alone their having a penny towards replacing borrowed working capital with accumulated working capital. The answer is "No, that is not happening". Tinkering with prices here or there for a short period because of another newspaper scare about the non-existence or existence of a temporary surplus will not meet the need. Costs have to be covered.
People have talked about the increase in cereal cost, but what about increases 1619 in fuel costs, and the myriad of things used on a farm, such as sheet polythene, binder twine, nails, timber for fencing and galvanised wire? Cereal prices might possibly drop, but these cost will not. We must also consider the creditworthiness without which the farmer loses his working capital, which is borrowed.
Government after Government of all political persuasions have encouraged farmers to expand output. As they have not had sufficient current return to finance this expansion, it has been done with borrowed money; and interest rates have doubled since the money was borrowed. That must be serviced out of present returns, otherwise the overdraft has to be increased still further to pay the interest on the previous overdraft, and the banks are simply not prepared to allow that.
What steps do we need to take? The action announced by the Minister today would have been admirable if it had been at £19.50 per live cwt. for beef. It is no good the Minister of State waving his hands down. The figure of £19.50 is the minimum which will start to generate the sort of returns which will service borrowed money.
It is because we have not been accustomed to such realities and because we have hoped that they would go away that we now have to face them with a bang. We need another 3.5p per gallon on milk, because the collapse of the beef market has reduced dramatically one of the major sections of the milk producer's income from cow barreners, cull-cows and calves. That will not recover overnight, and so we need an extra infusion of money into the milk producing industry—not a promise of money to come, but a flow of cash now.
Last weekend I visited a pig farm in my constituency. A year ago it had 600 pigs. Last Sunday it had 30. I do not know how many it will have by today. The farmer has had to sell off at heavy losses each week so that he and his wife can buy food to live on, and buy fuel and pay the electricity bills and rates. He has got to have money but the bank will not advance it any more.
We should abolish the milk subsidy paid at the moment on retail price, because we must introduce the people of 1620 Britain to the reality. We can no longer afford to postpone this painful introduction, and the money so saved should be transferred to a supplementary rate support grant, because that is where it is much more desperately needed.
If the Government will grasp the nettles which I have raised, they will have an agricultural policy of which they can be proud. I am not in the least interested in who has done what in the past, but I am interested that we should, nationally, get a policy we can live with and which meets the nation's needs. That will not happen unless producers' needs are also met.
§ Several hon. Members rose—
§ Mr. Speaker
I wish to call two further hon. Members from the back benches, one from each side of the House, provided that they take about only three minutes each.
§ 6.28 p.m.
§ Mr. Caerwyn E. Roderick (Brecon and Radnor)
I am grateful for the opportunity to make a few remarks. I agree with my hon. Friend the Member for Durham (Mr. Hughes). I have never believed in a free play of market forces ruling our agriculture industry. The country needs stability, and that cannot be given by the sort of freedom about which Members of the Opposition have been preaching for the past few years. Enough is already left to chance in agriculture with the weather without introducing a greater element of chance.
I welcome the remarks of my right hon. Friend the Minister in a number of respects. The lime subsidy is most welcome in my area of mid-Wales. We have asked for it for some time. We felt that when farmers were having a lean time, expenditure on lime would suffer first. Any long-term cut in the lime subsidy would be fatal.
I hope that my right hon. Friend has not altogether ruled out a fertiliser subsidy. I hope also that he will keep the options open regarding pigs and that when the terminal date comes for the extra subsidy, he will reconsider it. I hope that in the meantime he will seriously think about doing something before that date, because people want to prepare for the long term. There is concern in the industry as to what will happen after September.
1621 Beef production is of considerable concern in my area, and there have been difficult times recently. Farmers have been suffering agonies of anxiety. I am delighted to see that my right hon. Friend has achieved a breakthrough. I do not wish to be churlish. I wholeheartedly welcome the news that my right hon. Friend is thinking of a target figure of around £18 for the breakthrough.
§ Mr. Roderick
I apologise. I was using the word "target" very loosely when I should have used the word "guarantee". I hope that this will lead to a breakthrough with our partners in Europe.
When the negotiations with the Community are over, what shall we do if the Community says no? Shall we proceed on our own? I hope that we shall, because the Community cannot dictate to us the kind of agricultural policy that suits us best. I hope that my right hon. Friend will be adamant in that respect.
A dairy farmer in my constituency wrote to me a few days ago saying:I do not believe that anyone owes us a living; but by the same token, I do not think that an ungrateful public can expect me to work long hours in order to give them cheap food. I am already making structural plans so that I can reduce the herd size in order that I can run it myself if things don't improve in the near future. I shall be sorry to get rid of a good cowman who has been with me 17 years. Although I am a dairy farmer, the sale of calves is an important item in my income. Last year Mr. Ken Jones was paying me £40 per head for my Friesian bull calves. This year he doesn't want them owing to the loss he has suffered on last year's purchases. I am getting £6 to £7 for the same type of calf at the moment.Help for the beef sector will help the dairy farmer and I hope, too, that it will help many other sectors of the industry.
§ 6.33 p.m.
§ Mr. Nicholas Winterton (Macclesfield)
I am pleased to be able to make a brief contribution to the debate, not only because I represent an important likestock constituency in Cheshire, lying as it does between the two huge conurbations of Stoke-on-Trent and Greater Manchester, but because the importance of the British agriculture industry has never been more obvious than today, and 1622 today it is on the brink of collapse. To quote the words of Mr. Ken Unwin, chairman of the Staffordshire NFU county livestock committee,The situation is on a knife-edge at the moment and unless there is immediate action the consequences could be very bad.While many housewives can confidently anticipate a gigantic beef bonanza, with butchers and the retail trade cutting prices to the metaphoric bone, livestock producers in Cheshire, Staffordshire and elsewhere are on the verge of ruin. While the housewife will benefit from the 8p or 9p per pound reduction in the price of stewing steak or rolled bricket and other cheaper cuts, farmers are now estimated to be losing £40 per animal. At my local market in Congleton a loss of £8 per hundredweight on well-fed bullocks was reported last week.
At a time when world prices of primary products have dealt a severe blow to the United Kingdom economy, the import-saving rôle of British agriculture cannot and must not be underestimated. Sir Henry Plumb has suggested that this could be worth as much as an extra £750 million a year by 1980, and yet for the last three months the Government have to a certain extent been playing politics with the nation's home-grown food supplies. I do not blame the Minister for this state of affairs as he is undoubtedly restricted by his right hon. Friends in what he would like to do.
My party when in government did not always prove sensitive enough or act soon enough to deal with the problems of the industry. The concept of Europe is of no value to Britain unless we promote our own interests as well. The miners, producing some of the nation's energy requirements, got their pound of flesh at our expense. The housewife can buy her pound or more of flesh very reasonably. So why should not the farmer get a fair return for the pound of flesh he is producing and which represents his livelihood?
In championing the cause of the livestock farmer I am also seeking to safeguard the interests of the housewife. A collapse in the farm livestock industry in the United Kingdom will hit this country hard. It will hit not only the farmer and his agricultural workers but every man, woman and child. The situation 1623 is desperate. Creditors cannot be kept at bay indefinitely and we must not put ourselves in such a position that we rely more and more for our food upon other countries. We know what happened with oil when we were held to ransom in a blatant and appalling way. If we are not prepared to allow our farmers a realistic return for food which they grow in this country to the benefit of our trading position, for how long will we be able to afford to buy the vital raw materials that we do not possess and cannot produce but which we have to purchase from abroad if we are to remain in business?
We must wake up before it is too late. While I welcome the limited proposals that the Minister has announced, and I pay tribute to the way he is trying to stand up in Europe for British agriculture, I am sure that further Government action is required now to safeguard Britain's future.
§ 6.36 p.m.
§ Mr. Alick Buchanan-Smith (North Angus and Mearns)
This has been a useful debate, not least for the assurances that have been drawn from the Minister. My right hon. Friends and I welcome those assurances. Our only regret is that it has taken so long to get them from the Minister. It has taken many months, throughout the time we were debating the Gracious Speech, at the time of the debate on 8th May, through Question Time on numerous occasions and with tremendous pressure being put on the Minister and the Secretary of State for Scotland to get assurances about the beef industry.
It is all very well for the hon. and learned Member for Montgomery (Mr. Hooson) to pour scorn on the terms of the motion, but as a result of it we have been given assurances which the hon. and learned Member welcomed. Thank goodness that at last the Government have reacted to the pressure which we and others have continually put upon them in recent weeks.
The right hon. Gentleman gave certain undertakings, some of which are of a general nature. I appreciate why the Minister could not be precise this afternoon. We accept that the undertakings were given in good faith, and I assure the right hon. Gentleman that we will do all we can to support him in the 1624 interests of the farmer and the consumer. If he does not pursue his objectives with determination and if he does not achieve them the Opposition will use every means in their power to keep him up to the mark.
Precisely what assurances were given by the right hon. Gentleman today? He gave an assurance on the lime subsidy, and we welcome that. He must appreciate that in the circumstances now prevailing that subsidy will be useful and helpful, but it amounts to about £5 million, which is a very small sum in view of the fact that the industry has faced cost increases of between £40 million to £50 million since the 1974 price review in February.
I come to the Minister's proposals concerning beef. I appreciate that his right hon. Friend cannot answer precisely tonight, but I should like to know when the Minister's proposals will come ink, effect. Let him be under no illusion. Unless the proposals come into effect as quickly as possible, they will do nothing to restore confidence in the industry. Since 28th February it has had to exist on words and promises. The right hon. Gentleman means to carry out what he has said this evening. Unless that is done very soon, all those words will be lost and no confidence will be restored. Delay will be dangerous to our future supplies of beef.
Once the right hon. Gentleman's proposals are put forward and agreed, will they be backdated to the date of the announcement made today? If they are not backdated, can he operate them within a matter of weeks and give a firm date in the near future when they will come into effect? He has left unanswered a great many other questions. We still know nothing precise with regard to the future of pig producers.
My hon. Friends have referred to milk production. My hon. Friend the Member for Fife, East (Sir J. Gilmour) referred to the remarks of the Chairman of the Scottish Milk Marketing Board, who is a constituent of the right hon. Member for Kilmarnock (Mr. Ross), who, I hope, is listening. We are now experiencing a serious situation as regards the milk industry. Already in the summer months in parts of South-West England supplies of cheese are under allocation to retailers. How much more serious is that position 1625 likely to be during the winter? This will require firm action when the time comes.
My right hon. Friend has referred to eggs and poultry, about which questions have been left unanswered. I ask hon. Gentlemen not to blame us for what is happening to the beef market. It is not our fault. What undermines the confidence of the industry? The right hon. Gentleman does not understand the basic factors underlying the economics of the agriculture industry. He must realise two things. The dramatic fall in the price of beef over the last few weeks has occurred because of the actions of the right hon. Gentleman; it has happened since his Government came to power. He is involved in two ways. The first was when the Government came to power. Then there were the right hon. Gentleman's first negotiations in Brussels. He opted out of the intervention system and put nothing in its place. That was his most serious action to undermine confidence since his Government came to power. The responsibility for that rests with the right hon. Gentleman. According to the announcement of the right hon. Gentleman today, he is answering for his own mistakes and not for anything which happened before his Government came into office.
The Minister does not understand that confidence is crucial in the agriculture industry. Unless he does more to understand what motivates the industry and what makes the industry work, he will do us a disservice and any promises he makes will be worth very little.
The second thing for which the right hon. Gentleman must bear responsibility is the withdrawal from intervention, when he succeeded in opening the gates of this country to subsidised Community beef from across the Channel. That has been one of the biggest factors causing the weakness of the beef market in recent weeks. Let there be no illusions. What the right hon. Gentleman is putting forward tonight—we welcome it—is a rectification of his own mistakes and an attempt to put right what he has done recently.
I am glad that the right hon. Gentleman has agreed to accept the motion, which is drafted in clear and categoric terms. It calls on the Government to safeguard the future supplies of homegrown food to the consumer. We on this 1626 side provided that safeguard when we were in power.
As regards supplies of beef and veal, home production rose from 77 per cent. of total supplies in 1969–70 to a forecast of 86 per cent. in 1973–74. Production of mutton and lamb rose from 40 per cent. in 1969–70 to a forecast 52 per cent. in 1973–74. Production of bacon and ham the third most important livestock commodity, rose from 38 per cent. in 1969–70 to a forecast 45 per cent. in 1973–74. Our policies achieved an assurance of food supplies for the consumers of this country.
The right hon. Gentleman accepts our motion. We are glad. We will support him in his efforts to fulfil it.
Apart from the Minister's general assurance, he has given no promises of precise action. We await that. I assure him that we are not prepared to wait long. We shall be impatient, as indeed our producers will be impatient, unless he backs up his words by action. It is in the interests of consumers and producers that the motion should be implemented. We on this side give the right hon. Gentleman notice that if he fails to fulfil both the spirit and the letter of the motion he will fail not only the House of Commons but the producers. At the end of the day it will be the consumers who will condemn him for failing to ensure the food supplies of the nation.
§ 6.48 p.m.
§ The Secretary of State for Scotland (Mr. William Ross)
I had expected from the reports I have read that the House would be crowded and that we were to experience a continuous and vicious lashing attack upon the Government.
We expected that kind of debate, but after my right hon. Friend delivered his fine speech the debate was rather like Wimbledon after a thunderstorm—the courts were cleared, everyone disappeared.
The hon. Member for Devizes (Mr. Morrison) made the first Opposition backbench speech. I could see him mentally tearing up the speech he had prepared. He was in considerable difficulties. Although he asked important questions about eggs and poultry, which I shall answer later, it was not the speech he had intended to make. One of the difficulties of the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) 1627 was that he did not have the good sense to tear up his speech.
For some time we have expressed concern about the agriculture industry. I heard the hon. Gentleman saying that the farmers had had to live since 28th February. That was the date of the election. We did not even have a Government at that time. That was when a certain right hon. Gentleman was trying to organise something so that despite his dismissal by the people of this country he could remain Prime Minister. It started then.
The increase in the calf subsidy to the agriculture industry was £35 million. The special pig subsidy amounted to £30 million and that for horticulture heating oil amounted to £7 million. Announcements were made today about a lime subsidy of £5 million. Those are fine words. We do not deny that we have been concerned. We share the concern expressed about the agriculture industry by most people.
I have a Press release from the National Farmers' Union of Scotland. It reads:We have left the Minister in no doubt about how serious the situation has become. Frankly, we are facing a crisis in which milk and livestock producers are going to have to cut back production to survive. It is as simple as that.That was not said during the past two months. That was said on 28th September last year after they had seen the hon. Gentleman.
The hon. Gentleman asked for immediate action. How long did the farmers have to wait for action? Not until February 1974, after an election, did they get any action. Yet the hon. Gentleman has the nerve to stand and say "We will judge you". Whom do the Opposition think they are? They are certainly not deceiving the farmers, because the farmers know what happened.
Then we had that wonderful speech at Norwich by the right hon. Member for Grantham (Mr. Godber), who told us how he was manoeuvring everything and that the Government had made up their minds in December what the farmers needed. But he said that it was a ticklish business; they had to negotiate in the Common Market. The Common Market was the Conservatives' pride and joy, the answer to all the problems of agriculture.
I think that the right hon. Gentleman had four points. He was most concerned 1628 about milk. He spoke about his posturings in the negotiations about other things, about how difficult the matter was, how difficult he had been, how he had given way on this and that but how he had done nothing about matters other than milk. The other matters included beef and, I think, sugar.
§ Mr. Joseph Godber(Grantham) rose—
§ Mr. Godber rose—
§ Mr. Godber
Surely the right hon. Gentleman will give way when he has made such a challenge. He knows very well that there was no need to do anything about beef, because we were still in the intervention system. It was the action of his right hon. Friend that was responsible. As to the other matters, February was the date for the price review. Is the right hon. Gentleman saying that we should have abandoned the price review?
§ Mr. Ross
The right hon. Gentleman knows quite well that he advanced the price review because of the state of agriculture, but he did nothing about it. He got rid of the lime subsidy and ended the fertiliser subsidy. He did nothing about beef, because he could do nothing; he had already taken it out of the guarantee at the price review. He left us helpless. He had to go to Europe on the problem of beef and did not deal with it until he had dealt with milk. The right hon. Gentleman knows quite well what has happened to the intervention policy when put to the test in Europe. Indeed, he has no need to go to Europe generally. Let him go to Southern Ireland and see whether the intervention policy there has succeeded in sustaining the market. It has not.
It is no answer to tell the British public today "Let us force up prices. Let us put this fresh commodity into cold storage and let it deteriorate". If the right hon. Gentleman had heard his hon. Friend 1629 the Member for Fife, East (Sir J. Gilmour), he would have heard an entirely different approach. Not only we but the Community have to see how we got into the beef muddle. We shall get out of it only with considerable changes in things that people have hitherto thought sacred. The person who has started those changes is my right hon. Friend the Minister of Agriculture.
§ Mr. Buchanan-Smith rose—
§ Mr. Ross
I have only five minutes. The hon. Gentleman had his own time and I did not interrupt him.
It should be appreciated that the difficulties did not start on 28th February. They were there, and action had to be taken. We are not exactly free agents when it comes to taking immediate action. We have to go to Brussels and talk to our Community partners. That was one of the right hon. Gentleman's difficulties.
We have been asked for details. They cannot be given until they are worked out, but on the basis of what we know we are satisfied that the matter will be all right. We also have the assurance from my right hon. Friend that we shall take the action we think right for the British people and British agriculture.
§ Mr. Douglas Jay (Battersea, North) rose—
§ Mr. Ross
Changes must be made in the common agricultural policy not only to suit Britain but to suit Europe.
Several hon. Members suggested that the figure mentioned for beef was not enough. That did not surprise me. I think that it was the hon. and learned Member for Montgomery (Mr. Hooson) and my hon. Friend the Member for Carmarthen (Mr. Jones) who made the suggestion. If we take the figure under the guarantee and add the cost increases since, we have roughly the figure mentioned by my hon. Friend. A Conservative Member shakes his head. He need not do that, because I worked the figure out and I got my officials to help me.
1630 There are already indications that what was done last week and what has been announced even today are resulting in some firming-up. In fact there has been an improvement in today's prices. Let us not talk ourselves into further gloom. It was suggested that in order to have confidence there must be a floor figure. That figure has been given. We have received assurances about the lime subsidy.
Opposition Members should be ashamed. I remember the last debate and my statement at the end of my speech that if action was needed we should take it. We have already taken action. We have shown that the farmers of this country can once again rely on the Labour Party and this Government. We created the Act on which their postwar prosperity was built up, and we are still the same kind of people.
§ Mr. Marcus Kimball (Gainsborough)
How will the special subsidies announced to help with beef be administered? There is concern among auctioneers that they will be paid only on the deadweight. May we have an assurance that we shall return to the system as it was and that subsidies will be paid on the animals in the market when they are sold for slaughter?
§ Question put and agreed to
That this House calls on Her Majesty's Government to take immediate steps, especially in the livestock sector, to safeguard the future supplies of home grown food for the consumer.