HC Deb 26 March 1974 vol 871 cc371-80

8.01 p.m.

The Minister of State for Northern Ireland (Mr. Stanley Orme)

I beg to move, That the Agriculture Payments (Extension) (Northern Ireland) Order 1974, a copy of which was laid before this House on 12th March, be approved. The right hon. Member for Cambridgeshire (Mr. Pym) who is to reply for the Opposition deals not only with matters concerning Northern Ireland but with agriculture. However, his double duty is completely met by the business before us this evening. I think the right hon. Gentleman is conversant with the order because it is similar to one which was to have been brought before the House by his administration before the General Election.

The order renews the special assistance grant to Northern Ireland agriculture for a further three years at a current rate of £1.9 million per annum. The order was made by the previous administration on 7th February and laid before Parliament on 12th March. Under the provisions of Section 32 of the Agriculture Act 1957 the order will be of no effect unless approved by resolution of each House of Parliament. My noble Friend will be dealing with it later this week in another place.

The grant originated in the decontrol of food marketing and of agricultural produce which took place in 1954. During the period of control farmers throughout the United Kingdom received from the Ministry of Food the same fixed price for their produce sold off the farm. The system introduced in 1954 gave farmers throughout the United Kingdom the same deficiency payments based on the difference between the average market price for the country as a whole and the guaranteed price. This meant that when a deficiency payment was made each farmer received the same addition to the price he obtained from the market irrespective of the actual difference between the price he himself had obtained and the guaranteed price.

This presented a special difficulty for Northern Ireland because of its remoteness from the main markets in Great Britain. Northern Irish farmers tend to get lower prices on average than farmers in most parts of Great Britain. This was recognised in 1954, and the Government decided to make a grant each year to the Government of Northern Ireland for the purpose of assisting agriculture in Northern Ireland. The grant is now payable under Section 32 of the Agriculture Act 1957. This provides for the grant to be extended for periods of up to five years at a time and for the amount of the grant to be varied in respect of any extension period subject of course to parliamentary control and approval.

Until 1970 the grant was normally extended for the maximum period of five years allowed by the Act. This made possible the formulation of long-term schemes to improve the efficiency of Northern Ireland agriculture and enabled producers to plan ahead. Because of the uncertainty in 1970 over future agricultural support arrangements under the EEC proposals the period of the grant was fixed for three years. The Government have concluded that the grant should be extended for a further period of three years commencing on 1st April 1974.

The Government have taken several points into account in deciding to continue the grant at its present rate. First they have examined and compared the market prices obtained for the guaranteed agricultural commodities both in Northern Ireland and Great Britain. Secondly, the grant was considered in the context of the wider policy implications for Northern Ireland in view of the political situation. Thirdly, they have taken into account the changes in agricultural support arrangements in the United Kingdom. Taking all these factors into account the Government consider the renewal of the grant justified.

I should emphasise that the grant is not intended merely as a means of supplementing farmers' prices in Northern Ireland. The schemes financed by it are designed to encourage greater efficiency of production and more orderly marketing which will help Northern Irish farmers overcome their remoteness disadvantage. The schemes are described briefly in a statement laid before Parliament each year and a statement for 1973–74 was laid before the House on 4th February. Agriculture is a major industry in Northern Ireland. That is why it continues to receive Government support.

Finally, I will say a word about the way in which the grant is used. Allocation of the fund between various schemes is in the hands of the Department of Agriculture for Northern Ireland, subject to general approval by the three United Kingdom agricultural Ministers and the Treasury. Approval by the United Kingdom Ministers is required because the special assistance is part of the total assistance given by the United Kingdom Government under the Agriculture Act 1957 to farmers in the United Kingdom and must be consistent with the Government's overall agricultural policy. Subject to this, the disbursement of the money is a matter for the Northern Ireland Department of Agriculture.

8.7 p.m.

Mr. Francis Pym (Cambridgeshire)

I am grateful to the Minister of State for his remarks at the outset and I am also grateful for the explanation he gave about the order. The Opposition certainly support it. It would be impossible for me to do anything else because my signature is on it.

The Minister of State is perfectly right in saying that agriculture is even more important in Northern Ireland than it is in the rest of the United Kingdom. I do not think anyone would question that Northern Ireland agriculture has many extra costs to bear, particularly in relation to pigs and beef. The order extends the grants which are a contribution to these extra costs. Northern Ireland is much more heavily dependent upon imported feeding stuffs for the livestock sector of the industry than is the rest of the United Kingdom. About 80 per cent. of feeding stuffs used in Northern Ireland are imported, as compared with about 30 per cent. in the United Kingdom.

My figures show that for the current year the feedstuffs cost was expected to total about £4 million more than the equivalent price to farmers in Great Britain. and that is a direct result of the comparative remoteness to which the Minister of State referred. I do not think anyone will dispute that the rearing of calves and pigs is more expensive in Northern Ireland. I think the cost per calf is between £3 and £8 per beast more in Belfast than in this country, and is also more expensive in Belfast than in Dublin. That aspect must be taken into account.

In addition, there are the lower across-the-board market prices for produce. I believe that prices in Northern Ireland have fallen below the level applying generally in the United Kingdom by about £4 million. Again, transport and remoteness account for that.

The problem is one of both higher costs and lower incomes for farmers in Northern Ireland. This country has sought to put it right in various ways. The money that will be made available by the order, if approved by the House, is not the only means by which assistance will be given to farmers in Northern Ireland. There is the development programme grant, as well as the employment grant—which was introduced by my right hon. Friend the Member for Penrith and the Border (Mr. Whitelaw), costing between £2 million and £3 million —and a grant towards the transport costs of eggs. Therefore, various grants are available to make up the difference. This is very important from the point of view of Northern Ireland.

The only question is whether the amount is adequate. There is now a new factor to consider, namely, the negotiations completed by the Minister of Agriculture in Brussels last week and the way in which these negotiations will affect Northern Ireland. With regard to beef, I understand that there is to be no increase in the calf subsidy in Northern Ireland. It is to be done on a different basis in Northern Ireland, namely, on payment per head of fat cattle sold. I understand that the amount is related to the compensatory amounts as between Northern Ireland and the Republic, and that it amounts to about £20 per bullock. This is undoubtedly a great help, and is an arrangement which farmers in the United Kingdom would have preferred to the calf subsidy. I appreciate that this is not particularly a Northern Ireland point, but the hon. Gentleman will see in a moment what I am getting at.

The beef producers, through the negotiations of the Minister for Agriculture, have secured an arrangement which is much more acceptable to them than is the calf subsidy.

Following the negotiations in Brussels last week, the arrangements for pigs are now the same for Northern Ireland as for the rest of Great Britain. Pig producers in Northern Ireland have been in the greatest difficulty, and I hope and presume that most of the £1.9 million will go to them, as they are the sector at present in the greatest need.

I do not know whether the hon. Gentleman can confirm it, but I think I am right in saying that slaughtering of sows in Northern Ireland has been on a larger scale than in the rest of the United Kingdom. If the money goes to the pig producers rather than to any other sector it will fulfil a particularly useful purpose.

When I first became Secretary of State for Northern Ireland it was necessary to take an early decision on the future of this grant because the existing grant expires on 31st March. It was necessary to know well in advance whether the order was to be continued. It was in December that the Under-Secretary of State for Northern Ireland announced in the House that it was the intention of the then Government to continue the grant in this way. After that the price of feed went up in Northern Ireland, and produced difficulties. Towards the end of January and at the beginning of February I had a number of meetings with those responsible for agriculture in the Northern Ireland Executive, including Mr. Faulkner and Mr. Morrell, who were highly concerned about rising costs.

From the figures I was able to obtain at that time it appeared that the right amount would be £1.9 million, but that was a number of weeks ago. I do not know whether the hon. Gentleman has more up-to-date figures to confirm that that judgment was right. If not does he consider it appropriate to analyse and carefully review the costs of rearing pigs and beef in Northern Ireland to see whether the money provided under the order is adequate.

The House will wish to see that Northern Ireland producers are competing on a fair basis with producers in the rest of the United Kingdom. If the hon. Gentleman can assure us on that point—or otherwise undertake to go into the facts and figures most carefully and thereafter assure the House that there is adequate provision in the £1.9 million, in the circumstances at present appertaining both the House and the producers in Northern Ireland will be reassured.

8.15 p.m.

Mr. James Kilfedder (Down, North)

I welcome the figure of £1.9 million announced by the Minister, but I do not regard it as an adequate amount. According to my estimates the amount needed should be three or four times that figure if Ulster farmers are to be adequately helped. I therefore agree with the right hon. Member for Cambridgeshire (Mr. Pym) that there should be careful analysis and examination of pig and beef production in Northern Ireland to ensure that Ulster farmers get a fair deal.

Both Front Benches have already accepted that agriculture is a major industry in Northern Ireland. Indeed, agriculture is more important to Northern Ireland than it is to the rest of the United Kingdom. I trust that the Government will take further action to meet the special problems of farmers in Northern Ireland at present, such as the cost of feeding stuffs. I understand that feeding stuffs have gone up by £2 per ton within the past week. Four weeks ago there was an increase of £4 per ton. Such increases mean that the Ulster farmer cannot compete with his counterparts in the rest of the United Kingdom. Millers in Ulster have to maintain their staff and their mills and therefore feeding costs get greater.

I trust that the Minister can give some hope to Ulster farmers that the Government will help with the problem of feeding stuffs costs. The Government need urgently to tackle the differential between the cost of feeding stuffs in Northern Ireland and their cost in the rest of the United Kingdom. The situation in Northern Ireland is desperate at present. The present perilous position of Ulster farmers has been constantly emphasised by them, and by their political representatives, irrespective of party. Pig producers in Northern Ireland are probably in a worse state than other farmers, although the plight of the beef producer must also be carefully borne in mind.

How has the Minister arrived at this amount of £1.9 million in the Agriculture Payments Order? I understand that Northern Ireland imports in the region of 70 per cent. of its feeding stuffs, whereas the rest of Great Britain depends on only 30 per cent. of imported feeding stuffs. This underlines the grave need of the Ulster farmer for greater financial help.

Under the arrangements recently entered into in Brussels by the Minister of Agriculture, pig producers are to receive a payment of £3.50 per pig, but this will be for only two months. I understand that thereafter the amount will decrease. The figure of £3.50 per pig barely covers the cost of production in Northern Ireland and, no doubt, in the rest of the United Kingdom.

I suppose that the Government believe that because of the cut-back in pig production the market in Northern Ireland will harden, that pigs will be in short supply, that prices will therefore rise, and that farmers will be helped in that way; but that is the wrong way in which to look at the matter, because pig producers are getting rid of their breeding herds. I understand that they have disposed of nearly a third of them, which in the long run will affect the pig industry in Northern Ireland. Once the market improves, it is difficult to replace a breeding herd that has been carefully built up over the years.

I am sure that the Minister understands the position. I hope that his concern will not be expressed just in words of sympathy—he is always ready to offer such words—but also by an offer of cash to the farmer. I appeal to him, when he winds up this brief but important debate, to say that more cash will be available to the pig producer. The Minister has been made aware of the situation in Northern Ireland. I shall not repeat what I have said in the Northern Ireland Assembly and to Ministers here. The Minister must know that unless immediate help is given to farmers in Northern Ireland this major industry will be so gravely affected that it will take years to recover.

Northern Ireland sends its products to Great Britain. The Government should bear in mind that that is a help to the British economy. If the farmers are turned off the land because they are made bankrupt they will join the queues of unemployed in the cities. It is more expensive to produce jobs in industry for them than to keep them on their farms by giving them a reasonable amount of money.

All that I am asking for is justice for the Ulster farmer.

8.23 p.m.

Mr. Orme

By leave of the House; I should like to reply to the salient points raised by the right hon. Member for Cambridgeshire (Mr. Pym) and the hon. Member for Down, North (Mr. Kilfedder).

One of the key points was whether the £1.9 million is adequate in the current inflationary situation. I have been informed that the figure was arrived at last year by a working party of three ministries, which recommended renewal on a three-year basis rather than the previous five-year basis. That recommendation was based on figures gathered over a period. For example, in 1973–74 the estimated expenditure was £1,758,000. Out of an estimate of just under £1.9 million, the take-up was £1,668,000. That answers the hon. Gentleman's question about the adequacy of the amount. In that year a considerable amount was not taken up.

Of the amount we are talking about for 1974.75, it is estimated that £1,893,000 will be taken up, leaving a £7,000 gap. But, again, that is the top estimate, based on current figures.

The right hon. Gentleman wanted the situation brought right up to date, including the past six weeks. If everything is taken up, which is not likely on the basis of experience, that £1.9 million will be adequate.

Mr. Kilfedder

Does the Minister agree that the remoteness grant was and is provided to go on production schemes? It is not meant to go on to the end price of the farmer's product. That is why it has not been taken up.

Mr. Orme

I agree, but it is open to the farmers' union to suggest schemes and to apply pressure. No major dissatisfaction has been shown by the farmers in Northern Ireland in this regard.

I have been advised that discussions on the use of the grant have been held with the National Farmers' Union. It has agreed the proposals for 1974–75, which do not include any expenditure on pigs. That matter is covered by the agreement brought back from Brussels by my right hon. Friend the Minister for Agriculture, Fisheries and Food. There are on the Order Paper this week Questions dealing with it. The same grant applies in that case to Northern Ireland as to the rest of the United Kingdom, and will apply for about four months. The only assurance I can give is that if it proves to be inadequate and representations about pig production are made, the matter can be examined. My right hon. Friend's endeavours in Brussels have met some of the main points of criticism by farmers, not least in Northern Ireland.

In view of the EEC arrangements affecting pig production in Northern Ireland, I believe that the order meets the immediate situation. It is open to be questioned. Any hon. Member who wishes to do so can raise the matter at a future date.

I hope that the House will approve the order, so that the farmers in Northern Ireland can have what is a genuine and needed subsidy.

Question put and agreed to.

Resolved, That the Agriculture Payments (Extension) (Northern Ireland) Order 1974, a copy of which was laid before this House on 12th March, be approved.

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