§ 3.32 p.m.
§ Mr. Michael Jopling (Westmorland)
This being one of those days when the Opposition have the choice of the subject for debate, we have decided that we should talk about the current crisis in the agricultural industry. There is a real crisis which is perhaps best summed up in the document which the National Farmers' Union has circulated to Members of Parliament within the past few days. Its first paragraph briefly and baldly reads:The agricultural industry is now facing without any doubt its gravest crisis since the end of the war and confidence in the industry has never been so low.With that as the background, we believe it is essential that the Government use this debate to do whatever they can to restore the shattered confidence of farmers.
Of course, we know that the Government are committed to expansion and to the renewal of confidence. They produced their White Paper three months ago and it was welcomed by us. Indeed, it was welcomed by the industry. We believe that the White Paper is a recipe for the expansion which we all want. It provides expansion targets of around 2½ per cent., which we and the industry believe are reasonable. However, what is needed now is the cash to implement the aims of the White Paper.
For a good many months before the White Paper was produced the Government talked about what they were to put in it. But now, three months after its production, there has been no sign of the cash to inspire the confidence that is necessary so that we can achieve the targets that the White Paper set out. Surely it is now time for action. Surely, after three months, the talking has been going on long enough. We know that the Government have not gone cold on 1061 the aims of the White Paper. Only two weeks ago today the Prime Minister went to the Royal Show and made a speech about the need to expand agriculture. At the beginning of this debate it is no bad thing to put on record what the right hon. Gentleman said at that time. He is reported as saying:The argument for expanding agricultural output today, and for help to do it, rests on grounds which the most hardbitten economists, the most dispassionate industrial consultants would accept … It is on that basis, the hard commercial and economic facts, that it makes sense to expand food production in this country".Therefore, we know that as recently as two weeks ago the Government were still committed to the aims of the White Paper.
It seems that in the agricultural industry we have much the same problem as we have as regards the economy and the problems of inflation as a whole. Like the inflationary problems, the longer the Government delay the harder in the end will it become to put matters right. Already we have a much worse position in the farming industry than in April when the White Paper was produced. The Minister may well tell us that the weather has made things more difficult, but the effects of the weather will be felt hardest next winter and not now. It is now that confidence is running away and production is beginning to fall.
Many more serious underlying problems are apparent in the industry than the problems of the weather. When we look from one sector of the industry to another we see that there is falling profit, falling confidence and falling production. This has been going on for longer than the difficult weather conditions of the past few weeks in particular. Indeed, it has intensified since the White Paper was produced in April.
The Minister cannot be other than aware of the drop in confidence within the industry. The Minister goes round the industry a good deal and he must be aware of its mood. Farmers are beginning to argue that expansion is not in their best interests. There is a new mood of retrenchment in the industry which I have not seen before. I think that both sides of the House will agree that expansion of food production at home is in the national interest. Therefore, it must follow that we all agree 1062 that the present mood within the industry is a bad one for the nation. We must all do our best to restore confidence and to set the industry again on an expansionary path.
It is up to us to persuade the Minister to provide and inject the cash which the industry needs so badly. If we look around the industry and consider the various sectors, the same picture is apparent. I begin with the egg producing sector. It is a sector which has been having huge losses recently despite tremendous investment over the past few years. I heard an estimate last week, which I am sure is correct that, taking average costs of production in the egg producing sector, those engaged in it have been losing money in 12 out of the past 14 months. Recently even the most efficient producers have been losing money. Within the past few weeks the price of eggs to the producer has dropped as low as 15p a dozen. That implies losses for those producers who are producing at average costs of approximately 10p a dozen. Egg producers cannot continue for very long at that rate.
I must acknowledge that the Minister has taken action under Article 135 of the Treaty of Rome to try to get something done on a Community basis. That has resulted in the suspension of the monetary compensatory amounts and the increase in export restitutions for eggs exported from the Community. I am sure we all hope that these measures will be enough to restore confidence and profitability to the industry. However, if they do not—and there is no certainty that they will—I hope that the Minister today will give us an assurance that within a very few weeks he will seek a ban on imports from other Community countries.
At the same time, it is essential to work for a system within the Community in order to establish a more stable egg industry and a European system for egg production so that confidence may be restored not only to our own industry but to that throughout the Community.
I am sure that the Minister has plenty of examples of what is happening in the egg industry. I give him one small example, though perhaps it may not be thought so small when I have described it. It is that of a hatchery in Wiltshire which recently has gone bankrupt. It 1063 had an operation working up to a turnover of £10 million a year. In the words of its owners, it has gone bankrupt… because of the effect of imported eggs and the low price of eggs on the domestic market.Consequent upon that, customers have been unable to pay their bills, and cash flow problems have resulted, causing the company to go bankrupt. This is a straw in the wind showing what is happening in the egg producing industry, and the House should be aware of it.
I turn next to two industries, one of which I intend to talk about specifically but both of which have been clobbered by the increased cost of oil in the past year or so. Two weeks ago, we debated our fishing industry which, unlike most other fishing industries in the Community, has had no help. Although the Community allows help to deal with the oil crisis, here the Minister has done nothing to help the fishing industry, and trawlers continue to be tied up.
A similar situation exists in our glasshouse industry where, because of the increase in oil prices, the Community has allowed help to be given on a State basis when our own Minister has refused that assistance to our industry. I find it fantastic that although the right hon. Gentleman went to Brussels when the Council of Ministers debated whether individual States should be allowed to give this assistance in the face of increased oil prices, and was one of those to hold up their hands allowing individual States to pay these subsidies, he came straight home and refused to pay the subsidy to growers in this country—
§ The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart)
§ Mr. Jopling
Apparently the right hon. Gentleman disagrees with what I said. However, that is exactly what he did. He allowed other States in Europe to pay these grants, and then he exposed British growers to subsidised imports without the assistance of those same subsidies. To be fair, it is true that the returns of glasshouse growers in past months have not been at disaster level. But there is a great deal of the season to go, and a great many losses could be 1064 made in the next few months. So it can be no surprise to the right hon. Gentleman or to anyone else in this House that there is no more confidence in the glasshouse industry than there is in the trawler industry, which we debated two weeks ago. The right hon. Gentleman himself has been responsible for this loss of confidence In the glasshouse industry—
§ Mr. Jopling
If the right hon. Gentleman feels that it is nonsense to say that, I invite him to visit some of the glasshouse areas and to hear what growers are saying about the way in which he has refused them subsidies in the face of competition from abroad. He is responsible for the loss of confidence, and it is up to him to restore it.
§ Mr. Peter Hardy (Rother Valley)
I remind the hon. Gentleman that only two or three days ago we were hearing bleatings from his right hon. and hon. Friends about the need to stop Government subsidies to industries of all kinds. In view of statements of that type and the other protestations that we hear from the Opposition about people having to face the stern effects of increased oil prices, is not the hon. Gentleman being a little inconsistent?
§ Mr. Jopling
If the hon. Gentleman will be patient, he will discover that I intend to deal with that very point later in my speech.
In some of the other livestock sections of the farming industry, we find the stark reality of a cut back in production. I take as an example the pig industry. The March census showed that our breeding herd of pigs was 12 per cent. below the figure for March 1974. The breeding herd has been run down and, therefore, the industry has been unable to take advantage of the better prices that pigs have been fetching. This means that the country will be short of pig meat from domestic sources in the months ahead. The Meat and Livestock Commission estimates that, in the July-September period, pig slaughterings in this country will be 16 per cent. below the level for the same period last year. This is another example of how the Minister's attitudes and policies have meant that we shall have to go abroad to buy much more of our food than we need have bought.
1065 We have the same situation in the beet Industry, which is still tottering under the traumas of the Government policy of last year. We have had many arguments in the House about this and, repeatedly, the Minister has tried to shout himself out of his guilt. The truth is simple. When the Minister took office 18 months ago, the beef industry had a support system through the intervention system. It was the right hon. Gentleman who scrapped that and left our beef industry without any form of support for the first time for more than 25 years. The right hon. Gentleman cannot be surprised to discover that there is very little confidence in the beef industry and that such confidence as exists is at an extremely low level.
There are added fears. There are fears about the coming winter. There is a serious danger of a shortage of fodder, especially on the western side of the country. The Minister and I, with our adjoining constituencies, represent one of the most celebrated stock-rearing areas. We both know that our constituents are very anxious about what store cattle will be making in the autumn sales, which will begin soon.
There are measures which the Minister can adopt to help in the present situation. First. let him announce very soon the target prices for beef for each of the periods up to February of next year. This will do a great deal to increase confidence, and the sooner that it is done the better.
At the same time, there is uncertainty about whether the beef slaughter premium scheme will continue next year. The Minister negotiated it for one year. So far, there is no guarantee that the scheme will continue for a second year. I have been to talk to Mr. Lardinois about this. I hope very much that it will continue. If the Minister can make that early announcement, that, too, will do a good deal to help confidence.
I turn to the milk industry, where there is the greatest area of lost confidence in the whole of agriculture. There has been a drastic cut back in milk production and in the size of the dairy herd. Using the Department's own figures, I have calculated that over the past 11 weeks 60,000 more cows and bulls have been 1066 slaughtered than in the same period last year. That represents a 38 per cent. increase on last year. I have seen estimates that, if nothing is done now, by the end of the year our dairy herd will be 9 per cent. lower than it was two years ago. This will be a testimony to the Minister's supervision of the Department, if nothing is done.
The effect of the smaller herd is bound to mean that there will be less milk available next winter. I have seen reports that liquid milk may be rationed in the coming winter. I doubt whether that will be necessary, but I hope that the Minister will give assurances on this score and that he will be able to set at rest the anxieties of housewives. It would help if he could confirm that.
Although the rationing of liquid milk will probably not be necessary, there is a serious danger of cut backs in the production of dairy produce. The House will remember that, when the Minister and his colleagues last answered Questions in this House, we discussed the danger of there being a cut in butter production. I asked the Parliamentary Secretary on 3rd July whether he agreed thaton the latest estimates butter production in this country will cease at the end of this month and will not be resumed until March next year?"—[Official Report, 3rd July 1975: Vol. 894, c. 1662.]For my troubles, the hon. Gentleman told me that I was irresponsible. But I was interested to see on the front page of last week's Farmers Guardian that the suggestion I had voiced in the House was confirmed by the Milk Marketing Board. Therefore, I shall be glad to know whether the Government's view is that the board, too, is irresponsible. If not, I hope that the Government will tell us the position over the production of dairy produce this winter, and butter in particular.
It is tragic that this slide has happened in the course of this year. It is essential to provide better prices for milk producers this winter, when they face the prospect of food prices as high as last winter, if not higher. The White Paper spoke of an expansion of milk production. It is important that this expansion be implemented and encouraged by an immediate increase in milk prices.
1067 The signs of a cut back are evident for everyone to see. Confidence and production have been slipping almost where-ever one looks within the industry. The Government have waited too long to implement the White Paper that they produced three months ago, and they have put other impositions on the industry, whose confidence was already reeling.
The Government's legislative programme contains a myriad of further measures which have shattered confidence among farmers, including the capital transfer tax, which has had a tremendous effect on their confidence; the Corn-unity Land Bill, which in spite of some amendments, still provides a tremendous threat to the confidence of our farmers; and the potential imposition of the wealth tax, which is being considered by a Select Committee. The NFU recently published a statement with the headlineWealth tax proposals could cripple agriculture".Farmers have cottoned on to the threat of the re-rating of agricultural land, which the Labour Party has proposed, and are most anxious about it.
Finally, there is the proposal, which we read in the newspapers, that the Government intend to abolish the tied cottage system in the early future. I hope that the Minister will think very carefully before he pursues the Labour Party line on abolishing the tied cottage and will consult his right hon. Friend the Secretary of State for Scotland, whom I am glad to see here. It is significant that the Scottish National Farmers' Union and the Scottish farmworkers' section of the Transport and General Workers' Union are completely in accord on the retention of the tied house. In a statement they have said with one voice:We must insist that the views of the industry are not completely disregarded by those who know little about the agricultural industry.I hope that the Minister will have regard to what the Scottish industry feels. Many farmers and farm workers in this country take a view that is very little different.
§ Mr. David James (Dorset, North)
My hon. Friend refers only to what one reads in the newspapers. Last week I put a Question to the Minister of Agriculture, Fisheries and Food on the subject of tied cottages, which was transferred to the 1068 Secretary of State for the Environment. It was No. 79, and so naturally was dealt with as a Written Question. The answer was that the Government proposed to abolish tied cottages. It is not a matter of conjecture, but a matter of fact now.
§ Mr. Jopling
While that may be what the Secretary of State for the Environment thinks, I hope that the Minister of Agriculture, Fisheries and Food will stick up for the industry and for what is best for it. The Government say "Produce more food", but at the same time they say, "You must do it with these millstones around your necks, because the dogma and ideology of the Labour Party must come before an efficient food producing industry in this country".
The burdens that I have described have totally disrupted confidence. I quote as an example a statement by the chairman of the Agricultural Mortgage Corporation in his annual report, where he said:The farming community, including landowners and farmers, are likely to be more concerned with financial planning to meet these taxes than with providing funds for expansion of output. The larger units and enterprises which produce so high a proportion of food must end up by being fragmented and their working capital depleted, when it is already insufficient to keep pace with inflated prices.It seems clear to everyone but the Government that if more food is wanted, which is what the Government do want, the industry cannot be shackled with capital taxation and other legislative bonds.
If the Government want more evidence of this, I invite the Minister to look at the recent evidence produced by the Country Landowners' Association, based on the preliminary results of its capital investment survey, which covered 280 replies, involving 714,000 acres of let land and 1,044,000 of owner-occupied land. Before October 1974 there was planned for that land—almost 2 million acres—new investment of £10.8 million. Since then, as a result of the Government's policies, only £4.2 million of that investment is to be continued. The remaining £6.6 million has been abandoned, curtailed or postponed.
The reasons for this, with regard to buildings alone, are that almost 60 per cent. are being abandoned or postponed because of the capital transfer tax, uncertainty over the farming profit, the tied cottages issue or the wealth tax. Therefore, it must be clear to the Government 1069 that their proposals have had a devastating effect in reducing confidence and investment in the industry. The survey gives a vivid example of how the Government's legislative programme is cutting back what they want to achieve. These are the reasons for the present uncertainty and loss of confidence and for the cutback.
The Government must act very soon. I know that talks are continuing and have been continuing since the publication of the White Paper. I hope that the Minister will make an announcement this afternoon about how the White Paper will be implemented. If he does not, I hope that he will tell us that he can make a statement before the recess.
Above all, we believe that there should be a revaluation of the green pound, whose value has moved so far away from the value of sterling. In view of recent experience, the time has come for another adjustment. Last October, when the gap was 14 per cent., the Government cut it back to 6 per cent. In February they made another adjustment from 15 per cent. to 11 per cent. But now the value of the green pound is 22 per cent. out of line with sterling, so it is clearly time for another adjustment. That would be the quickest way to restore confidence in the industry. I know that it is argued that it would mean an increase in food prices, but a 10 per cent, revaluation of the green pound would mean an increase in the cost of living of less than 1p in the pound. I warn the Government that if they do not do something soon, food prices will rise far more because of the inevitable shortages which will follow than because of the consequences of the green pound alteration itself.
It is absolutely essential, in our longterm supply situation, to stimulate more food production now. The Government must use every weapon in their armoury—the green pound, other Community schemes and Government help. This refers to the question of the hon. Member for Rother Valley (Mr. Hardy). There is nothing new in the Opposition saying that the Government must not rule out increased Government spending to stimulate food production. At the last General Election, we on this side said that, although it was our policy to reduce Government spending, there were two 1070 exceptions—housing and food production. On these, we were prepared to increase public spending.
Through the White Paper, the Government have shown the way. So far, most farmers have seen the White Paper as only a cynical public relations exercise. Many of them remember the "little Neddy" of 1968, set up by the right hon. Member for Anglesey (Mr. Hughes), which turned out to be all talk and no cash. Let the Government show today that they are prepared to put their cash where their mouths are. I hope that the Minister will stand up for increased food production. He is a popular man, with a great deal of charm, but he must use that charm for a change within the Cabinet and get his colleagues to support a policy for more food.
The Minister understands horse racing similes. Through the White Paper, he has shown that he intends to take his horse to the right race course, but he has not yet got it to the start. He has cantered it down to the start but, unfortunately, in the same way as confidence in agricultural production is falling away, he has not yet managed to pull up his horse at the starting gate. It is still cantering faster and faster in the wrong direction. The time has come to get a turn round in the industry to stop the decline and to get food production increasing once more.
§ 4.3 p.m.
§ The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart)
I welcome this opportunity for what I hope will be a useful and constructive debate on the current situation and prospects in agriculture. I well appreciate that there are serious difficulties and problems facing the industry which will be much in hon. Members' minds. I hope, however, that they will not take too short-term a view and that they will recognise the overall economic situation within which we must all operate. I felt that the hon. Member for Westmorland (Mr. Jopling) in some respects took a short-term view and failed to set our debate in its proper context.
The hon. Member talked about subsidies for horticulture and fishing. At least I got £6¼ million for fishing and £5 million for horticulture, which was much more than any other country received in the EEC. Prices today in horticulture have firmed, so I do not 1071 accept the gloom that the hon. Gentleman is trying to spread.
When the Government embarked on the discussions which led up to the White Paper "Food from Our Own Resources", we deliberately set out to establish a longer-term perspective for agricultural policy. Agriculture, we felt, cannot be dealt with simply on a year-by-year basis, let alone on a month-by-month approach. We set out to analyse in depth with all the interests concerned what was the proper economic value of agricultural production and what priorities that assessment indicates. We looked at prospects for world food supply and demand over the years ahead.
We considered the implications for this country, for the security of our food supply and the possible costs to our balance of payments. We concluded, as the White Paper makes clear, that a policy of expansion in our domestic food production was justified. Moreover, the White Paper not only states the Government's confidence in the basic case for expansion, but also sets the overall objective at which the Government and industry should aim as being an annual 2½ per cent. increase in the industry's net product. Further, the White Paper analyses where that expansion should bring most benefit to this country.
We looked at this both in terms of the resources needed to produce the extra output and in terms of potential import saving. It was clear from these analyses that higher output of milk, with its byproduct, beef from the dairy herd, and sugar beet was where the most benefit should come. Cereals and sheep production should also, however, make a significant contribution. The White Paper sets out a projection of the possible pattern of higher United Kingdom output in the early 1980s. This is the first time that producers have been offered such a clear set of guidelines worked out by the Government in consultation with the industry.
The White Paper was widely welcomed. All the farmers' unions, in England and Wales, Scotland and Ulster, acknowledged the White Paper to be a new forward-looking and positive statement of Government policy. The White Paper gets away from just looking at agriculture at each annual review. It provides a frame- 1072 work for the development of agriculture and agricultural policy over the years ahead.
More recently, I have been asked questions about implementing the White Paper as if this was a matter for once-for-all decisions needing to be taken now or not at all. This is, of course, a misconception. The White Paper establishes a strategy for the industry and agricultural policy. The Government, in consultation with the industry, will now develop their policies within that strategic framework so as to achieve the aims which the White Paper sets out.
The industry welcomed the White Paper in that spirit. Within a month of its publication, as the hon. Member for Wesmorland acknowledged, we initiated further discussions with the industry. These discussions are aimed at determining what measures it would be right and practicable to take in furtherance of the White Paper's aims. These discussions are still in progress. Among the subjects being covered are the effectiveness of capital and production grants, including possible ways of adjusting incentives or, for example, the better use and conservation of grass, the effects of capital taxation and of the green pound and beef market prospects. These are some of the matters which we are still discussing with the industry.
Meanwhile, I am well aware that many producers are concerned and apprehensive. The year 1974–75 was a difficult year, especially in the livestock sector. Costs rose again enormously. Net income fell. In real terms aggregate net income was 26 per cent. below 1973–74. Net product was unchanged. I accept that this was not a satisfactory picture overall, though it needs to be borne in mind that some sectors, notably cereals, still had a very good year.
This year producers have had further problems. The cold, wet spring hampered cultivations badly. It extended the winter for the livestock farmers and did much to offset the benefits of the mildness of the normal winter months. Many livestock farmers came out of the winter with no fodder left and poached and damaged pastures, too. Thanks to the weather since then, first cuts of hay and silage have been excellent in quality, but rather light in volume. The recent dry weather 1073 has seriously held back the growth of all crops, including the second growth of grass. The rain of the last few days will help, but more is wanted.
It is too early to forecast this autumn's harvests, but spring-sown cereals certainly seem likely to he down. It is obviously essential that farmers do all they can to conserve grass. I am sure that cereal growers will also have very much in mind the value of straw for supplementary winter fodder supplies. It is essential that this year we should not waste any animal fodder that can be economically used. This is essentially a matter of self-help for the industry. I am glad that last week the editorial of the publication, Farmers Weekly focused on this matter. It is the line that I take.
My Department is talking with the farmers' unions to discover how effective lines of communication can best be opened up between the livestock farmers, who want to buy straw, and those who will have it to sell.
§ Mr. Emlyn Hooson (Montgomery)
This is very important to the livestock farmers in the West. Has the Minister considered introducing a ban on the burning of straw this summer?
§ Mr. Peart
I hope that the hon. Member for Devon, West (Mr. Mills) will allow me to reply to the hon. and learned Member for Montgomery (Mr. Hooson). I heard the shouting from the hon. Gentleman's bench and I hope that he will explain it.
I discussed this matter with my liaison officers last Friday, and we are keeping in close touch with the industry.
§ Mr. Peter Mills
I do not think I have ever been discourteous to the Minister. I raised this matter the other day with Ministry officials and they said that they would not introduce a ban on the burning of straw. The Minister has now said the opposite.
§ Mr. Peart
I have said that I have had discussions with my panel chairmen who represent the various regions. This 1074 is one of the matters which we are now discussing with the unions. It is an important matter, and I am glad that it has been emphasised.
Prospects for the sugar beet crop must still be uncertain, but the lack of rain has certainly held back the crop to date. The dairy herd showed a further fall at this spring's livestock survey. Though yields per cow are up compared to last year, culling continues at a high rate and inseminations have declined.
I do not believe that there is any risk of milk being short for liquid consumption this winter. However, I am concerned at this continuing decline in the dairy sector. I accept in many respects the analysis of the industry made by the hon. Member for Westmorland. The decline is all the more disappointing, bearing in mind that this year's guaranteed price is over 32 per cent. higher than that fixed at the 1974 review.
Egg producers have also been facing difficulties. The hon. Member for Westmorland mentioned this. Last month I asked the Commission for action under Article 135, not of the main Treaty of Rome, but of the Treaty of Accession. It suspended monetary compensatory amounts and doubled the restitutions on exports to selected markets outside the Community. The hon. Gentleman mentioned the banning of imports. This would not be an easy decision to take, but I am continuing to keep a close watch on developments. I was glad to note last week's strengthening in the prices of large eggs.
Clearly, there are problems—I am not denying that. In order to achieve the expansion foreseen in the White Paper, recent trends, particularly in the dairy sector, must be reversed. When we published the White Paper, the referendum still lay ahead. We did not know—farmers did not know—whether future policy was to be worked out in the context of continued membership of the European Economic Community or whether in some other framework. Now we know. The country has decided. The strategy of expansion set out in the White Paper will now be pursued within the framework of the common agricultural policy.
I am confident that there is no problem here. The fact that, where necessary, major changes can be made in the 1075 common agricultural policy is well demonstrated by the new EEC beef regime which I secured at the beginning of this year.
It is all very well for the hon. Member for Westmorland to talk about me destroying confidence in the beef industry. It was his Government who ended the guarantee. Beef producers have benefited substantially from the new régime.
§ Mr. Joseph Godber (Grantham)
I would not dissent from the Minister's analysis. However, he must not continue with the accusation about doing away with the guarantee when he knows perfectly well that the previous Conservative Government instituted in place of it the full Community guarantee. He did not like that guarantee, and he has, therefore, moved elsewhere. However, it is important that he should not distort the position.
§ Mr. Peart
I believe that the previous Conservative administration destroyed the guarantee that worked so well in this country and substituted permanent intervention, which did not work, and which is not working now.
Beef producers have a far better régime. They have benefited substantially from the new régime, and the right hon. Member for Grantham (Mr. Godber) knows it. I shall explain. It is a real point. The régime has provided the assurance of a reasonable level of return—20 per cent. higher than producers' returns in 1974–75. I have made clear that I intend to ensure that the European Economic Community continues to provide satisfactory arrangements for beef producers. I will say in response to the query by the hon. Member for Westmorland about whether these would continue for one year only that I shall not agree to any future settlements which do not meet this end. Beef producers can be assured of that. I am, however, aware that the beef market has weakened in recent weeks. The hot weather has obviously contributed a lot to this. Some producers also fear a repetition of last year's problems. But, thanks to the beef premium arrangements, the situation is now very different. Producers' returns are safeguarded. The premia are doing their intended job.
Additional support can also be provided by support buying of a limited kind and assisted private storage, which comes 1076 back into operation. This can help to secure the better phasing of supplies, putting a floor in the market when supplies are plentiful and helping to ensure that supplies are available to be marketed in the spring when prices could otherwise be high.
There have been suggestions that producers may not get these target prices because of limits on the maximum size of the premia. There is, however, no ceiling on the total size of the weekly premium, but only on the overall annual average. Because there were no variable premia from early March until mid-June, I cannot foresee that even with current market trends this overall annual limit will bite. Thus, the new beef régime with its monthly target prices, variable premia and the support buying facilities which I have mentioned together provide producers with an effective guarantee.
Also I believe that producers will have a strong inducement to keep cattle on farms until next spring when I announce at the end of the month the remaining monthly target prices for this marketing year. It should be possible to show a rise of several pounds between the September-October low and the February price.
A further point to bear in mind is that a further transitional step in our support prices will be taken at the beginning of the new marketing year. Converted at the present representative rate, this would add a further £1 to the guide price, even without any further change in the Community's guide price for beef.
Those who can avoid marketing their animals at present weak prices and can hold them until next spring are likely to benefit considerably in terms of increased cash in their pockets. Producers generally, thanks to the new régime, can look forward with real confidence. For all concerned it is important that this should be reflected in the calf and store sales this autumn.
I agree that a major matter affecting the operation of the CAP in this country is the so-called green pound, which has been mentioned by the hon. Member for Westmorland. This has, I know, a substantial impact on producers of all the main commodities. As I have said, the effects of the green pound are among the 1077 issues we are currently discussing with the industry. I am well aware of producers' feelings. This is not, however, an easy issue, as the hon. Gentleman admits. Among the immediate effects of changing sterling's representative rate would be a reduction in the monetary compensatory amounts which subsidise our imports and some increase in prices to consumers. Livestock producers' feed costs would also be adversely affected. On the other hand, I appreciate the economic case which producers generally can deploy.
I am sure that it is widely recognised that farmers must have a reasonable return for their skill and effort. They cannot otherwise be expected to produce the food we must have. I hope to be able to say more about this shortly, but I cannot say more today.
Another issue affecting the operation of the CAP which is currently under consideration is the EEC Commission's stocktaking report. We shall be debating this report later this month. Hon. Members are well aware of its importance, and I need not go into detail about it today.
This afternoon I shall only re-emphasise to the House that the Government are concerned to ensure that the CAP should operate flexibly and effectively, providing producers with a reasonable level of support, but not at disproportionate costs to our consumers or to the Exchequer or to our balance of payments. The discouragement of wasteful surpluses by setting support prices at sensible levels is fundamental. Other measures may also be necessary in some sectors.
I am, however, fully seized of the possible impact on our dairy industry of the Commission's ideas for a two-stage price fixing in the milk sector. The House can be assured that I will not accept arrangements which bear inequitably on United Kingdom producers. I shall want to see any new arrangements continuing to provide effective support to efficient producers. It is inefficient production which must be discouraged in the Community. In this country our dairy industry has certain advantages of structure and climate. I said this in reply to hon. Members the other day at Question Time. Expansion by our efficient producers is not at all inconsistent with dis- 1078 couraging surplus production by the inefficient. Indeed, it would be entirely in line with the Commission's own principles of seeing production develop within the EEC where it can be carried out most economically.
I come now to taxation. In addition to these major issues concerning the operation of the CAP, I know that farmers are considerably perturbed about the possible impact of the Government's capital taxation measures. I am well aware that some, including the hon. Member for Westmorland, have argued that these measures are inconsistent with our wish to see an increase in agricultural production. I do not accept this. The Government's taxation proposals are designed to bring about a more equitable distribution of wealth—an objective with which, I hope, no hon. Member would quarrel. But the Government have always made it abundantly clear that they recognise that there are problems in regard to the capital taxation of agriculture.
Special measures to meet these problems have been included in the Finance Act 1975, which dealt with the capital transfer tax, and in the current Finance (No. 2) Bill, which deals with capital gains tax. In addition, the whole question of the effect of capital taxation on agricultural production is being examined by an interdepartmental committee.
So what are these fears based upon? First, they are based on capital transfer tax, which applies only to gifts or on death, and on which we have already given a considerable measure of relief. Second, they are based on capital gains tax, where we are proposing a similar measure of relief. Third, they are based on the wealth tax, which has not been introduced, which is being examined by a Select Committee of this House, and on which there have been detailed discussions with the agricultural organisations.
While, therefore, I recognise that the fears which have been expressed are genuine, I suggest that they are premature, and I would ask hon. Members to wait for the report of the Select Committee and the development of the Government's policies before forming a firm judgment on this important issue.
1079 Another issue on which I think there has been some premature concern is that of tied cottages. The Government recognise that, although this issue concerns housing and wider problems of social justice, there are particular agricultural problems which will need to be considered. Employers refer particularly to livestock enterprises and other situations where they argue that it is necessary for a worker to live on the holding. They have also described other circumstances such as remote areas where there may be no alternative housing available. The fact that our commitment relates solely to agriculture means that we can concentrate on solving particular agricultural problems.
My right hon. Friend the Secretary of State for the Environment and I intend to issue shortly a consultative document to form the basis for discussions with interested organisations on the form legislation should take. We look forward to consulting both the agricultural interests and the local authority and housing organisations. In achieving this reform, we shall certainly see that full consideration is given to the problems of agriculture, so that our food production objectives are not prejudiced.
§ Mr. Robin Corbett (Hemel Hempstead)
I welcome what my right hon. Friend has said, but will he indicate whether it is proposed to issue this consultative document before the recess.
§ Mr. Peart
I cannot be specific on this, and I should have to consult my right hon. Friend. We have been working hard on this. We shall try to get it out as soon as possible.
Perhaps I may now come to my conclusion. As I said in my opening remarks, the fundamental importance of "Food from our own Resources" is that it provides a framework within which the Government can develop their policies affecing agriculture in a consistent and coherent way. Certainly it is in full recognition of the basic economic arguments for expanding our own agriculture that we are conducting the further discussions with the industry which we began in May. The House may be sure that the decisions arising from these discussions will have been fully and carefully examined and weighed. I do not, how- 1080 ever, wish this afternoon to set out any particular timetable for such decisions. As I said when I began, the conclusions of the White Paper are now a matter for the ongoing development of policy. As and when specific measures seem appropriate, they will be taken.
Producers already enjoy substantially improved support this year as a result, in particular, of our determinations after the 1975 review and the new beef regime. At the same time, there are, I recognise, grounds for concern about certain current trends, notably in the dairy sector. I know, too, that the next couple of months will be an important period in producers' planning. This makes today's debate all the more timely. I look forward to hearing hon. Members' views. The House may be sure that, in reviewing the outcome of the recent discussions with the industry, I shall also take full account of what is said today. My aim will certainly be to secure the confident and expanding agriculture which I believe is an aim shared by all sides of the House.
§ Mr. Deputy Speaker (Mr. George Thomas)
Before we begin the debate from the back benches, the House should know that 27 right hon. and hon. Members are hoping to participate, and all with a strong claim to participate. They can do so only if the House will help.
§ 4.28 p.m.
§ Mr. Francis Pym (Cambridgeshire)
I declare an interest, in that I am involved in a farming enterprise.
The House will be glad to note, from the manner and delivery of the speech of the right hon. Gentleman the Minister, that he has fully recovered from his unfortunate accident. Everyone will be delighted about that.
However, at the same time, I regret having to say that I thought that his speech was thin. I was disappointed by its lack of positive content, for I was hoping for a forthright statement which would take us a stage further than the White Paper. It was not without hope, but what I am concerned about is the urgency. I am fearful that we could get into the situation yet again of something happening that will prove to be too late and perhaps too little.
§ Mr. Pym
Whatever misfortunes the farming world may have suffered from a Labour Government in the last 15 months or so, there are two gains. The first is the personal conversion of the Ministers to the merits of the European Community. He saw the light, and that was a help.
The second is the recognition by the Labour Party, although belated, of the wholly changed circumstances of world food supply and availability and, therefore, the context of British agriculture. In the 1970 Parliament Labour Members did not indicate in any way that they understood this, whereas my right hon. Friend and hon. Friends perceived this change coming many years ago and prepared for it in the 1960s. As a result, we were ready and able to adjust the support system in the early 1970s in a way appropriate to the new circumstances, and to lead the industry forward again on a path of renewed expansion.
At the same time it was much in our minds that with the disappearance of the once plentiful supply of cheap food in the world our membership of the European Community took on an extra and special significance. Our membership of the Community gives us an added degree of security and insurance against the permanent risk that is nearly unique to Britain, our heavy dependence on imported food. In itself that is enough for us all to agree about expansion.
Today the case is even greater because of the state of the economy and the import-saving capability of our farmers and farm workers. At the beginning of his speech the Minister referred to some comments by my hon. Friend the Member for Westmorland (Mr. Jopling) and said that he ought to take into account and recognise the economic context in which we are operating. That context means still more food and more expansion. The farmers and farm workers are ready and willing to do the job provided that they are enabled to do so. They must have a climate of confidence and continuity, and a long-term prospect of fair and reasonable returns, which the Government alone can create and maintain.
1082 That climate of confidence does not exist today. That prospect of fair and reasonable returns is not clear, or not as clear as it needs to be if the decline is to stop, let alone be replaced by a steady and significantly rising output. Many of us had hoped that the much-heralded White Paper would be the mechanism with which to fire a new burst of activity and enthusiasm in agriculture—that it would be the starting gun of a new expansion.
It is true that the White Paper received a certain welcome, as the right hon. Gentleman said. I think it would be true to say that it was welcomed so far as it went. I found it a great disappointment and a wasted opportunity. I read it at home because I was away from the House at the time, and I found it a half-hearted document. Even its good intentions are wrapped up in cautious phraseology. Certainly it is not the sound of a trumpet blaring a note of expansion. There is no word in it about how such expansion as is referred to is to be achieved.
What is needed so badly is specific measures giving the clearest indication of how this is to be done. In paragraph 57 it does not even say that specific measures will be taken. It simply says that the Government are determining whether they will be right and practicable. Of course they will be. Not only that, such measures are urgent. There is no word about them here.
The same paragraph of the White Paper says that the Government will look to the agricultural and food industries to work with them in bringing about expansion. It is the other way round. The agricultural and food world is looking to the Government to co-operate and to take the right decisions to meet the needs of the situation.
I want to deal with the requirements of an expansionist agricultural policy as I see it. The first point is that taking one year with another the industry must be profitable. This does not mean paying for inefficiency. We are agreed about that. There is no need for it, as the superb record of British agriculture clearly shows. But food that is efficiently and economically produced must carry with it a reasonable profit. I ask the Government how they think they can possibly get the higher output of milk or 1083 sugar to which they refer unless the terms of business ensure a fair profit for efficient production. What the farmer experiences today is a fall in income. What has to come about is profitability. Will the Minister give an assurance that an increased production of milk and sugar, as asked for by the Government, will be profitable provided that it is efficiently produced?
In existing world conditions any sound agricultural policy must be based on the proposition that the consumer pays the right and fair price for food that is efficiently grown. Subsidies on the vast scale introduced last year are positively distorting at the production end and can contribute to shortages in some cases.
The Government speak with two voices about this. One day they talk about more money for subsidies and the next day about the need to abolish them. The Secretary of State for Prices and Consumer Protection rides both these horses. She is almost a good enough saleswoman to persuade the nation both ways but not quite good enough. The House well understands the counter-inflation needs of today, but in present conditions large-scale food subsidies are not helpful either to higher food output or to countering inflation.
Because of the long-term nature of agriculture, continuity is crucial. We have known that continuity of policy from the 1940s to the 1970s. There were changes of emphasis, as there must always be, but the broad direction and objective remained basically unchanged through all General Elections and changes of Government. Today the industry feels that that continuity has been broken. There is no question but that opting out of intervention in March of last year contributed enormously to that. I would like to hear in the reply to the debate that the Government will not in any circumstances contemplate opting out again. I would also like to be assured, as would many farmers on the eastern side of the country, that there is no question of opting out of intervention for cereals should that situation arise.
This feeling that continuity has been broken accounts for much of the hesitancy and the feeling of uncertainty among farmers. When I spoke from the Opposition Front Bench on this subject 1084 I went out of my way to try to rebuild what could be described as an all-party approach. I very much regret that the right hon. Gentleman rejected that. Without longer-term stability and continuity of policy we cannot obtain, and do not deserve to obtain, optimum output.
The next requirement is fair competition. No industry or business can be expected to yield its best except on the basis of fair competition. In too many sectors of agriculture there is, or is thought to be—which in practice comes to much the same thing—unfair competition. There are a number of examples, such as the egg and the glasshouse sectors. The way that both those sectors have been treated or feel they have been treated—I think "have been treated" is more accurate—is inimical to their confidence.
As the Minister accepted, the whole industry suffers from the harsh and worsening effect of the level of the green pound. The disadvantage of its increasing mis-alignment is cumulative. Until a proper adjustment is made our producers will go on suffering an unfairness that is intolerable and, moreover, an unfairness which they did not expect to have to meet when they so wholeheartedly agreed that it was right for Britain to become a member of the EEC.
This leads me to the whole area of taxation and investment. The Minister said a word or two about it in his speech. In the White Paper he simply recognised that the Government are:aware of concern in the agricultural industry",and then went on to say that they would investigate. Unhappily, this is an area where the Labour Party gets bogged down in its own political prejudice and where the true interests of the nation and the agricultural industry become obscure. I find the right hon. Gentleman's silence on all of this quite incredible.
The right hon. Gentleman made some comments about some of the fears and criticisms that have been alleged, but has he made any speech at any time, in the House or outside it, containing an intellectual justification either for the capital transfer tax as it affects the land or of the wealth tax as it may affect the land? The Chancellor has conceded a minor adjustment to the CTT, but the 1085 sheer tonnage of taxation remains, a deliberately-imposed burden and handicap. How can the Minister expect the industry to yield the results he wants unless there is relief from this crippling burden with the threat of more to come?
If agriculture is to be clobbered so savagely—and, as usual, under a Labour Government everyone else is being clobbered as well—how can it find the money for investment? Have the Government worked this one out? The more a family invests in a farm, thereby improving its efficiency and productivity, the more valuable the holding becomes, and the more valuable and efficient it becomes, the more taxation it attracts. That is a positive disincentive to do the very thing that the Minister wants—invest more. We want more encouragement and not discouragement.
Alone of our great industries, agriculture is based on the family, with a relationship between employers and employees that is the envy of all businesses in any other walk of life. What is required is the encouragement, support and continuance of these families through to the next generation. We will mark carefully what the right hon. Gentleman has said today. He gave us hope that the Government were going to be sensible and that they appreciate the problems. We shall look very carefully at what conies forward as a result of the discussions the right hon. Gentleman referred to.
The next requirement is research, which is vitally important. Paragraph 18 of the White Paper is grudging in the extreme. It refers to "materially helped"—that is the description of the contribution of research, and it is impolite almost to the point of offensiveness. Our agricultural research scientists are the envy of the world, and it is vital that their effort should be maintained. It is not only the world-known institutes, some of which are in Cambridgeshire—and we are very proud of them there—but we must also remember the research work done by companies and private enterprise.
I attach great importance to the potential of our uplands and hill areas. More attention must be paid to them. Apart from their natural inherent potential, there is a national incentive to invest in them because of the continuing loss of 1086 good lowland land for non-agricultural use. This is not the occasion to go into the whole problem of land use, but I do not believe that enough thought and study has been given to the whole subject of the non-agricultural claims on farmland. I should like to see more work done on that aspect.
All these things to me are essential requirements of an expansionist agricultural policy which the Government accept and which is justified. But the greatest requirement is for political leadership. I regret to say that today there is an inadequacy of political leadership in agriculture—almost a vacuum. The House knows that the Minister's heart is in the right place, but that is not enough. He must carry his Cabinet colleagues with him and carry conviction with all those who work on the land.
Farmers and farm workers throughout the country are longing to make that very substantial contribution to our national recovery of which they are capable, but at present they are frustrated because there is no clear political leadership. The White Paper did not provide it and the right hon. Gentleman's speech has not done so. There is still a gap, and it is urgent that it be filled. What we have heard is not enough. The Government must rise to the occasion and take the decisions that meet the true needs of the present most serious food situation. Otherwise, the outlook for the consumers, more even perhaps than for the farmers, will be grim indeed.
§ 4.44 p.m.
§ Mr. Emlyn Hooson (Montgomery)
I am sure that the whole House echoes the sentiments expressed by the right hon. Member for Cambridgeshire (Mr. Pym) in saying that we are glad that the Minister has fully recovered from his recent accident. In the same way, I am sure also that the whole House is glad to see that the right hon. Member for Cambridgeshire has recovered his full vigour. He talked with great vigour even when he was not talking sense, although he did talk a good deal of sense in much of his speech. I certainly did not agree with him when he extolled the virtues of the intervention system. I am sure that the majority of practical farmers thank heaven that they are not entirely dependent on that system for beef.
1087 The hon. Member for Westmorland (Mr. Jopling) said that he would use racecourse similies in the knowledge that the Minister would understand them. As the Minister's wife comes from Aberystwyth, I did not follow how that could be, and the Minister did not respond by giving agriculture the starting shot that it needed.
What the Minister should have done was to set the Prime Minister's sentiments as expressed in his speech at the Stoneleigh Show in the context of his statement last Friday. The Prime Minister last Friday drew in sombre colours the economic state of the nation and announced the measures that the Government were to take to deal with it. Yet only two weeks earlier, at Stoneleigh, he had said how important it was for the country to have economic expansion in agriculture, that we should increase our food production, and that the Government would provide the means of doing it.
What the agricultural industry expected from the Minister today was that he would set out what the means are to be to provide that expansion. There is no doubt that the industry is in a very difficult situation. To a large extent, the Minister inherited it. Conservative Members still talk a lot of hypocritical nonsense about, for example, the reduction in the dairy herd. I remember making speech after speech in 1973 when the dairy herd was going down rapidly. Calves were being slaughtered, and it takes over two years to produce a dairy heifer which will be in milk. The dairy section of agriculture ran down greatly in 1973, as the right hon. Member for Cambridgeshire knows full well. The Minister inherited a difficult situation, but he must face the reality that morale in the industry now is very low.
§ Mr. Robert Boscawen (Wells)
The hon. and learned Gentleman says that the dairy herd went down in 1973. If he looks at them, he will see that the figures for hill farming reached a record level that year.
§ Mr. Hooson
The dairy herd reached a record level in spring 1973 but, as anyone interested in the subject knows, by the autumn many dairy cows and calves had been slaughtered, and there was a 1088 great rundown of the herd. A dairy calf born in 1973 could have been expected to come into profit two years later, but we are now seeing the results of the herd going down very substantially from 1973.
The agricultural industry is in a very serious situation. The Government cannot allow it to drift as it is doing at present. I was travelling very early today and I heard the early farming programme on the radio. It was suggested by some pundits that the yields of various grains will be lower this year. I agree with the Minister that it is too early yet to estimate what the yields will be—we have had bad seasonal weather—but it is estimated that wheat and barley yields will be down this year.
One of the reasons for the accelerated reduction in the dairy herd has been the very high cost of fodder, and it looks as though fodder will be even more expensive next winter than last. It is against this background that the Minister should be making his plans.
Farmers are very much aware of this problem. Their morale is very low indeed. As the Minister knows, last year, and especially during the last winter, many of them had their overdrafts stretched to the limit. They are paying very high interest rates. I doubt whether store cattle are fetching very much higher prices now than they were this time last year. Lamb prices have fallen disastrously, although of course we have a bottom in the market through the guarantee. All in all, the farming industry in its livestock sector is very depressed.
If the Minister looks at the Farmers Weekly for last Friday he will see an account of the sale of a dairy farm in Devon. I am sure that the Minister has studied this article.
§ Mr. Hooson
From the story that was unfolded, it seemed to me that this was all too typical of what has been happening in dairying. The people who have been hardest hit are the people who have, in many ways, invested most, tried to follow modern methods, borrowed money in order to expand and gone in for the cult of agricultural expansion, 1089 about which there is very great cynicism in the agricultural industry at present. The margins were so narrow that when the squeeze came, as it did in the past year or two, there was no margin left. This has happened to many farms not only in the dairying sector but in other sectors of agriculture. This is the problem that the Minister faces.
The same situation is true of beef. I think that the Minister was absolutely right to press for the kind of guarantee that he obtained from his fellow Ministers in Brussels. Yet, there is no doubt that very few people can make beef production pay at present. That is partly because our production is seasonally wrong. The cost of fodder is so high that even with the high premium provided in February and March nobody can afford to buy fodder and keep their animals until March and April and make a profit. If they have the fodder on their farms the situation is different. However, if they have to buy fodder, as so many farmers in the West have to buy it in the event of a poor harvest, it is simply not on. Therefore, the Minister has a great deal to do in those areas.
As the hon. Member for Westmorland pointed out, there is despair among the egg producers. I received a letter on Saturday from a young constituent of mine who farms five acres. He has quite a large poultry holding. Obviously, he cannot produce anything else. He has not got the option of switching to some other form of agricultural production. He told me:The cost of production on our own holding is approximately 25p per dozen, our income 14p per dozen. At the moment we produce 1,080 dozen per week which works out at £118.80 loss per week.He is a very efficient egg producer and, as the figures indicate, he is in a fairly big way of business for our part of the world, However, he is losing £118 per week, and this obviously cannot continue.
We have over-produced in this country. France has over-produced, but the indications are that the French over-production will continue longer than ours. Although the Minister has recently sought assistance from his fellow Ministers in the Common Market, it is necessary for him in the next few weeks to take drastic action if he is to save our egg industry. Those who were either for or against the Common Market have to face the fact that it 1090 may be necessary for this country to impose unilateral import controls on eggs. If it is necessary to do so, the Minister should not hesitate, because the time is close when this should be done.
I have one simple message to get across to the Minister. I represent an agricultural constituency. I myself farm and I come from a family which is almost wholly concerned with agriculture. In my view it is necessary for the Minister to have an urgent farm review in the near future. It will probably be wiser to have it in the autumn when he knows the result of the harvest, but I think we must have some indication earlier. Moreover, he should set out the means which the Prime Minister indicated the Government are to provide for extra food production in this country.
With the present world food situation, with the perils of our balance of payments position, with the uncertainty of our weather and with the small margins that existed last winter, which indicated possible disaster to our farmers, even though they carried on successfully through the winter, the Minister owes it to the farming industry of this country not to keep it in suspense any longer than is necessary. When the speech he made today is reviewed in farming circles it will be treated as a very great disappointment.
§ 4.56 p.m.
§ Mr. Thomas Torney (Bradford, South)
Labour Ministers are also very mindful of the need to increase our home food production. We cannot boast on the Labour side of the House the number of practical farmers that there are on the Opposition benches. However, we have a good nucleus of Members who are interested in the farming industry because they are interested in food and the production of food. Food production is one of the mainstays of our nation although we have to buy a lot from abroad.
I am pleased that my right hon. Friend the Secretary of State has not left the Chamber, because I should like to impress on him very sincerely that we—I think I speak for the activists in agriculture on the Labour benches—like the White Paper on agriculture, but we think it lacks teeth. We do not say that as a criticism of my right hon. Friend or his Ministry. However, to put into effect the things that 1091 are embodied in the White Paper which must be good for farming and the nation, money is required.
I know that I speak for my agriculture group, of which I am chairman, when I say that we want to impress on the Minister, and implore him to impress on the Cabinet and the Chancellor, that, whatever the serious state of our nation economically and financially, some money must be found to implement the proposals in the White Paper. The feeling on the Labour benches about the state of British farming is no less urgent than that of the Opposition.
I take the point made by the hon. and learned Member for Montgomery (Mr. Hooson) about eggs, despite what egg producers told me a few months ago. I accept that the industry is in a bad way. Whilst I do not think that the banning of the import of French eggs would cure the situation—as was rightly said, we have over-production and the French have over-production—it would be an excellent psychological point because it would give confidence. The banning of French eggs should be done fairly quickly. There must be no more messing about in Brussels. It should be done unilaterally.
Having said that the position is serious, I shall take up one or two points made by Opposition Members which I thought were somewhat unfair. I shall not put it any stronger than that. The right hon. Member for Cambridgeshire (Mr. Pym) talked about continuity in farming policy. Of course, this is very necessary in any industry. It is necessary in agriculture throughout the world that the producer knows that he has a market for his goods. When we buy overseas it is easier to get a better deal when we can make long-term contracts, which at present the Common Market does not allow us to do.
We still have to get nearly half our food from markets abroad. The point that I want to make concerns what the right hon. Member for Cambridgeshire said about continuity. The real break in continuity was made when the Tory Government took us into the Common Market and broke with the system of guaranteed prices.
§ Mr. Pym indicated dissent.1092
§ Mr. Torney
The right hon. Gentleman shakes his head. But the break regarding intervention was but a crack. As the Minister said, intervention does not work here. Indeed, from what I can see, it does not work in the rest of the Common Market.
Our system of continuity put real stability in the farming industry of this country. That stability was brought about by a Labour Minister of Agriculture. The worst thing that could and did happen was when we entered the Common Market and those guaranteed prices were abolished.
We have now got back to something approaching a system of guaranteed prices. Flexibility of the common agricultural policy is now the only thing that is likely to give some stability to the farming industry. The British farmer knows that if he produces more goods, he will have a market for them at fair prices, which will in turn give him a reasonable return on his outlay.
I turn now to the question of beef. I was concerned that the allegation should be made by the hon. Member for Westmorland (Mr. Jopling) that farming was in its present chaotic mess because of Labour Party dogma. It was nothing of the kind. We should remember that a Tory Minister of Agriculture told the farmers to increase their beef production. That was done in the period between 1970 and 1974. The farmers obeyed and increased beef production. Every farmer knows what happened. I have been told this over a period by scores of farmers.
What happened? After being told to increase production, the farmers started the wheels moving to do just that. The price of feeding stuffs then rocketed. I am not suggesting, as was so unfairly suggested by the Labour Opposition, that the great increase in the price of feeding stuffs at that time was the fault of the then Tory Government. However, I am putting the charge back on the Minister of Agriculture of the day. That was not due to Labour Party dogma. That was due to lack of action by the then Minister of Agriculture in not giving help to the beef farmers to offset the terrible rise in the cost of feeding stuffs due to crop failures and a general world 1093 shortage. I think that puts the whole situation in perspective.
The hon. Member for Westmorland actually talked about increasing Government expenditure. That blew a breath of fresh air from the Opposition,especially as so many right hon. and hon. Gentlemen have been bleating about cutting Government expenditure.
I can say, and have said, to the Minister: "Go to the Chancellor, go to the Prime Minister, and demand more money for farming." I can say that because I have never suggested that we should cut Government expenditure. If one suggests cutting Government expenditure, it means cutting expenditure on essential matters such as help to the farmer, the aged, the sick, the disabled, and so on. That is by the way. But in looking at the farming industry—I think that I have made my sympathies clear—we must also look at the consumer side as well. We cannot say that we will not cut Government spending on help towards the farming industry but will cut expenditure aimed at helping the consumer.
We are going through a difficult period of financial and economic crisis. We are told that we must tighten our belts, that we must accept controls on wages, and so forth. I will not go into the rights or wrongs of that. But when right hon. and hon. Gentlemen talk about increasing the price of this commodity and that commodity, it is the housewife who has to pay more. When they talk about subsidies being unrealistic, wrong and a waste of Government expenditure and say that they should be taken off, it is the housewife who has to pay more for goods in the shops. We are asked to keep wage increases down to the minimum and to tighten our belts. We cannot have it both ways. We cannot eat our cake and have it.
I think that everyone knows that I am anti-Market. I know that we must accept the will of the people declared in the referendum, and I accept it democratically. But it does not mean that the mere stroke of that referendum makes right all the things which I believed were wrong.
I sincerely believe that the common agricultural policy is wrong for Britain. 1094 It is terribly bent towards helping French agriculture and French food production. It cannot be any good for Britain when it favours, as it does, a nation which inefficiently produces the bulk of its own food supplies, because, as we do not produce much more than half our own food supplies, we have to buy the rest in world markets.
I hope that no one will suggest that there is no cheap food in the world. "Cheap" is a relative matter. I know that there is no cheap food in the world compared with five, 10 or 15 years ago, but food in some parts of the world is cheaper than in other parts. I believe that food comes cheaper from those nations which produce it efficiently. French agriculture is notoriously inefficient. Indeed, a great deal of taxpayers' money in all nine EEC countries is going down the drain in an attempt to pull French agriculture round.
It may surprise hon. Members to know that French agriculture, in addition to the tremendous aid that it receives from the Common Agricultural Fund, receives 40 per cent. of the Social Fund of the Common Market. That is the fund into which the sick, the disabled and deprived children have to dip. Yet French agriculture has 40 per cent. of that as well. That will not be read in any publication. That is not the effort of any hearsay journalist. That has come from the mouths of Commissioners in Brussels. That came out when I visited Brussels recently to talk not about agriculture but about immigration. It emerged that 40 per cent. of the fund in which we were interested was being used to help French agriculture in addition to all that the French received from the common agricultural policy.
My plea to my right hon. Friend is that he should bear in mind when he goes to Brussels that the common agricultural policy benefits one nation, France, far more than it benefits the other members of the Nine. We produce only half the food that we consume. I therefore hope that, if my right hon. Friend cannot bring about the abolition of the CAP and the institution of something better, he will endeavour to make it so flexible that it can be changed to suit not just one Common Market country but the agricultural and food policies of all nine members of the EEC.
I realise that the farmer needs help, but so too does the consumer. I there- 1095 fore wish to make a plea for the housewife who must pay for the food. It may be a question of only a ½p increase in the pound, but, in view of all the other increases which the housewife has to pay and of the dire economic situation to which my right hon. Friend the Prime Minister referred in his recent statement on the state of the nation, we must try to avoid even ½p increases. I therefore hope that my right hon. Friend, when he goes to Brussels or wherever it may be, to discuss the issue of the green pound, will bear in mind the consumer and the housewife, who have as good a case to argue as the farmers.
§ 5.12 p.m.
§ Mr. Hector Monro (Dumfries)
I am sure that the hon. Member for Bradford, South (Mr. Torney) will forgive me if I do not go over again the arguments about the referendum. I totally disagree with almost everything that he said, except that what we are discussing is the question of an adequate food supply at reasonable prices to the people of this country. The concern which has been expressed by hon. Members representing Welsh and English constituencies is equally applicable to Scotland, and I am glad that the Secretary of State for Scotland is present to hear what I have to say.
The main foundation of the debate is the new White Paper. It is a plausible document, but quite meaningless because good intentions will not provide profits in agriculture. It is up to the Secretary of State to put much more heart into the White Paper than is written in it.
The issue in recent years has been one of confidence and of cash flow in the industry. This problem rears its head as we move towards the autumn and the store sales, both of cattle and of hill lambs. That is why it is urgent that we should have something of greater significance from the Government than we have had so far. There is great concern about the possible shortage of hay this winter and the price of feeding stuffs. Inflation and rising costs have hit the farmers dramatically in the past 18 months, and their returns are not sufficient to cover rising costs.
It is the wish of farmers—and I declare my interest as a farmer—that they should 1096 pay farm workers as high and adequate a wage as is possible. That can be done only from profits. If the Government join the farmers in wishing to pay good wages to farm staff, they must ensure that the industry has sufficient profits.
I wish to mention a few matters on which I believe action is essential. Hon. Members have spoken in detail about the question of milk and the necessity for extra support. There has been a fall in the number of dairy cows. I am unconvinced by the Minister's optimism for the coming winter. There are large cheese and milk product factories in my constituency, and I am desperately concerned that unemployment might result from a milk shortage. Eggs are a critical subject at the moment. It costs about 25p to produce a dozen eggs. The packing stations are paying about 22p and 14p for smalls. In the open market at Lanark last week the price was 11 p. This situation cannot continue without egg producers going bankrupt. The issue of imports is critical. In a finely balanced market, anything which disrupts production in this country can lower prices. Imports from France are making all the difference between a profit and a loss. I know that the Minister made an adjustment to the monetary compensation amount, but it is insignificant to deal with the problem.
I wish to deal with my concern about hill farming and the autumn lamb sales and the fat lamb sales. The skinning of sheep's heads may be an unsavoury subject to mention in the House, but it is causing great concern and is weakening the fat lamb trade. It will certainly have an effect on the store lambs sales next month and in September. The Ministry and, in particular, its veterinary service have got into a terrible tangle over this matter and have been far from resolute in tackling EEC officials about it. There is no need to go over the regulations and actions which have been taken. Streams of letters have been flowing between the Scottish Office, the Ministry of Agriculture and myself about taking steps to deal with this issue. If we had taken a firm line at the start, we should not have been in our present position.
We shall not see any immediate results from the trials which have been taking place on the skinning of heads. I am 1097 not convinced that it is necessary for the heads to be skinned. We should have fought this from the start. The relevant regulation was introduced before we joined the EEC. As we are the major producers of lamb and mutton in Europe, we should be the front runners in this issue. It affects Scotland in particular because horned sheep are the more difficult to deal with and, with our black-faced lambs being in the preponderance in Britain, when it comes to the store sales, and subsequently, next winter and spring, the fat lamb sales, Scotland's position will be significantly worse than that of other parts of the United Kingdom. Will the Minister pursue this matter with vigour and try to obtain results in weeks rather than months?
I wish to say a few brief words about the Minister's lack of action in connection with venison. The Government and the Highlands and Islands Development Board have been encouraging the production of venison as an alternative or supplement to hill farming production. We are in a frightful muddle over the issue of chilling venison soon after the beasts have been killed. The practical difficulties in the West Highlands in doing this are beyond description. The export of venison to Germany has been a lucrative market, and we do not want to throw it away. May we have some action on this subject, because by the end of August and the beginning of September the season will be upon us?
I welcome the brucellosis eradication scheme. My area is in the midst of it. I wish to raise two points in connection with the scheme. First, is the maximum value of £240 a head for slaughter sufficient? The Minister will find that it is difficult to replace stock at that maximum price at a dairy auction or mart for tested cattle. The Government should examine this as part of the incentives to eradicate the disease.
There is a discretion about the percentage of stock which reacted, as against the total slaughter of the herd. Milk production is expensive. A large amount of capital is involved. It is a serious matter for a dairy farmer to go out of production for six months or more. It is probably better to slaughter the animals more quickly and to allow the reintro- 1098 duction of disease-free stock than to carry out tests progressively for a long period.
There is a lack of uniformity of grading for the headage premium. Beasts which are turned down in some markets are sent to another market or slaughterhouse where they are passed for the premium. I should like to see greater co-ordination between graders in the United Kingdom. This affects areas such as my own where there are different interpretations on either side of the border. The premium is important. No farmer should lose it as a result of a lack of co-ordination in the United Kingdom.
I should like to refer to many subjects, including horticulture, the capital transfer tax, the Community Land Bill and tied houses. All those aspects of Government policy are detrimentally affecting farming today. That seems to be contrary to the aspirations of the White Paper, which was put forward with such enthusiasm by the Minister.
The Government must take purposeful action to make farming profitable and help the consumer. The Prime Minister said that he wanted to see expansion. The Minister said the same. Let us see the Government act by putting forward long-term cash incentives to build confidence.
§ 5.23 p.m.
§ Mr. Robin Corbett (Hemel Hempstead)
It is inevitable that when the Opposition mount these debates they should argue that as a result of their removal from Government, thousands of cows, pigs and sheep queued up at slaughterhouses to have their throats cut because the ballot box result undermined farmers' confidence at a stroke.
I have listened to many debates on this subject in Parliament. A large number of hon. Members care about agriculture. It does agriculture no service to be casual about the use of the word "confidence" when speaking about its problems.
I thought that the hon. Member for Westmorland (Mr. Jopling) was riding too hard and with too much stick on the racetrack of confidence. I do not believe that agriculture, in spite of the problems which it faces, wants to hear Members of Parliament say time and time again that they have no confidence in what all sections of agriculture are 1099 attempting to do. Confidence is a two-way business. It means that agriculture must have confidence in the Government of the day and Members of Parliament when we debate its future. It also means that the public, through the Government and Members of Parliament, must have confidence in agriculture and horticulture to do a decent job. Agriculturists must believe in themselves and their ability to overcome many of the problems with which they wrestle, sometimes helped and sometimes hindered by past Governments. We must learn that in agriculture as in housing, milk, cereals, meat, vegetables and eggs are not produced in Whitehall or Westminster.
We are united in our recognition of the urgent need for everything possible to be done to enable agriculture to meet the forecasts of extra expansion made in the White Paper—I almost said the Government's White Paper. I think that is one of the mistakes made by the Opposition. It is not the Government's White Paper. The significance of the White Paper, "Food from Our Own Resources", resides in the fact that it was published after long and detailed consultations with all sectors of agriculture. To that extent it represents, for the first time probably since the war, a consensus view as to what is possible in terms of extra expansion of food production by agriculture.
We are left with a problem. It is all very well to speak about expansion. I shall deal with some of the immediate problems later. However, from where do we expect the expansion to come?
Agricultural land, much of it highly productive, is being gobbled up for development at a fast rate. Land is a basic asset which cannot be replaced. In all 65,000 acres of land are developed each year in England and Wales, much of which is inevitably of high quality. We may slow the process but we shall not stop it. We need tighter controls and a more positive r ôle for the Ministry of Agriculture and the Department in Scotland before the land is taken for development.
An all-party effort in Committee secured safeguards for productive agricultural land under the Community Land Bill. We shall not see an increase in the acreage of agricultural land. That 1100 means that we must look elsewhere for extra production. Where shall we look for that?
One of the promising areas of development is higher yielding cereal varieties. We were all pleased that Mr. John Bingham, the winner of the Royal Agricultural Society of England's research medal this year, forecast at the Royal Show that new wheat varieties could raise yields, which have been static for several years, to about 2½ tons per acre within the next 20 years. The Plant Breeding Institute has promised dwarf winter wheats which will yield significantly more than the popular varieties now in use. I say this with great respect to my right hon. Friend: we need men and money behind this research so as to encourage and speed its commercial application as a matter of priority.
There are steps which farmers themselves can take. The Farmers Weekly recently estimated that £900 million a year could be saved through the better use of land and machinery, stock and fertiliser. Hay wasted in making, storing and feeding, for example, is estimated to cost the industry £105 million a year. Crop yields depleted through inadequate drainage cost an estimated £210 million a year. Animal diseases cost an estimated £390 million a year. Wrongly-set combine harvesters are estimated to leave cereals worth an estimated £23 million a year unharvested in the fields. It is not argued that it is possible to save all that money or that all the waste can be avoided. But a determined war on waste by agriculture can yield significant savings and, to that extent, stop the needless loss of output.
As the White Paper says, the biggest scope for improvement is in the making, use and storage of grass and animal by-products. Two years ago 3½ million tons of straw went up in smoke out of a total of about 9½ million tons. I doubt whether we shall see that this year. Much work is put into grassland improvement and management. However, much more needs to be done urgently to encourage agriculture to treat grass as a more important crop.
Similarly, there have been significant improvements in our livestock, especially in beef animals and pigs, but, again, more must be done if we are to get extra output from fewer acres. Our publicly-owned 1101 research establishments must be geared to the urgent need to see that the industry gets all possible assistance to meet the aims of the White Paper. There are few short cuts in research, but there is everything to be said for encouraging more urgency in this work.
Many of us were guests of the ICI and other firms earlier this year and saw the work that was being done on the development and improvement of pesticides and herbicides. These, too, have a significant contribution to make in assisting the farmer to get more crops from the same acreage.
There is another way in which farmers can help themselves both in production and in marketing, and that is through our agricultural co-operatives. If the NFU and its members do not like the idea of a statutory meat scheme, let them put some steam behind farmer-run co-operatives, to contain costs, ensure a standard quality product and so increase profits and output.
§ Mr. Peter Mills
Perhaps the hon. Gentleman recalls that when the industry wanted to extend from the NFU through the FMC, the Government virtually stopped it.
§ Mr. Corbett
The hon. Gentleman must have looked at my notes. My next sentence is that I urge my right hon. and hon. Friends on the Front Bench and my right hon. Friend the Secretary of State for Prices and Consumer Protection to publish the report which has been referred to the Monopolies and Mergers Commission on the proposed merger between the NFU and the FMC. If that merger were allowed to go ahead, it could lead to exciting developments in co-operation, not just at marketing level but also at production level. I hope that my right hon. Friend will do what he can to see that we have an early answer on this matter.
In this context it is right to pay tribute to the Central Council for Agricultural and Horticultural Co-operation and its retiring Chairman, Sir Roger Falk. I heard someone pay a tribute to him recently in roughly these words: "You knew little about the industry when you came into it and you know not a lot more about it now you are leaving and that is why you have been able to 1102 do such a good job." That was a well-meant and well-earned tribute.
Last week I was pleased to be able to join a council tour of four co-operative societies in Worcestershire and Gloucestershire which covered feed compounding, machinery and seeds, the marketing of horticultural produce, a Land Settlement Association operation in both production and marketing and a small pig group. I was much impressed by what had been done and what is being planned. Much has happened in agricultural co-operation in the past eight years since my right hon. Friend established the council in 1967.
We all know that farmers and growers are nothing if not individualists, especially when things are going right. They need to take a lot of thought before they change their habits. But the demonstrable success of our agricultural cooperatives in farming and horticulture should encourage more farmers and growers to look again at the advantages of co-operation. There can be little doubt that there are substantial prizes for both these industries in increased co-operation.
There are now 330 agricultural co-operatives, most of which are concerned with marketing. More than half have been formed in the past 15 years. The council's annual report estimates that there are now sufficient agricultural cooperatives to form an effective basis for expansion, although new ones are not ruled out. The job now is to encourage and persuade more farmers and growers to join in these activities.
Since 1971 grants totalling just over £4 million have gone into co-operative development in all parts of the United Kingdom, all but £613,000 into marketing co-operatives. It is perhaps in the area of production that there is scope for expansion of both business and output on the basis of secured markets at fair prices.
The Government's inflation package makes expansion of farm output all the more urgent, not just to save on imports, important though that is, but as a deliberate policy to reduce imports of food which we have all for many years been saying could and should be grown here. But there will be no expansion of output unless we reverse the present fall in output.
1103 There is no disguising that what is at stake in the next few months is not higher output but how to maintain the present milk output—and I think my right hon. Friend admitted that this afternoon. There must be no complacency about what will happen to doorstep milk supplies at the end of this year. I hope what I say will not be interpreted as panic-mongering, but under successive Governments since 1973 there has been a steady decline in the dairy heard, for many reasons. Unless that decline is halted and reversed doorstep milk supplies will be in danger. Supplies could well be in danger at the end of the year, and there is worse to come. It is on the basis of an expansion in the dairy herd that the forecast in the White Paper of much of the extra output is built. That is at the heart of our hopes for expansion.
I am glad that the Minister is holding talks with all parts of the dairy industry on how to halt and reverse this decline. I wish him best speed and all vigour. If producers are to make up the shortfall and go on to expand they will need a better price for their product, and the consumer will have to pay more for milk on the doorstep. The only end to a policy of cheap milk is no milk. If the Government think it right to subsidise the doorstep price, there are good reasons for that, but producers need, and must have, higher returns if they are to stay in business in face of rising costs.
My right hon. Friend mentioned the fodder position. I welcome his news that last Friday he had talks with members of his liaison committees. It is blindingly obvious to everyone in the industry, and to everyone in the House who takes an interest in these affairs, that there will be a fodder shortage this winter. If it rains right on the nail and the temperature stays exactly as it should between now and the end of the growing season there will still be a fodder shortage. I urge the Minister to put more steam behind these discussions. The impression he gave was that they were not going as fast as many of us would like.
I urge the Minister to discuss with the farmers' unions ways in which the maximum amount of fodder can be cut and conserved in the next few weeks. We should encourage a joint appeal from the Minister and from the presidents of 1104 the farmers' unions to all who are getting in the harvest—"Bale, do not burn". It would be a crime if this year straw were to be burnt on the scale of previous autumns. That appeal applies similarly to other arable by-products.
I hope that the Minister will alert the Agricultural Development and Advisory Service to its responsibilities, and use it and the offices of the NFU county branches to conduct urgently a review of the likely fodder situation and get round the table and work out ways of sharing it. We had a good demonstration last winter of what voluntary co-operation can achieve, and the livestock and cereal farmers should be congratulated on their efforts. My plea to the Minister is that we should start taking these steps now before the shortage sets in. I believe that the Government should be ready to step in to steady the market, if need be, and perhaps to assist with transport and even storage.
I should like to end on a hopeful note, which brings me back to where I started. There has never been a time when sections of farming have not faced problems. It is an industry which has probably faced more quick changes—changes which can dramatically and critically affect output—than any other industry. This situation makes forward planning that much more difficult for this important industry.
Let me end by quoting the view of Professor George Allen, Professor of Agricultural Economics, University of Aberdeen, reported in Lloyds Bank Review in July 1975:Given British farming's favourable size structure, lower real wages costs than much of Continental agriculture (e.g. Netherlands, Denmark, NE France and the Paris Basin) and exchange-rate adjustments broadly reflecting differential rates of inflation in agricultural costs, it is hard to see anything other than a much more favourable financial outlook than was enjoyed in 1960–72.I hope that the Government will be able to encourage the industry to fulfil most of the aspirations in the White Paper.
§ 5.42 p.m.
§ Mr. David James (Dorset, North)
I am extremely grateful to be called to speak in this debate because I represent an almost wholly agricultural constituency where the people are gravely worried about the present situation.
1105 Having spoken on the telephone last night to three egg producers who are losing £1,000 a week, I found far from encouraging the somewhat leisurely approach of the Minister of Agriculture to the problems which beset the agricultural industry. Never in the 15 years that I have been, in and out of the House, concerned with agricultural constituencies have I known confidence at such a low ebb. None the less, farmers are resilient people. They have known periods of glut and low prices, they have gone through times of gale and times of prolonged drought, and they have always ended up right because farmers tend to be like that. They can recover from such situations. However, what they cannot recover from is the Socialist, urban-oriented political threat of wealth tax, capital transfer tax and action over tied houses. All these represent matters from which there can be no recovery. The situation is irretrievable.
I do not think Labour Members—and I see that there are only eight of them now present—realise the extent to which people love the land on which they live and work. Anybody who read the impressive book by Robert Ardrey a few years ago, called "The Territorial Imperative", will remember his point that probably the love of land and the relationship with the land is a more potent driving force in human motivation than indeed is sex. The relationship between a man and his land is the basis on which all our food production turns. More than in any other field of human endeavour, the man on the land—whether he be a landowner or a tenant farmer—regards himself as a caretaker for the next generation and for posterity. That posterity is the concern of the man in the croft in the Western Isles of Scotland as much as of the man on the landed estate in southern England in respect of his "ain folk". It is his own son he wishes to see succeed to that land.
The reason why our countryside is so beautiful is that successive generations over 500 years have planted trees for posterity—trees which take a long time to mature. Already the effect can be seen in our countryside. My county of Dorset, in common with many other counties, has been tragically and disastrously smitten with elm disease. On a six-mile drive from my home to church on Sun- 1106 day, I counted 127 dying elms beside the road. In days gone by those trees would have been cut down and burned and replacement trees would have been planted. But in the present day, because of the lack of confidence in the future, people will not bother to cut down these trees. Soon the greater part of southern England will be covered with skeleton trees. Nobody will have the time, the incentive or the money to cut down, burn and replace with disease-resistant trees. I suggest that the proposed capital taxation on farmers and landowners is far more disastrous than any short-term effect, even in respect of the egg producers who are losing not hundreds but thousands of pounds a week.
The White Paper says that we need to expand our agriculture, and it is common ground that we need investment in the land. That expansion can be obtained in only one of three ways. The first is by means of retained profits ploughed back into the farming enterprise—and, incidentally, how is a farmer to retain profits from his land when he is making a loss? If the farmer is to make a profit, under the present proposals he will not be allowed to retain enough of it to reap the benefit and plough it back into the land. The second possibility is for a farmer to have recourse to his bank manager. But since in present conditions the value of land is falling, it is not possible for farmers to increase bank borrowings on assets which have a falling value. Thirdly, the farmer can recapitalise his venture by selling off an unwanted field at the edge of a village for urban development. By that means up to the present time he has been able to put that money into, say, a new milk parlour or a piece of farming equipment.
All these methods of refinancing agricultural products are now to be denied to farmers. The incidence of wealth tax and the proposed tax flowing from the provisions of the Community Land Bill will deprive farmers of their seed corn, which since biblical times has been the greatest asset held by a farmer. This will make it impossible for future generations to take advantage of what has been done by their forebears.
The effect of capital transfer tax—and there have been concessions, although they are too small to be of any account—will result in the breaking up of large 1107 landed estates. I know that this is what Labour Members want, and I understand their motives, but it will have the effect of enormously reducing the number of farms available for letting. It will not be possible for young men who may have gone through agricultural college and with limited capital behind them to take on a tenancy and attempt to build up their own agricultural life.
A further effect of the Socialist proposals will be to fragment the farms that already exist. There has always been an inherent clash between the Treasury and the Ministry of Agriculture on this point. It has been settled Ministry of Agriculture policy over the years to increase the size of farms. On the other hand, it has also been settled Treasury policy to fragment farms that already exist by the imposition of estate duty and now capital transfer tax.
I do not think it right that land should be put in a more favoured position than anything else in terms of capital taxation. That has the effect of artificially raising the value of land. At this stage I must declare an interest in that I come from land-owning stock. The 45 per cent. rebate was welcome, but it had the effect of vastly increasing the price of land to an unhealthy degree. I think that capital transfer tax is a better tax than estate duty, which merely turned the whole matter into a form of Russian roulette—namely, whether lung cancer was to claim one first. I accept that CTT is not a bad tax. What I object to are the rates. The rates make it impossible for farmers or anyone else.
§ Mr. Jerry Wiggin (Weston-super-Mare)
I cannot accept my hon. Friend's contention as regards capital transfer tax. The one feature of the tax to which we have objected is that it is a tax on gifts. The element of death may well produce certain more attractive features than estate duty produced, but CTT is a tax on gifts. It is that to which we object.
§ Mr. James
I accept my hon. Friend's point. The argument that I am trying to develop is that no one knows what his or her expectation of life may be. The fact that a gift can be set at naught because someone has the misfortune to be run over by a bus 36 hours before the seven years is up makes it a highly 1108 arbitrary tax. I much prefer a tax which enables people to know exactly where they stand, but my main interest is in the rate at which CTT is imposed. I am especially interested in rates that will make it possible for farmers to continue but I also have well in mind those people who are running family businesses or other businesses.
On 27th March I elicited a Written Answer from the Exchequer on the highest rates of estate duty or gift taxes in direct line of descent in every country in the EEC. I shall read the figures rapidly. In Belgium the rate is 17 per cent., in Denmark 32 per cent., in France 20 per cent., in Germany 50 per cent., in Ireland 55 per cent.—admittedly it is going up—in Italy 31 per cent., in Luxembourg 16 per cent., in the Netherlands 17 per cent. and in the United Kingdom 75 per cent. The average of those figures is 35 per cent. Therefore, the rate of CTT in this country is over double that of any other country in the EEC. For the last year for which figures are available the total yield of capital taxation under this heading in the Eight was £433 million, while in the United Kingdom alone it was £463 million.
I believe that here we have the key to two problems. Labour Members continually urge upon us the need for Britain to invest, invest and invest again, but why should people invest when capital erosion in this country is more than in the eight other countries of the EEC put together? How in the world can we expect farmers to expand their businesses when the rate of CTT is such that there is bound to be a continuous outflow of capital from the industry rather than the inflow which the industry could develop for itself if these matters were handled better?
Unless the Government are prepared to take a hard non-doctrinaire look at these matters and are prepared to recognise that farming is a family business which continues from generation to generation and is deeply entrenched—there are eight identifiable families in my constituency who manned their pikes when the Armada was off our shores in 1588 and are still farming today—I believe that the countryside, our national heritage, will be grievously impoverished. Moreover, I believe that we shall go hungry within the next 12 months.
§ 5.55 p.m.
§ Mr. Ted Graham (Edmonton)
I am reminded that my hon. Friend the Member for Bradford, South (Mr. Torney), in opening his remarks, almost apologised because on the Government benches there were not as many Members as on the Opposition benches with practical experience of farming. In that, my hon. Friend was absolutely right, save for the speech of my hon. Friend the Member for Hemel Hempstead (Mr. Corbett), who demonstrated a deep knowledge of farming. I say at once how grateful the whole House is to my hon. Friend for the benefit he gave us of his experience. As a Member sponsored by the Cooperative movement, I was delighted to hear the extensive and generous tributes which my hon. Friend paid to the instrument of the co-operative idea which is used in agriculture and farming.
I declare a small interest as a director of a co-operative society—namely, the Enfield Highway Society, which farms in the Lea Valley—but particularly as a member of the board of directors of the Co-operative Wholesale Society, having had a long association with the society. The CWS, which is owned and controlled by the retail co-operatives, is perhaps the largest farmer in Britain. It farms over 37,000 acres from Aberdeen to Cirencester. It farms approximately 11,100 acres of wheat, barley, potatoes, sugar beet and peas and 38 acres under glass. I am able to speak as one who, although once or even twice removed from such matters, has some experience and knowledge.
The CWS does not share the gloom and pessimism that is coming to us from the Opposition. Of course, there is no argument that farming is in one of its traditional and periodic difficult times. However, my friends in the CWS tell me that the society has increased the size of its dairy herd at the rate of 20 per cent. over the past two years. Despite what has elsewhere been described as a grim outlook, the CWS intends to maintain its expansion programme. Already the CWS has the largest dairy herd in the country, with over 5,000 cows. Its decision to expand is against the background of the reported slaughter of 21,000 cows a week in England and Wales and the decision by 6,000 producers to go out of milk over the past 12 months.
1110 The CWS is confident of the long-term future of the dairy industry. That must be right when we consider that the country is expected to supply only just sufficient milk to meet demand and when Britain imports £360 million worth of milk products a year, including butter and cheese, some of which could be produced in this country if more milk were available.
§ Mr. Maxwell-Hyslop
Will the hon. Gentleman tell us, roughly speaking, how many CWS employees in the dairies will lose their jobs this winter if there is not enough milk for anything except liquid distribution?
§ Mr. Graham
I am not able to state the position. The efficiency of the CWS as regards milk is notable, and I shall demonstrate its efficiency by making one or two further comments. The CWS has increased its yield not merely by additions to the dairy herd but by a move to larger herds involving rotary parlours which enable two men to milk 300 cows, bringing about the advantages of a labour-saving of one man per unit and team work.
Recently we have had the Royal Show. Last week's Farmers Weekly quoted a farmer detailing his problems and saying:We should have known better from past experience than to trust the politicians' promises.I make that quotation not merely as a way of defending the Government but to remind the Opposition, who appear to be taking their lead from the hon. Member for Westmorland (Mr. Jopling), that it does not do the industry or this House much credit to say that all the ills facing the farming industry can be laid at the door of one political party or the other.
If that point is to be reinforced, the record needs to show all the facts. Earlier this year Kathleen J. Smith wrote in the Daily Telegraph that when my right hon. Friend first took office the livestock sector, on which about 90 per cent. of farmers relied for at least some of their income, had declined from a profit to a loss situation because of the doubling of the costs of animal feedstuffs during the previous nine months and the reluctance of the then Conservative Government to increase the price of animal products proportionately.
I make those two party points to redress the balance in what has been said 1111 by Opposition Members, because a great deal has been made by them about the lack of confidence in and uncertainty about Government intentions among those engaged in farming.
I share the view which was expressed by my hon. Friend the Member for Hemel Hempstead. I very much hope that the discussions which are taking place with the various elements in the industry about how we can put flesh on the bones of the White Paper will reach fruition fairly soon.
Inevitably the problem with which the farming industry will have to come to grips—and undoubtedly this will have an effect upon the number of workers—is that of looking for savings in costs. It will be mechanising and using technological aids. It will inevitably be reducing the labour force. When reference is made to the labour force, we must recall that in 1960 there were more than 500,000 full-time workers on the land whereas there are now only 233,000. It is clear that there has been an erosion in the attractions of the industry from the point of view of those who consider earning their living within it.
In common with other right hon. and hon. Members, I have received the views of the National Farmers' Union. On capital taxation, the point is made by the NFU that the Government ought to modify their proposals to take into account the special circumstances of agriculture. I have sympathy with that view. But, in common with a host of other industries, a perfectly good case can be made for modifying any general taxation proposition in order to take account of the special circumstances of the agricultural industry. This is a problem which any Government have to face.
§ Mr. Wiggin
In the capital transfer tax proposals there is a special recognition for agriculture. The Government have accepted the point already. What the Opposition quarrel with is that the Government's concession is meaningless.
§ Mr. Graham
As my right hon. Friend said earlier, we must wait a little longer for precise concrete proposals to emerge. There is a general understanding of the problems of the industry, and the way that the capital transfer tax will affect 1112 the industry is fairly well known. I am sure that the hon. Gentleman will have heard my right hon. Friend indicate that he would stand up for the industry in other places, as well as inside the Cabinet.
The final matter which I wish to raise relates to food prices. In its submission, the National Farmers' Union said that some food prices would have to go up unless there was a corresponding extension of food subsidies. Here, the Opposion are in a dilemma. There is this dichotomy between saying that people ought to be prepared to pay more for their food—and I agree that they should—and having to balance whether they should pay more directly or whether they should be subsidised in one way or another.
The Opposition find it difficult to rationalise their philosophy on subsidies. We are told that there needs to be an enormous reduction in public expenditure. I was delighted to hear my right hon. Friend the Prime Minister say last week that there was to be some increased public expenditure on food subsidies and housing subsidies. But the Opposition never object to increased producer subsidies, which are running at a figure in excess of £600 million to the farming industry in general. That is the sum which represents subsidies of one kind or another to the producer, but, of course, in the end they are all designed to assist the consumer and the producer.
The Opposition argue that there is a special case for the protection of one sector of the community. I do not hold to that view. When it comes to the question of responsibilities, the Opposition and their friends need to do a great deal of heart-searching about their responsibility to workers on the land. I referred just now to the catastrophic reduction in the number of people working on the land. Recently there was a conference at Reading University organised by the British Society for Agricultural Labour Science designed to encourage farmers to think about manpower use. In a survey which was reported to the conference, great dissatisfaction was expressed by present-day workers about their conditions. They were asked "Would you encourage your son or your daughter to work on the land?" In general, the answer was the same as the one which I recall miners giving when asked whether they would 1113 encourage their sons to go down the mines. Three-quarters of the workers who were asked that question said that they would not encourage their children to work on the land.
Today we hear about the problems facing the farming industry. However, I have more confidence than the Opposition that, with Government assistance, the farming industry, large and small, will be able to surmount the problems, as it always has done in the past.
§ 6.7 p.m.
§ Sir Paul Bryan (Howden)
I should first like to declare my interest as one who farms on the borders of his constituency in Yorkshire.
This is the first debate that we have had since the publication of the White Paper, "Food from Our Own Resources". What impresses me about the White Paper is the contrast between its matter-of-fact optimism and the actual mood of farmers whom I meet in my constituency.
It is not very difficult in a country like this which imports some 40 per cent. of its food to get out a plan which will save millions of pounds in imports. Both the National Farmers' Union and the Government have succeeded in doing this. However, this is not a very hopeful moment for launching such a plan on our farmers, who are more determined to keep what they have than to go in for any kind of expansion. Retrenchment, not expansion, is the order of the day, and the facts show exactly why.
Our dairy and pig herds have been declining. The beef herd and the national sheep flock are expected to decline. Horticulture and egg production have had a disastrous time. Investment in buildings and machinery is sharply down. The immediate worry is undoubtedly the shortage of cash, especially on the livestock side, and this cannot be said too often to the Minister.
Two years or so ago livestock farmers borrowed, probably against the background of high land prices. Since then, interest rates have soared. Inflation has hit them in every way. Livestock profits are lower, leaving very little with which to pay interest and certainly nothing with which to pay back capital. At the same time, land values have slipped 30 or 40 per cent., and the herds have lost a lot of 1114 their value. The story already quoted of the farmer in the constituency of my hon. Friend the Member for Devon, West (Mr. Mills) is probably typical of the situation of a good many farmers.
Against this unpromising background for expansion, the Government have wantonly chosen this time to start upsetting fundamentally the traditional structure of British agriculture. By "wantonly", I mean that they have done so for no conceivable agricultural reason. Traditionally, about half our land is owned and farmed by farmers and the other half is rented to farmers by landlords. This mixed system has proved so suited to our land that our agriculture has a record second to no other industry since the war. The Prime Minister praised it at Stoneleigh; the Minister of Agriculture constantly praises its performance. I do not think that anybody belittles its record. During the debates on the Common Market, all agreed that the structure of our agriculture was superior to anything on the Continent.
Despite this good structural situation, in the past 18 months the Government have been passing laws which will do lasting injury to both the owner-occupier and the landlord and in so doing they will do long-term harm to the tenant. The damage will be caused by the whole range of capital taxation. It is not just one or other of the taxes; it is the combination and inter-reaction of capital transfer tax, wealth tax, and capital gains tax, superimposed on the highest income tax in the world. There is no doubt that in time this combination will kill the moderate to large family farm, many efficient agricultural estates, and reduce the number of farms to let.
§ Mr. Corbett
Does the hon. Gentleman recall that when my right hon. Friend the Chancellor of the Exchequer introduced what one Conservative Member described as a minor concession for agriculture the point was made from the Labour benches that it would mean that the vast majority of family farms would not have to pay capital transfer tax?
§ Sir P. Bryan
I shall be covering that matter.
It was clear in the excellent capital transfer tax debates that the Government had given no serious thought to the effect of that tax on agriculture. In the end, 1115 as a result of good argument from this side of the House, we extracted a few concessions, but even now they are wholly inadequate. The Government recognise this in their White Paper, for under the headingResources and possible restraint on output,is the promise of areview of the effect of capital taxation on agricultural production.The Government are at last discovering just what sort of effect the tax will have. It is scandalous that a tax should first be put into force and that then we should have an inquiry into its effect. Would it not have been better to wait a year and go into the question of its effect before imposing it on the industry and causing such damage and concern?
I ask the Minister to inquire not only into the effect on present production but also into what system should replace the present one. At whatever level the tax starts to bite—whether it be at 200, 300 or 500 acres, at some level the farmers concerned will have to sell off land to pay their taxes. Even if the bigger farms and estates are not numerous, they represent a high proportion of our production Above a certain acreage, a great deal of land will have to be sold, or at any rate a great deal of money will have to be found for taxation. Does the Minister envisage the farmers or estate owners in question selling off land? Does he envisage fragmentation, about which so much has been said, with so few comments from him?
The next option open to those affected will be to sell their land, presumably to a finance house, and lease it back again. But we do not know whether the finance houses will be buyers by then.
A third possibility, which is very much in farmers' minds, is that the Government will accept land for taxes, so that once again we shall have the story of the Government "saving" an industry by slow nationalisation.
Will the Minister now say which of these three options he favours?
We do not yet have the wealth tax; it is being considered. The NFU has forecast a bill of about £100 million for that tax. If the capital transfer tax bill is about £100 million as well, in one year 1116 a sum equal to a third of the investment on fixed capital in the whole farming industry in 1974 will have gone in those taxes. At a time when we are supposed to be trying to expand, that is an extraordinary way to treat the industry.
According to a chart in the Farmers-Weekly, a farmer with a 908-acre farm who is paying either the rate A or rate B envisaged in the Green Paper will have a return on capital, after paying income tax and wealth tax, of under 1 per cent. In other words, he will work for almost nothing for the year in question. That is hardly an encouragement to invest.
As my right hon. Friend the Member for Cambridgeshire (Mr. Pym) said, the landlord in turn will be encouraged to invest less, so that his farm is not valued highly.
Whatever further concessions are now made, these taxes clearly represent a massive deterrent to investment expansion.
During the time of referendum I read an article in the Sunday Times by John Cherrington, in which he said:Where British farmers are at a distinct disadvantage compared to Continental farmers is in their tax burden, not only for income tax which in France for instance is assessed on a much more generous basis to the farmer, but also in capital taxation. No other country imposes on farmers wealth, capital transfer and capital gains taxes to the extent that is done here. The effect of these taxes is going to be increasingly severe over the years. Farmers who wish to avoid them will have to make provision for this. This will reduce the amount available for investment in actual farming, and this must affect their competitive position.I think that we all agree that John Cherrington is a fair critic.
My final point concerns the tied cottage. Of all service houses in this country, only 10 per cent. are in agriculture, but for some unknown reason they have been picked on as the evil ones. There has been no explanation. A recent impartial report by the Tavistock Institute showed that on balance the tied cottage is welcomed in the industry. No doubt improvements could be made in the system, and I should be happy to see them made, but the Government's proposals to abolish are ludicrous. We all know of holdings where there is a house for the man who looks after the livestock enterprise. No one living away could do so. To abolish such tied cottages 1117 would undoubtedly close down some ventures and certainly discourage new intensive pig and livestock enterprises.
The Government are working in two watertight compartments. On the one hand, the Minister of Agriculture is honestly trying his best to get expansion; on the other, his Left-wing colleagues promote measures which are killers to expansion of any kind. It is time that the Minister asserts himself. Otherwise, his White Paper will mean nothing.
§ 6.20 p.m.
§ Mr. Gwynfor Evans (Carmarthen)
In two decades, between 1955 and 1975, the number of dairy farms in Wales dropped by 59 per cent. I am much concerned about the social consequences—about the effect on the Welsh language, for one thing. The language has been driven from the industrial parts to the rural parts. Farming provides the economic basis for the language and the traditional culture of the people. With this decimation of the farming population the whole of Welsh culture is put in jeopardy.
I wonder what the reaction would be in England if the number of dairy farms had dropped by the same proportion in the same time. In 1955 there were 27,500 dairy farmers in Wales, in 1975 there are 11,300, and the fall continues. It has gone on under successive Governments, Conservative and Labour; it is not a recent phenomenon. It continues—indeed, it is accelerating.
In England and Wales, between 1973 and 1975, the gallonage of milk fell by 49 million—a steep and lamentable fall. But Wales accounted for no fewer than 21 million gallons of that drop—or 42 per cent.—although its population is only 6 per cent. of that of England. The old county of Carmarthen, a great part of which I represent, is particularly hard hit, because it produces about a quarter of all the milk produced in Wales. This situation is an indictment of the record of successive Governments in Wales.
It is well known that every recession hits Wales harder than England. In every depression, the effects in Wales are more brutal. Unemployment and depopulation are always greater, outward migration always heavier. This has been acknowledged to be true of the industrial areas. What I want to emphasise is that the effects of misgovernment are at least 1118 as great in agricultural and rural Wales as in industrial Wales.
The green pound situation is an example of how Wales suffers excessively from Government policy. The 22 per cent. gap which the Government have allowed to develop between the real value of the green pound and the phoney exchange rate at which rates are pegged in the United Kingdom has far more adverse effects in Wales than in England because of our vulnerable situation. Our farmers are now in desperate need of the 7p a gallon difference that would be made to the price of milk and the £35 that would be added to the price of the average steer if the green pound were adjusted to the true currency value.
While we suffer in this way, continental farmers apparently are subsidised to compete more effectively against the farmers in the countries of Britain and in the British market itself. In that situation, the need for an early and considerable increase in the return for milk is urgent. We wonder what our producers will get for their milk in the winter. Now that we are to continue in the Common Market, this kind of decision is no longer made here but in Brussels. We know that M. Lardinois has his own clear ideas about what should happen to the price of milk in the winter. Already, some farmers who supported our continued membership are showing signs of repentance as they see the power of the pressures of continental farmers.
I have spoken so far of dairy farming, but it is not only the dairy farmer who is hit by the drop in milk production. Indeed, it is not only the farmer. A host of people who depend on the farmer are also hit, including creamery workers, who are immensely important in rural Wales. Their number in my constituency varies, according to season, from 800 to 1,200. That is a considerable number in a rural area. I note anxiety in every creamery. There is already little production of butter in these creameries compared with the past. Britain last year imported £266 million-worth of butter. How good it would be, socially and economically, and financially, if a great part of that costly imported food could be made at home.
Certainly we have the physical capacity for expansion, but it is the easiest thing in the world, and the most useless, to mouth the word "expansion" if the 1119 farmer is not allowed the financial return which will enable him to invest to expand. The physical capacity to expand must be matched by financial capacity.
The farmer must be given the means of expansion and the confidence that he will not be set off on another fool's errand He must know for years ahead that his return will be adequate. That goes for every commodity, in our case for meat as well as for milk. Commitment to expansion is meaningless unless the farmer is given the means to expand.
I am very glad of the Minister's assurance today about the continuation of deficiency grant support after April 1966. What sums will be payable under the variable premium scheme to the end of the year? It would be good for farmers to know what they will get. Unless their immediate return is improved, they will lack the cash to maintain their present production, let alone expand.
When will the CAP for sheep be ready? We should like to see as much strength on behalf of our sheep farmers as the French Government are showing in regard to lamb and mutton on behalf of the French consumer. In particular, we should like the French market kept open all the year round for our lamb and mutton.
The market prices for beef are dropping rapidly. Will the amount per hundredweight paid for variable premiums be increased? A considerable amount of the allocation at the beginning of the support year must remain unused. That should be at the disposal of the Government.
Turning now to fodder, last winter's crisis, which could have led to the starvation of hundreds of thousands of animals, fortunately passed because of the unusual mildness of the winter, but farmers were left with no reserve of fodder—certainly in my area. Now the hay harvest has passed for the lowlands and, because of the April cold spell and the drought in May and June, the quantity of hay harvested is roughly half the quantity harvested in the past. It is of good quality, but it is low in weight. On the high ground the situation could be even worse.
The lack of fertiliser which farmers could not afford to put on the ground 1120 earlier this year may have made its contribution. Next year is expected with great trepidation. It will be a difficult and expensive winter, whatever the weather is like.
I wonder what came of the attempt that the Minister made last winter to obtain hay from abroad? In the coming winter could we have a fund to support farmers who have to pay so much for such costly feed. If the Government do not act with great speed and resolution we could have a repetition of the kind of demonstrations to which the farmers of Wales were driven last year. It would be sad if we had to face that once again.
§ 6.30 p.m.
§ Mr. Hamish Watt (Banff)
I should like to start my short contribution this afternoon by making an extra special plea for unity from all sides of the House. It would be nice to have time to speak about the effects of capital transfer tax and of the desperate fodder situation that will arise in our hills and uplands. However, I shall forgo all that today and make a special plea for unity on agricultural policy.
We must realise that external forces are at work that are interested in having a go at our agricultural policy and do not want it to succeed. It is up to us to get a policy that is coherent and cohesive, and that will do something for the future of British agriculture. There has often been a call for the setting up of a House of Commons Select Committee on agriculture. The need for such a committee is now desperate.
Now that there is no hope of escape from the clutches of the common agricultural policy Britain had better learn to pull together in the best interests of its farmers or we shall find that we are torn apart by the agreed policies of our EEC partners.
One of the chief reasons for the Six wanting us in to make Nine was to allow their farmers to get their hands on the only market that was in deficit—the British market. We know that the French grain farmers are casting covetous eyes on the British market, that the Italians want our vegetable market, that the Germans and the Irish beef producers want unrestricted access for their beef into Britain, and that the Dutch are ready to ship liquid milk into our market 1121 in the coming winter if our supplies do not meet requirements. The Danes—we have always known this—already have the major share of our bacon market, and they will step up exports to us whenever and wherever the opportunity arises.
At present the British Government are providing just the right atmosphere for a vast down-turn in the production of all these commodities.
If time had permitted, I should have liked to analyse some of the policies—or, in some cases, lack of policies—that have reduced British farming confidence to its present sorry state. However, I want to use the few minutes at my disposal to make some proposals and to warn the Minister of the dangers that we are facing from EEC policies.
I want the Minister seriously to examine his portfolio and to tell us—not necessarily today—whether he considers that the time has come when he should shed his responsibility as Minister for Food. In the past there were sound reasons for grouping agriculture, fisheries and food together, but in the changed circumstances of today would it not be fairer to all concerned, not least to our EEC partners and to the Minister, that he should speak unequivocally for the producer?
§ Mr. Peart
That is a fair question. Although I do not agree with the hon. Member, I respect his motives and understand them. From experience, I believe that it is better that we should have a Minister of Agriculture who is also responsible for the food industry and other matters that affect agriculture. That is my experience. I may be wrong, but I think I am right.
§ Mr. Watt
I thank the Minister for that reply. I still think it is wrong of this House to ask the right hon. Gentleman, in Europe, to negotiate for us on behalf of the consumers at one moment and to negotiate on behalf of the producers at another. Surely this must reduce his credibility in the eyes of his fellow Europeans? Has the time not come for the responsibility for food to be passed on to the Secretary of State for Prices and Consumer Protection? Certainly, the present incumbent of that post is admirably fitted to fill the rôle. The Minister would then be able to devote all his time to looking after the interests 1122 of our farmers and fishermen, as the Ministers of the other EEC countries do.
A farmer friend of mine who returned from France only yesterday telephoned me to tell me just how well the French Government looked after the interests of the French farmer, and only hoped that we had someone who looked after ours. The present Commissioner for Agriculture, Mr. Pierre Lardinois, certainly seems to be looking after the interests of the French farmers. I shall always remember, as a young man, going to market. I would come home and tell my father that I had met Mr. So-and-So, and my father always said, "Ah, well, but he's worth the watching". I put it to the Minister that when we are talking of Mr. Pierre Lardinois, he is worth the watching. I should like to explain my reasons for saying this.
First, the Commission is pressing ahead with a plan to lower the intervention price of feeding quality wheat from the 1976 harvest. That is all very fine, until we examine the production figures of the various countries. We discover that Britain grows far and away the highest percentage of feed wheat, and always will, because of its climatic conditions.
Secondly, there is a strong proposal to deduct a percentage of the milk cheque from milk producers each month to help finance the sales of butter and skim milk powder to third countries and also to discourage the production of vast surpluses of dairy products. Why should British dairy farmers be penalised in this way when we have no surpluses of any dairy product?
Thirdly—I make no apology for returning to the subject—the skinned heads directive for sheep exported to the EEC militates against the sheep producers of Britain. If ever a directive was designed to discriminate, it is surely that one. If the EEC wants us to be so hygienic—and listen to who is talking—the obvious answer is to cut the heads off the sheep, as was done in the past, and to consign them to the knackery, away from the slaughterhouse. The directive, as it stands, is designed to make it difficult and uneconomic for our sheep producers to export sheep to France. It is working; it is making it uneconomic and difficult for us to export our lambs. I ask the Minister to tell the Commission that the 1123 only sensible way to resolve this problem is cut the heads off the sheep.
The right hon. Member for Penrith and The Border (Mr. Whitelaw) was highly amused when I raised this subject in the House some months ago. I wonder whether he is still amused, when every farming paper one picks up every weekend mentions how unfair the workings of this directive are. Every sheep farmer now recognises that directive for what it was—a deliberate attempt to cut off our exports from the French market. I am delighted to see that the Minister is nodding in agreement.
Unless the farming community knows that it has a champion who is prepared to fight solely for its interests both here and in Europe, there will be no return of confidence in the industry, and production will continue to fall.
I should like to finish by reiterating my plea for the setting up of a Select Committee of the House to work out a long-term plan for the agriculture industry and to keep that plan on target. Finally, I beg the Minister to be ever vigilant and to examine, carefully and suspiciously, every order, directive or proposal emanating from Brussels. Only by doing so, with the best interests of the British farmer always in mind, can the Minister look after our largest and most vital industry, and ensure that we can have a decent future for it.
In order to save the pound we must save imports. The easiest way to save imports is to grow more food from our own resources. The next few weeks will show the British farmer just how serious are the Government on both these counts. I earnestly believe that British agriculture holds the key.
§ 6.40 p.m.
§ Dr. Colin Phipps (Dudley, West)
I declare an interest, in that I own a farm.
The debate so far has covered most of the short-term problems facing farmers, and I do not particularly wish to talk of those problems. I should like to turn attention to three major long-term elements which are significant to farmers.
One of the principal problems that face farmers—it certainly faces me, and has faced all farmers for many years—is the cyclical nature of the industry. One of the great difficulties in an industry 1124 which is comprised of so many individuals is that when the Minister sits down with the NFU and decides each year what ought to be grown and how much should be produced, the tendency is to say that in this industry, of such and such a size, if we change the incentives by such and such a percentage the net effect will be an increase in production of the percentage that we wish.
If this were an industry which comprised three or four, or even 30 or 40, large-scale enterprises, such machinery might produce the desired result, but in an industry which is so widespread and comprises so many individuals, what happens is that the individual farmer makes his decision based upon the effect of that incentive on him and his production personally. The net result is that we get an over-production in whichever particular area—beef, barley, or anything else—for which the Minister, together with the NFU, is producing incentives.
In my farming activities I have been impressed by the way that having a contractual relationship with the British Sugar Corporation for my sugar beet always enables me to know at the beginning of the year how much beet I can plant. With this difficult and complex business, contractual relationships of that sort in British agriculture are probably one of the most important single things that the Government must promote. In any review of agriculture that is taking place, I hope that the initiation of contractual farming will be one of the major things we consider.
The second thing, which has been mentioned by the right hon. Member for Cambridgeshire (Mr. Pym) is the question of—I hardly like to use the phrase—land reclamation. Land reclamation is certainly something to which the Government must turn their attention. We lose, I believe, about 50,000 acres a year to urban and other activities and development.
§ Dr. Phipps
More than that, I am assured. It is important that we reclaim marginal hill land and other land at a greater rate than we are doing so currently. As much of the land that we lose is of good quality and much of the marginal land we reclaim is of a lesser quality, 1125 we shall have to reclaim higher acreages than we lose each year. I should like the Minister to look at proposals which might produce something in excess of 75,000 acres of new usable land each year, whether by grants to the industry or by other means. This is essential for agriculture. The White Paper will be meaningless unless this is done fairly rapidly.
The third thing to which I want to turn at greater length is the challenge passed out by the right hon. Member for Cambridgeshire when he said that by introducing capital transfer tax we were not operating in the true interests of agriculture or of the nation. He went on to claim that we had never given an intellectual justification—I believe that was his phrase—for the capital transfer tax as it applies to agriculture. In the next five or six minutes, I shall try to give such a justification, because I believe that there is one and that it is an extremely important justification for the future of agriculture.
Having said that, I have my own reservations and doubts about the capital transfer tax. [HON. MEMBERS: "Oh."] Hon. Members of the Opposition say "Oh". I suspect that they will he appalled by the solution which I would impose. However, the problem with capital transfer tax for agriculture is that it is neither flesh nor fowl. The 50 per cent. rate imposes considerable difficulties for the farmer who has to give up, shall we say, 50 per cent. of his acreage in sales in order to pay his capital transfer tax.
This problem was faced by the Treasury and, indeed in the Select Committee on a Wealth Tax we are currently facing it. What we do is to provide a class of exemptions for agriculture. As has been mentioned in the debate, this has a terrible effect on the industry. What we are doing is erecting a class of assets which are attracting to them value, which is not a function in any sense of their economic use. It is purely a function of tax benefits which derive from the CCT in the way we are proposing in agriculture, and the wealth tax will do exactly the same thing. Twenty times earnings, 20 times rent, will produce prices in agricultural land which are totally uneconomic. Opposition Members who want to see tenant farmers coming back into the business are absolutely 1126 correct in saying that this is something that will certainly inhibit any tenant farmers returning to the industry.
Therefore, what is the solution? There are only two possible solutions. The first is that we have no capital transfer tax on agricultural land—which I suggest is not just and certainly not equitable in the sense that the tax is meant to apply across the board. What would be much more sensible is if the capital transfer tax on agricultural land were a special case and were 100 per cent., and payable not in cash but in land.
The justification for this is that there is a very sharp distinction between the ownership of land and what is done upon the land. The money that should be put into agriculture is money that should be put into what is done upon the land and not into the ownership of the land.
The reason we do not have young men coming into farming is that they cannot afford to buy farms; they do not have the capital to purchase a farm. If we had land which was totally owned by the State—this seems to be a suitable and equitable way of passing land from individual farmers to the State—we would have a situation in which land became tenanted and in which eventually all land was tenanted. I should be quite happy under the capital transfer tax system to see the son given a tenant right when his father died. Possibly there is no real justification for this on moral grounds, but we have, after all, the tenant right in existence anyway, so I should be happy to see the tenant right given to the son and the land passed to the State. With the land owned by the State, we would then have a situation in which we could get new entrants into farming—people who were interested only In the industry of farming, and not in the value of land. Farming is, after all, about what is done on the land, not about the ownership of land.
This has been sharply brought home to us on the Select Committee on a Wealth Tax. If anyone would care to read the evidence of, say, the CLA, as opposed to the evidence of the NFU, he will find that the distinctions are very acute. However, it is difficult to say to a farmer, "You are better off if your land values were to fall." We must accept that. But it is difficult to say to 1127 someone who owns land at £600 an acre that he would be better off at £300 an acre—
§ Mr. Geraint Howells (Cardigan)
Is the hon. Gentleman suggesting that one generation of farming should work full working days to pay for his particular farm and at the end of his life hand over the farm to the State, and that the farmer's son should take over as tenant?
§ Dr. Phipps
I am indeed, and I do not see the objection to that because, basically, what the farmer is trying to do is to erect an asset which has continuity with respect to his family. He is not buying that land because he thinks that he or his son will sell it but because it will be within his family, and his son can farm it. If the problem of ownership of land is taken out of farming and what we have is people farming, we have it because it is their business and industry. The question of ownership of the land is irrelevant.
The sooner we get away from having the ownership of the land tied to the farmer the sooner we shall get a rejuvenated agricultural industry. My objection to the capital transfer tax—I suggested that Tory Members might not like my solution—is that it is 50 per cent. It is doing neither one thing nor the other. It will make it difficult for farmers to pay the tax without selling half of their land. It will lead to the fragmentation suggested by Conservative Members. The solution to the problem of the agricultural industry in the long term is the slow but steady nationalisation of the land through a 100 per cent. capital transfer tax. I recommend it strongly to my right hon. Friend and hope that he will discuss it with the Treasury.
§ 6.51 p.m.
§ Mr. John Davies (Knutsford)
Nothing would give me greater pleasure than to enter into the lists of argument with the hon. Member for Dudley, West (Dr. Phipps) about the incentives to investment and to improving the quality of the land or many other things. I would, however, prefer to follow the line of thought I had originally suggested to myself. The issue I wish to talk about is that of pricing as it affects farmers and 1128 the agricultural industry. I deeply believe that in today's conditions the expectation of an outlet and a satisfactory price is the biggest single factor which helps create confidence. Similarly, the lack of such an expectation brings about an absence of such confidence.
Generally speaking, farmers looking forward rightly think that there will be a broad assurance for them in the years to come, enabling them to market with satisfaction what they can produce. Their greatest single anxiety resides in the belief that the price they receive will under shoot the costs to which they expose themselves, including the costs of continued investment. This is the fundamental problem of the farming industry. All the issues surrounding this—intervention, guarantees, subsidies, subventions—are palliatives from the point of view of the farming industry.
They are acceptable palliatives at times when the industry is under duress, but the truth is that they represent an alleviation of an inadequate price situation in the markets they serve. It is that point that I particularly wish to stress. A fundamental injustice was done to our farming industry some time ago, and has not been corrected. It was perhaps done by inadvertence rather than intent. It is an inadvertence which should long ago have been corrected. It is to that that I wish to call attention.
The Government—and I cannot entirely exonerate the Government of which I was a member—thought that it was a convenience to ride the green pound to try to maintain a lower level of consumer pricing in the market and thereby hold back the retail price index and all the dangers to which an excessive rise in the index could expose us. The extent of inadvertence was that the degree of that purely adventitious advantage was not adequately realised and perhaps has still not been.
It is true that farmers accepted as reasonable when we joined the European Economic Community that it was too big a step for them to advance immediately from the pricing levels of their market as it was at the beginning of 1973 to the pricing levels common in the Community. They accepted the principle of transition as part and parcel of a reasonable approach to a reasonable 1129 pricing level. The farming industry as a whole does not seek extreme movement of prices. It looks for secure and consistent pricing of a reasonable kind. Its reasonableness was demonstrated by its broad acceptance of the principle of transition in the pricing mechanisms of the Community.
What was not realised either by the farmers or by the Government—and how could it have been?—was that there would be two enormous and quite unforeseen developments which would strike at the heart of that reasonable approach to their future. The first of such developments was the catastrophic increase in world food prices in 1973, with particular impact on the feeding costs of the industry. Undoubtedly this was not foreseen. It was not known to what degree we would see a tumultuous increase in the price levels to maintain stocks in the farms. That was one big development.
The other, equally unforeseen, was the extraordinary and agonising plummeting of the value of sterling in terms of world exchanges, with the result that a mechanism which had been devised to adjust what might be at the margin of the common agricultural pricing system—the differences in exchange which might emerge—was suddenly faced by the necessity not to make marginal adjustments but to make what was such a fundamental discount on the pricing levels of our farming industry as totally to undermine its prospects and forecasts.
The effect of the whole system of monetary compensatory amounts as allied to what we must generally regard as being a now totally illusory conversion rate for sterling into units of account has proved to be the most damaging and most unexpected element in the whole of our farming misfortunes in the past year or two. Is it rational—to what other industry could it possibly be said—to say to those in farming "We will arrest the movement of the foreign exchange rates, despite the fact that you are dependent to a great extent upon imports, at a level prevalent three years ago, and, irrespective of what happens thereafter, your prices will be frozen to that level while the price of imports, particularly those from Community sources, will be subsidised by us so that those exporting to us shall not suffer in a similar way"? That is what is happening at present.
1130 The expression "green pound" in some way conjures up a synthetic situation which is not fully understood. Suppose the Government said to the chemical industry, which produces a great deal and imports much of its material, that its prices would be frozen back to the equivalent import levels of three years ago irrespective of cost of production today. That is precisely what has been happening to our farming industry.
The situation has been getting worse. This seems to be an entirely unjust flaw in the system we have adopted. There is an element of injustice here which transcends the position of political pressure or balance one way or the other. It is surely overdue that this injustice should be righted. I hope that the right hon. Gentleman will not say that this is under consideration but, rather, will assure us that he has a positive timetable for the readjustment of the exchange system which will give satisfaction to the farming industry.
§ 6.58 p.m.
§ Mr. Peter Hardy (Rother Valley)
The House has listened with great interest to the right hon. Member for Knutsford (Mr. Davies). Some of us on the Labour benches would not disagree with part of his analysis. His comments about the dangers of riding the green pound are relevant. There may be temporary value in doing so because it can hold back the upward movement of the retail price index, but the right hon. Gentleman is correct to assume that there are dangers in carrying that ride too far, particularly if it threatens productivity and the confidence of British agriculture. The analysis of the right hon. Gentleman is correct, in that we need to see greater rewards and greater capacity to meet the increased costs of production in British agriculture.
The hon. Member for Westmorland (Mr. Jopling) touched on a matter of importance. He suggested that the way out of our problems was to increase subsidies. Apparently when we are debating agriculture, "public expenditure" is not a dirty phrase. He said that the Opposition were in favour of subsidising housing and farming, the implication being that they were not in favour of subsidising anything else. But if one recalls recent debates in this House and the speeches made by Members of the Conservative Opposition, one 1131 finds them calling for subsidies not only for housing and agriculture but for such things as rural transport, postal and telephone services, various kinds of social service, and a whole variety of local services, and of course, above all and properly, defence.
§ Mr. Jopling
The hon. Gentleman must not put into my mouth things that I never said. I take exception to his saying that I stated that we would not subsidise anything else. That is not what I said. I made it clear that, whilst we said that public expenditure should be cut, we felt that in two sectors there was justification for increasing it. There is complete consistency in saying that there should be increases in two sectors but that overall expenditure should be reduced.
§ Mr. Hardy
I am grateful for that clarification. The Conservative Opposition's view is that expenditure should be savagely cut. If it is to be cut as savagely as they require, it will mean that there will be very little scope, either for housing or for farming, to make substantial increases in subsidy.
But I do not disagree with the hon. Gentleman's assessment that the rewards for the farming industry must be greater. The farmers must have sufficient income so that they can invest and fulfil the aims of the Government's White Paper. They need the assurance that the right hon. Member for Knutsford suggested. I hope we have provided part of that assurance by the publication of the White Paper and by the Prime Minister's speech. But these assurances will be relatively fruitless if they are not followed by a variety of actions. Those actions cannot lie purely in subsidisation. Food prices will have to rise. There is no alternative if we are to ensure that we can promote the self-sufficiency which should be our aim. For that reason, adjustments to the green pound are now essential.
Reference has been made in the debate to tied cottages. If the farmers and others who live in the politically backward rural areas represented by the Conservatives had had the wit 20 years ago, they would have ensured that the rural district councils engaged in policies which would have provided the local communities with adequate bungalow and other accommodation for the elderly and dis- 1132 abled. If that problem had been faced and resolved fairly and reasonably, as it has been in many industrial areas, there would be very much less anxiety among farmers now.
I have referred to self-sufficiency, and I hope I shall be allowed to refer again to what I have referred to in three previous agricultural debates—forestry. It is appropriate for me to pay tribute to those engaged in the activities of the Forestry Commission. I was on the brief annual parliamentary visit this year to see the Forestry Commission's activities. This time it was to south-west Scotland. I was very impressed by the dedicated achievements of the commission there. The commission, which is not viewed favourably by some hon. Members opposite because it is a nationalised activity, is very forward-looking.
I was particularly impressed by the achievements in aerial fertilisation, through helicopters spreading fertiliser. The result has been massively to increase the growth rate of the trees which received the fertiliser. Examining a cross-section of the timber, one could see visible evidence of the value of this work. It suggests that we are still undervaluing our capacity to produce more of our own timber. It is ridiculous that we should be producing only 8 per cent. or 9 per cent. of our timber requirements, and hope that the Government will ensure that home timber production is greatly increased.
I welcome the reversal by my right hon. Friend of the disastrous decision taken in July 1972 as a result of the unfortunate White Paper on forestry published by the Conservative Government. I hope that the forestry policy on which the Government are embarking will allow Britain to be more self-sufficient in timber production.
Some of us were particularly anxious when the capital transfer tax, as applied to forestry and farming, was under consideration in the House. The Conservative Opposition in particular were much at fault because, rather than try to present the needs of farming and forestry and secure realistic if moderate improvements, they preferred to make political capital by engaging in confrontation against the principle of the tax. The fact that a change was made was due to Labour Members who were prepared to 1133 accept the view that agriculture and forestry needed special consideration. We also, logically, took the view that if the concession for farming and forestry had been very much greater it would almost certainly have put up the price of forestry and farm land and made the exercise much more difficult.
The Chancellor of the Exchequer's concession on CTT has been much more beneficial to forestry than the Opposition suggests. There was an article in Country Life recently which seemed to support that contention—and I do not think that it was written by anyone dedicated to the Left wing of the Labour Party. It seemed to suggest that the concession had proved very helpful.
In reply to a speech I made on the Finance Bill, my right hon. Friend the Chief Secretary to the Treasury said that the Treasury would keep under consideration the effects of taxation measures on forestry and farming to ensure that Britain did not lack production. He added that the matter would continue to be studied and that tendencies would be watched. I welcomed that statement. I hope that the Treasury will not be slow in making further modest amendments to ensure that the dangers which have been mooted do not arise.
The Conservative Opposition, particularly in the last 12 months, have spent much more time talking about the evils of CTT than drawing to the attention of constituents the beneficial and helpful results of the Government's policy. If the Opposition are concerned about the national interest and to help farmers develop confidence, they will serve the national interest instead of taking or seeking party political advantage.
My hon. Friend the Member for Hemel Hempstead (Mr. Corbett) made a constructive and helpful speech. His reference to the need to improve grassland so as to enhance dairy production was very important. Britain's grassland is one of our most precious resources, and we must ensure that production from it increases.
My right hon. Friend said that the first cuts of hay this summer have been reasonable in quality but light in volume. I hope that we shall see another miracle of British weather, of the kind that we experienced last winter, and that our fears 1134 as a result of drought will not in the event be justified. However, if we do not have the miracle we need I hope we can ensure that there is a timely buying of fodder from abroad, in order that we do not have to buy at peak prices which would affect our position extremely badly. In that connection, I hope that my right hon. Friend will underline the fears expressed by the hon. Member for Hemel Hempstead and call upon British farmers, certainly in the east of England, not to indulge at all this year in the burning of straw.
We have recently suffered from a very serious problem in the industrial areas of Britain, which has brought home our present plight. My right hon. Friend is aware that in recent weeks, especially the past two or three, I have been most anxious about the position of the fish-and-chip shops in my area. This is, of course, no light matter. The fish-and-chip shop is an institution which is an important part of British life. I patronise such shops quite frequently.
The other day I was pleased to meet several fish friers from my constituency with whom I had been in consultation during the previous fortnight. I am most grateful to my right hon. Friend and to the staff in the Ministry whom I contacted over this matter, because the fish friers were in an extremely difficult position.
The crisis arose more than anything else because of the weather. Potatoes were touching a price of almost 25p a pound. That figure sounds more awesome if we talk in terms of 5s. a pound, which is very nearly the price potatoes reached before the rain came last week. The sad point is that I understand that last year we had a very good potato harvest, which should have been able to sustain us through the summer, particularly given the normal level of our potato imports from the Channel Islands, Cyprus, and so on. Unfortunately, there have been disappointments about those imports, and we have suffered quite a serious shortage.
I should like to ask my right hon. Friend who, I know, has been most concerned about the position—as have his civil servants—whether he has been satisfied with the advice he received from the Potato Marketing Board, which, I understand, assured all involved that supplies 1135 would probably be adequate, at a reasonable price, throughout this summer. That really does not justify the hand-to-mouth position which we were in for a few days towards the end of June.
The fish friers of my constituency are entitled to ask me to convey to the Minister their hope that he will consider the Potato Marketing Board carefully, particularly with a view to increasing the consumer component of the board. The situation that was experienced in many parts of England in late June was one that we do not wish to see repeated.
I turn to the question of eggs. I have said before in the House—I make no apology for repeating it—that Opposition Members appear to have discovered an egg problem after 28th February last year. I remember first asking questions about French eggs in 1972. I certainly wrote to the Minister of Agriculture, Fisheries and Food at that time, which was considerably before my right hon. Friend assumed office. It is not a new problem, but it is a serious one. I wonder whether my right hon. Friend is really confident that the actions he has taken under Article 135 will be sufficient. I should like to ask him whether, at the next meeting of the Ministers responsible for agriculture in the Community he will consider raising the question of improving the levels of co-ordination of egg production throughout the whole of the EEC.
There needs to be a greater degree of Community co-operation. We certainly need to be careful, as my right hon. Friend has been careful, not to walk into the trap of thinking that the easy answer is to ban imports from one country. We have an important egg export trade and it would be extremely embarrassing for us to threaten it.
I do not wish to say much more, because I know that other hon. Members are extremely interested in agriculture. It is important to recognise, as has been emphasised, that the interest is not purely on the Opposition side of the House. It is important that we stress that the present Minister inherited a situation which was full of problems and which was largely one of chaos, not least in the area of beef to which so many people in previous years had been exhorted to move from dairying. Now, as hon. Gentlemen have conceded, we have the 1136 likelihood of a milk and dairy product shortage. The root of that shortage lies not in the fodder situation nor in any decision taken by my right hon. Friend, but in the move encouraged by the previous Conservative administration which, foolishly and blindly, encouraged farmers to get out of dairying and to go into beef. That sort of problem—and there were many others—was inherited by my right hon. Friend.
My right hon. Friend is showing agriculture that the way ahead can be adequately rewarded, and that the grounds for confidence will certainly be there. He will have to accept that the British consumer will have to bear a cut in the standard of living which food price increases, of the scale which I believe are inevitable, will necessitate. For that reason, although my right hon. Friend has received a great deal of criticism today, I believe that many of the decisions he has made are in the best interests of the British farmer and the British people. He deserves to be congratulated and he deserves a great deal of sympathy because some of the decisions he will have to take in the next six months will be hard ones.
§ Mr. Deputy Speaker (Sir Myer Galpern)
Order. The hon. Member for Rother Valley (Mr. Hardy) made a very acceptable declaration when he said that there are many hon. Members who are interested in this debate on agriculture. I inform the House that so far approximately 12 hon. Members have indicated that they wish to take part in the debate. Therefore, on a rough calculation—my arithmetic is quite poor—it works out at 10 minutes per speaker if we are to accommodate all who are anxious to take part before the winding-up speeches.
§ 7.16 p.m.
§ Mr. Ralph Howell (Norfolk, North)
I shall try to keep my remarks brief. I must declare an interest as I am a dairy farmer.
It is important that we should hold a debate on the very serious crisis that has arisen in British agriculture. It is more important that something positive should come out of the debate and that positive action should be taken immediately. We have all agreed that there is an immediate need to restore confidence in British agriculture generally, and especially in 1137 the dairy industry. This can be achieved only by making agriculture and dairy farming more profitable. Unless we do this we shall not secure an adequate food supply.
We are now in a different situation from that which we experienced for many years in this country. We now desperately need to use our British agriculture to the full. If we do not, there will be serious food shortages which will affect everyone. I am not just pleading for the farmer or the farm worker. It is in the interests of the whole nation that we secure food supplies.
In general, I think that this debate could have been held at any time in the past five years and similar things would have been said. Both sides of the House have blamed each other for the mistakes which have been made. It is high time we got away from blaming each other, because both parties have made mistakes about agriculture. We are in our present position because of the mistakes made by both sides of the House. It would he better if we could forget this petty party squabbling about who made which mistake.
There is a great need for fresh thinking on agriculture. A thoroughly new approach is needed. In my view, we could learn a lot from our European partners. Far too often we are liable to criticise them for the way they look after their national agriculture. However, the lesson to be learned is that we should be looking after our national agriculture as well as they are looking after theirs.
We urgently need production planning and marketing organisation. Every time that we reduce our breeding herds or our laying flocks we lose out, and our competitors, the French, the Danes, the Dutch or whoever, gain extra entry into our markets. The time has come to think seriously about planning and contractual farming, as was suggested by the hon. Member for Dudley, West (Dr. Phipps). That is the way ahead. I do not think I agree with anything else said by the hon. Gentleman, but that is a point worth looking at.
I agree with the hon. Member for Banff. (Mr. Watt) about the need for a Select Committee on agriculture. We had such a Select Committee some time ago. I believe that it should be restored. Pos- 1138 sibly some new thinking might result from it.
We have had the White Paper and an encouraging speech by the Minister, who told us that discussions are continuing. But discussions will not restore confidence, particularly when the Government are following other proposals concerned with taxation which are designed to destroy confidence.
So long as we are continuing with food subsidies and not allowing our farmers to get the real prices for their products from the market, there will be no confidence. It is absurd to sell milk at less than a third of the price of beer. That does not make sense and will not lead to confidence in the industry. There is, and will be, such a shortage of milk in this country that we shall produce no butter and very little cheese this winter.
I turn now to the positive action which could be taken today if the Government wanted to help agriculture. I refer to the green pound. The value of the green pound could be adjusted very quickly. There is no problem with the EEC. The Minister could ensure that a great step forward was taken to make agriculture generally more profitable if the green pound were adjusted. I urge him to take that action.
The Minister of Agriculture is highly regarded. He has an exceptionally pleasant personality. However, the time has come for him to be belligerent. He must insist that the Cabinet takes action. Perhaps he should take note of the action taken by the former Secretary of State for Education, who, by threatening to resign, got his way.
Finally, I urge the Government to take this crisis in agriculture seriously, to take immediate action, and to readjust the green pound straight away.
§ 7.24 p.m.
§ Mr. Wm. Ross (Londonderry)
I have always believed that the essential task of the Government was to try to provide as much cheap food as possible and at the same time to provide a reasonable level of income for the farming community. That income must be high enough to keep people in farming and working at the job. I confess that I have yet to hear a policy announced in this House which will bring about that state of affairs.
1139 The hon. Member for Westmorland (Mr. Jopling) listed the farmers' woes. The farmers already know their woes.
We then heard the Minister detail the carrots which are to be dangled before the farming community. But the carrots are growing in someone else's garden. The Government and the public must realise that farmers have heard of carrots before. I ought to declare an interest, because I still farm in a small way. Farmers are no longer interested in what is promised for tomorrow. Essentially, they need hard cash now not only to live but to invest for the future.
Last year there was a fall of 26 per cent. in real terms in farm incomes. That is a tremendous drop when spread over the entire farming community. But people seem to forget that that did not fall equally on all farmers. It bore particularly heavily on certain sections of the industry—particularly the beef and suckling herd sectors. It meant that farmers in those sections of the industry made little or no profit. I should be interested in the publication of the figures used for the determination of the guarantees for this year's Farm Price Review. I think that they would be most revealing. I believe that they would reveal a very dangerous situation in some sections of the industry.
It is the Government's job to create conditions in which farmers can make profits, out of which they can meet their normal everyday expenses and save to pay the tax which must be paid when they either die or decide to pass their farms on to their children. I am not being morbid when I say that. Farmers are practical people. Most farmers who own their land wish to pass it on. I do not know whether the hon. Member for Dudley, West (Dr. Phipps) owns his land. If he does, I should like to be around when his will is read to see whether he is prepared to pass on his land to the State.
§ Dr. Phipps
I assure the hon. Gentleman, first, that I own my land and, secondly, that I have no intention of passing on the ownership to my children. I only wish that capital transfer tax were 100 per cent. The valuable thing is that my children should work the land, not own it.
§ Mr. Ross
Perhaps at some future stage the hon. Gentleman will tell us what he intends to do with his land.
Farmers, as has been pointed out by hon. Gentlemen opposite, are in a similar situation to that in which coalminers once were. I do not know whether coalminers are still advising their children to go into other industries, but many farmers are advising their sons, and in some cases their daughters, to direct their energies into other professions and industries rather than stay in farming. They see no future for them in that industry. This situation will surface slowly over a long time, but it will have very severe effects on food production in this country.
It is sometimes forgotten that profits are not made equally on all types of land. There are many different types of land, from the low-lying highly fertile soils in some parts of the country to the Highlands of Scotland and the hills of Northern Ireland. Farming policy which works for one area will not necessarily work for another. There are differences in the quality of land, altitude and rainfall. All these things taken together have a tremendous effect on the crops which can be grown, stock production and, indeed, the number of buildings needed to house stock during the winter. All these factors make tremendously different demands on individual farmers.
The EEC proposes to deal with the problem by giving subsidies to less favoured areas. Apparently such subsidies are to be given at the source of supply. I have no great enthusiasm for subsidies, but, if we must subsidise food, it should be subsidised at the source, as was done under our own guarantee system. When the subsidy is put on at the source—the farming community—it pays much greater dividends than can ever be achieved by being applied at any other point right down to the consumer.
The Minister has not told us his interpretation of EEC policy as it affects the United Kingdom. He has not said what his policy will be for the structure of farming in this country in so far as it conflicts with opinion in the EEC. We have not been given any information about what the size of the work force in farming will be in this country. There is a danger 1141 that we may go too far with mechanisation and take too many people off the land. That point has already been reached on some very large farms in this country and in my Province, and possibly we have gone beyond it. Machinery has its limits, and we must have a fairly large number of people working on the land. That means money, and in the short term it may mean higher production costs per unit, but people will remain on the land only if they have reasonable incomes.
I wish to say a few words about the peculiar difficulties of Northern Ireland. A number of hon. Members have referred to the difficulties which have been brought to the fore by the green pound. Northern Ireland shares a common land frontier, and a pretty well unpoliced land frontier, with a foreign State which is also a member of the EEC and which enjoys a tremendous advantage over the United Kingdom in relation to the green pound. The green pound is being used in this country as a device for keeping down the cost of food to the consumer, but it is the farmer who is paying the price. The difficulty of the green pound shows up more clearly and blatantly in Northern Ireland than elsewhere, especially because the border is wide open.
We have a tremendous amount of smuggling, and we hear the most astonishing stories which we cannot nail down but which apparently have a fair bit of truth in them. The Public Accounts Committee found that there was a certain amount of truth about the difficulties concerning the smuggling of calves for the purpose of collecting illegal subsidy. My hon. Friend the Member for Antrim, North (Rev. Ian Paisley) raised this question some time ago, and he was more or less laughed at, but on investigation it was found that his remarks were correct. We have a problem of the smuggling not only of calves and fat cattle but of pigs. The ownership of meat and pig factories in Northern Ireland by citizens of Eire is increasing. Being true patriots, there is no doubt that they favour their own country's interests, and it would not be reasonable to think that they would do otherwise.
I should like the Government to put their minds to this problem. All kinds of rackets seem to be worked which are costing probably the EEC and certainly 1142 the people of this country a great deal of money. I hope that the Government will take steps to stop this smuggling and try to trace the source of the reports and stamp it out.
There is a tremendous export of fat lambs from Northern Ireland to Eire. Quite a lot of them go through to France. Lamb was selling at 30p a pound in Northern Ireland last week. In my local market it was down to 25p. In France it was 76p. Therefore, someone is making a lot of money. Only in Eire and the United Kingdom is the price of lamb about 30p a pound. Elesewhere it is 40p, 50p, 60p or 70p a pound. In the Common Market it is a luxury meat. In Ballymena market last week top quality fat steers were selling at from £15 to £16.40, seconds were from £13 to £14.65, first quality heifers from £14 to £16.40 and second quality heifers from £12 to £13.80.
Farmers in Northern Ireland are not desperately worried at present because the variable premium is not bringing their return up to a reasonable level. However, the farmers and possibly the Government have not realised that if there is an increase of between £2 and £3 in the price on this side of the Irish Sea the very large premium will probably be wiped out and people dealing in fat stock will find themselves in an even more serious situation than last year. In addition, a tremendous number of fat-stock from Eire are entering our slaughterhouses and jamming them so that our own farmers cannot get their own stock in. It is time the Ministry took an interest in what is going on.
The Minister said that farmers should hold their cattle until the spring. By the spring we shall probably have intervention because the present regime will last only until then. But if we are to hold them until the spring, on what are we to feed them? If a bullock is ready for slaughter, keeping it until the spring will not make it more ready and, even if kept, it will not be worth that much more money in any case. People cannot afford to keep their cattle. They must sell them when they reach sale weight and size. If we are to hold cattle until the spring, are we also supposed to hold eggs until then?
No human being can be held responsible for the weather, and probably that is a good job, but reference has been 1143 made to the difficulty this year of growing crops. Grass has been poor. For the first time I have seen crops withering in the fields in Northern Ireland from lack of rain. That problem was taken care of at the weekend because we had rain, but the basic crop has already been determined. The young potatoes have already formed, even the main crop. There will not be any more and the crop will be light. Nothing much can be done about the hay crop or the grain crops. No change of weather can improve the situation. If we have bad weather from now, it will probably be a good deal worse. I should like people to keep that in mind, because I get the impression from listening to some hon. Members and other people that crops improve whenever the conditions improve. The conditions up to now have already predetermined the final crop, and it will be smaller than last year's crop.
The green pound has been our greatest bugbear in Northern Ireland. We should like it to be devalued to the same level as it is in Eire, which would remove a lot of our difficulties.
I have read the White Paper with some care. Paragraph 17 points out that we need adequate training centres. That means money. Paragraph 23 says that the industry needs assurance and long-term planning. That is all very well, but the assurance which the industry needs in view of the risk of further variations in world food prices is an injection of capital which will keep people farming.
An injection of capital in farming must be looked upon as the premium on an insurance policy. We know what happens when we do not pay insurance premiums. If our houses burn down, we do not get any money and we are in serious trouble. If we are not prepared to pay the insurance premium to agriculture to assure future food production, we shall pay a heavy penalty.
There is much more that I could say about the difficulties faced especially by the upland and small farmers. However, many hon. Members wish to speak, and I have no doubt that I have wearied the House long enough.
§ 7.41 p.m.
§ Mr. John Watkinson (Gloucestershire, West)
I was interested in the contribu- 1144 tion made by my hon. Friend the Member for Dudley, West (Dr. Phipps). He injected into our discussion some radical thinking about the ownership of land and the farming carried out on it. He pointed out the difference between the two concepts.
Recently I visited a co-operative enterprise in my constituency at Newent, which is known as the Land Settlement. It is a classic example of the ownership of land separated from the agricultural processes occurring on it. I commend this system to the Opposition. Land Settlement tenants can "buy in" a 5-acre plot of land and cultivate it. This is basically a horticultural enterprise. Tenants cultivating that land have at their disposal central services in terms of marketing and propagating. The farmers feed their materials into the central departments which distribute and sell the products. When the farmers leave Land Settlement they do not sell their land privately. It remains in the ownership of the Government.
Under this system young persons who are interested in horticulture but cannot buy a farm or land for themselves are enabled to become agriculturists and earn their livelihood without the enormous burden and struggle to find vast sums of money. I commend cooperative projects and ventures to the Opposition. Those projects illustrate what can be done and demonstrate a pattern which can develop.
§ Mr. Anthony Nelson (Chichester)
In my constituency of Chichester there are at least two land settlement associations. Many of the tenants have suffered substantially as a result of the Government's stubborn refusal to subsidise the oil used by horticulturists. That has resulted in many young tenants giving up their tenancies. Many of the former Jarrow tenants who converted to the new tenancies are now finding times very hard. The hon. Gentleman neglected that point.
§ Mr. Watkinson
I am aware of the difficulties faced by horticulture. My right hon. Friend made a grant to tide horticulturists over this difficult time. Land Settlement tenants in Chichester and elsewhere are receiving favourable prices for produce now being marketed.
The debate must be seen in terms of the Government White Paper "Food from 1145 Our Own Resources". I am impressed by the arguments presented for the expansion of agriculture. There is a potent balance of payments argument in favour of encouraging agriculture. The White Paper indicates that for every 1 per cent. fall in the exchange rate an extra £35 million is added to the food bill. As a result of the depreciation of the currency over the past few months, an extra £1,000 million has been added to the cost of imported food.
Now that we are part of the Common Market and participate in the common agricultural policy it is obvious that it is to our benefit to concentrate on those areas which will be of the greatest advantage to us. The White Paper emphasises that our grassland is highly suited to the production of milk. It advocates an expansion of the milk industry. However, the dairy farmers in my constituency are worried about their prospects. They have seen those words in the White Paper but realise that the reality for them in terms of bank balances is far from rosy. One of my farmer constituents wrote to me about this problem. He pointed out that last year his profit dropped to one-third of the previous year's figure. As a result of his efforts the farm yielded just over £2,800. That is what he received for a year's work in dairy farming, on which he must live. That sum is inadequate.
Dairy farmers suffer from the enormous increase in the price of feeding stuffs and the dramatic fall in the price paid for livestock. They suffer from the effects of inflation on the running costs of their enterprises. The cost of repairing vehicles has trebled. The result is that dairy farmers must cut back on their herds. The farmer who wrote to me is thinking of laying off men. He does not see how he can get through the winter if the Minister gives no indication of an increase in the price of milk to the consumer.
If there is to be an expansion of milk production, we must pay higher prices to dairy farmers. They must recive an adequate return. The White Paper acknowledges that fact. I welcome that.
The Minister is faced with a difficulty. An increase in the price of milk will result in an increase in the consumer price index. The Minister may find himself in the unhappy position of undermining the Government's economic policy. How- 1146 ever, sooner or later he must come to terms with the green pound, which must be devalued. The Minister must be prepared to increase the price of commodities to ensure a reasonable return to farmers. He is faced with the phasing-out difficulty during the transitional period resulting from our continued membership of the Common Market. That will increase the cost of living.
Farmers are confronted by a dramatic increase in the cost of cattle feed. However, we must remember that the people of the West are still much better fed than the majority of people in the rest of the world. There are between 400 million and 500 million people in the rest of the world who have a totally inadequate daily diet. We should keep in the forefront of our minds when considering the technology of our agricultural industry the desirability of not feeding our animals with vital cereal commodities which could be used to feed human beings. To that end, I welcome the emphasis in the White Paper on improvements in research and technology. We must use our grass to better effect and improve our drainage systems.
Important developments are going on with the extraction of juices from grass. Those juices can be used instead of cereals for feeding pigs and cows. We must keep up our expenditure on research and development. It is sad to note that there is to be no increase in the money available for the Agricultural Research Council in the coming year.
Hon. Members have spoken almost casually of the reference in the White Paper to the loss of approximately 70,000 acres a year of valuable agricultural land. That is a serious matter. A difficult balancing act has to be performed in deciding whether to preserve our land for agricultural purposes or to use it for housing or for motorways. If we are to maintain our agricultural output we must ensure that every five years we do not lose an area of agricultural land equal to the size of the old county of Rutland.
The White Paper mentions that we are losing land to forestry. I do not regard that as a loss. We have consistently underestimated the impact which forestry can make on the welfare of the country. We have spoken of the import bill in terms of food, but it is significant that we import nearly £2,000 million worth of 1147 timber products each year. We manage to produce only between 8 per cent. and 10 per cent. of our needs. The British Isles has one of the lowest percentages of woodland area of any country in Europe, yet it is one of the best countries in Europe for growing trees. I should like to see a dramatic increase in the number of trees planted.
At the beginning of this century one of the founders of our movement, Keir Hardie, spoke of the need for 10 million acres of afforestation. That is what we must aim at. If we are to reach that target by the end of the century, we shall have to increase dramatically the number of trees planted to 100,000 acres and possibly 200,000 acres a year into the 1980s. That policy is vital to produce major savings in our balance of payments position. It is almost certain that there will be a world-wide shortage of timber at the end of the century.
I should like the State to be involved more in the profitable sector of forestry; that is to say, the end product and distribution. In that way the State would get for the people the return which is at present going to private enterprise.
I welcome the White Paper "Food from Our Own Resources". I reiterate the vital necessity for the Government to back up their words with deeds and make available the necessary resources to provide for the expansion in agriculture which we all require.
§ Mr. Deputy Speaker
Order. I make this final appeal for the co-operation of hon. Members. Before the winding-up speeches there will be 65 minutes. There are 10 hon. Members who are anxious to take part, and they can easily be accommodated if hon. Members will restrict the length of their remarks. I shall not appeal to them again.
§ 7.55 p.m.
§ Mr. Nicholas Winterton (Macclesfield)
It is fortunate that we should have this debate on agriculture at this time because it enables us to have the long overdue debate upon the Government's White Paper "Food from Our Own Resources", and the Minister has been able to tell us that before the Summer Recess a statement is likely to be made on agricultural 1148 matters and that there will be a debate on the EEC stocktaking document which is of particular relevance and importance to the United Kingdom dairy industry.
I was impressed by the speech made by the hon. Member for Hemel Hempstead (Mr. Corbett), whose contribution was detailed, interesting and constructive. He said that farmers had particular problems in following their livelihood. Foot and mouth diseases, sheep scab, swine vesicular disease and brucellosis are just some of the diseases with which farmers have to cope. In following their hazardous occupation they have to work long hours, seven days a week. It is dry when they want wet weather and it is wet when they want dry weather. Each year there is a massive reduction in the acreage of land available for production so that the farmer has to produce more from fewer acres. All that indicates that the British agriculture industry has done a wonderful job since the war. It is the most advanced farming industry in the world.
The expansion proposed in the White Paper is greatly welcomed by the farmers. That expansion was referred to by the Prime Minister when he opened the Royal Show at Stoneleigh, in Warwickshire, a short time ago. I wrote to the Minister of State on 10th June enclosing a letter from the Secretary of the Macclesfield branch of the NFU. My letter dealt mainly with the milk industry, but it also referred to many other sectors. I should like to quote one sentence from the Minister's reply:Nevertheless we understand producers' reluctance to commit themselves to costly expansion programmes.That sentence is revealing. The words contained in the White Paper are one thing, but action is quite another. So far, the Government have neither provided the money nor created the atmosphere to make possible the expansion of home-produced food. As many of my hon. Friends said, the Government have actively pursued policies which are having the opposite effect and which are extremely damaging to the industry.
I shall mention several points which are of paramount importance to agriculture. The false value of the green pound leaves our farmers grossly under-recouped. It is estimated that if the green pound is revalued it will increase the 1149 milk price by about 8p per gallon, although it will also increase costs by 2p per gallon, leaving a net advantage to the farmer of 6p. The Government must now take action on the green pound. It was interesting to hear the hon. Member for Rother Valley (Mr. Hardy) urge that action should be taken. I hope that the Minister will give a clear assurance that action will be taken soon.
The hon. Member for Dudley, West (Dr. Phipps) emphasised the effect of the new capital taxes—capital transfer tax in particular. That tax and the proposed wealth tax are causing large estates and ordinary farmers considerable problems. Because of these taxes they are now seeking ways to take capital out of production to meet commitments in due course. Those commitments will be additional to the proposed revaluation of agricultural land. They amount to additional burdens on farmers who are already being "squeezed", but at the same time the Government are saying "Please produce more for the nation". To produce that extra amount of food, farmers must have the wherewithal with which to achieve it—not necessarily by subsidy, although that is one way to achieve the effect but, I would advocate, by a fair return being given to United Kingdom farmers.
I wish to turn to the subject of service houses and cottages. Despite strong evidence from both sides of the industry, the Government seem hell-bent on pursuing the bigoted and irrelevant policy of abolishing tied cottages. Such a move will reduce dairy herds virtually overnight. No farmer will dare to run large breeding herds without an adequate staff on hand to supervise operations. Ewes do not tell the farmers when they are about to lamb, sows do not advertise in advance that they are to farrow, and certainly cows do not broadcast the fact that they are to calve. Staff must be on hand almost throughout a 24-hour period, seven days a week when calving, and so on, is in process. Expert staff are needed to assist. If the tied cottage and the service cottage are abolished it will make the situation very difficult. I do not understand why the Government have picked on the agricultural service cottage, which amounts to only 10 per cent. of the total. What will happen to the other 90 per cent. of tied houses in one form or another'? The Minister must come clean 1150 on this question. If he does not make a clear statement about the tied house, he will be letting down the industry.
I should like to turn to the subject of drought conditions and their effect on farms generally. Following the torrential rain over the weekend it is difficult to appreciate that many parts of the country have been suffering severely from drought. Its effect has been made worse by lack of capital investment in livestock farms. Some farmers have been unable to fund good grassland management. Reseeding programmes have been postponed or abandoned. Lime and fertiliser usage has been reduced, with consequent reduction in output. But that is not the end of the story. Reduction in output means greater dependence on overseas suppliers and additional burdens on our balance of payments. This, surely, is false economy if we can produce the food within our own shores.
I wish to turn to the livestock and dairy sector. This subject is of particular relevance to my constituents in Congleton and Macclesfield. I should like to put on record the fact that last year the national dairy herd was reduced by 130,000 cows. Cull cow and bull slaughterings last week amounted to more than 20,000. When this figure is compared with 14,000 slaughterings last year, the grave indications of the situation must be clearly understood. How many dairy cows will be left at the end of the year if slaughterings continue at the present rate? In the year ending in March this year, AI dairy inseminations were down by 7.2 per cent.; in April and May of this year they were down by 10.4 per cent. Dairy replacement heffers are being slaughtered rather than being brought into dairy herds.
A great deal of emphasis has been laid on the fact that by the end of the year we could be suffering from a shortage of milk. The Government have an opportunity to take action. I urge them to do so.
§ 8.7 p.m.
§ Mr. Colin Shepherd (Hereford)
I am grateful for the opportunity to contribute to this debate, which deals with a subject that is so important to my constituents. My constituents and I who are involved in agriculture pricked up our ears when 1151 we heard the speech made by the right hon. Gentleman the Prime Minister in opening the Royal Show at the end of June. The right hon. Gentleman made three basic points which I shall outline.
The first point made by the Prime Minister related to the need for agriculture to take up the slack. The second point concerned the need for the realisation of the fact that the era of cheap food had ended. The third point touched on the need for expansion of home production. The present debate had been running very much on the latter theme, but there has been little mention of the question of slack in agriculture.
I wish to deal briefly with the subject of slack in the industry. It is my impression that in Hereford agriculture is highly-tuned indeed, and I believe that there is no slack at all. My parliamentary neighbour, the hon. Member for Gloucestershire, West (Mr. Watkinson) described the situation of a dairy farmer in his constituency. The story he told was similar to my experience over the weekend when I set out to examine the situation of a typical dairy farmer in Hereford.
In 1965 the dairy farmer to whom I refer ran 30 cows which provided him with a comfortable living. In 1975 he had extended his herd to 135 cows. However, his income amounted to exactly the same sum in pounds sterling. No wonder that farmer described the situation as similar to running like hell up a "down" escalator—in other words, running down steadily all the time. Undoubtedly, there is little slack in agriculture because most of it has been taken up and is stretched as tautly as a violin string. Financial reserves in the industry are low, and many dairy producers are managing at the moment only by selling off cows.
A further point made by the Prime Minister in the speech at the Royal Show related to the need for education about the fact that there is no longer any cheap food. I wish to draw attention to the situation in the milk industry related to the price of a pint of milk. It is certainly important to persuade and educate the consumer that he or she is obtaining an incredibly good deal—indeed, far too good a deal for anybody's benefit. The 1152 cost of a pint of milk retail is 6½p, yet a consumer will pay 10p for a "coke" and 20p or more for a pint of beer. How out of balance things have become when a basic commodity is priced at only a quarter of leisure products which we do not really need. Let us get the situation right. Let us initiate a major campaign to educate the people about these facts.
The Minister of Agriculture said that he was not in agreement with the concept of a Ministry for agriculture and fisheries and a separate Ministry for food. If that is the case, I hope that the Minister will seek to persuade his colleague the Secretary of State for Prices and Consumer Protection that the best form of consumer protection is a continuity of supplies, even though the price is substantially higher than the consumer previously paid. Continuity of supply is far more important than getting something for nothing in the short term and then complaining because it is not there tomorrow.
The third aspect of the Prime Minister's speech was the necessity to increase home production. As I have said, I think all of us in Herefordshire pricked up our ears and said to ourselves "The Government are thinking on the right lines". Then we had to ask ourselves "Are they taking the necessary action? Are they backing up their words with deeds? "As yet we have seen and heard nothing to indicate that there are deeds to follow the words.
The responsibility of government to the food producer is to set the climate right for the farmer to stretch himself. Unless we get right the rate for the job we shall not get the product at the end. In that context we must bear in mind the right price for the producer. Secondly, we must recognise the need to make it possible for investment to take place in agriculture. My right hon. Friend the Member for Cambridgeshire (Mr. Pym) has already made reference to taxation. I am reminded of the top of the hit parade of 1910. I was not around at the time, but I gather it was a number called "The Cobbler's Song". Leaving aside the cobblers, the refrain went:The better I cobble the less I earn.The Minister would be well advised to remember that that is the situation the farmer now faces. The better he works the less he earns.
1153 The question of being able to invest is important. Eight years ago a 70-cow unit in Herefordshire was started and it moved into surplus and allowed for expansion after only 20 months. Today, if we take the economics on exactly the same basis, the same unit will take 35 years to pay off. Where is the logic in that? Where is the incentive to invest? It is not present.
Next, I turn to the question of immediate future confidence. I have already mentioned the need to get producer prices right, but coupled with that is the forward action that is now necessary to pre-empt the threatened difficulties of fodder and straw shortages next winter. The hon. and learned Member for Montgomery (Mr. Hooson) has already made mention of possible shortages, and pressed the Minister to take action. I add my voice in asking for positive steps to be taken by the Minister to prevent the burning of straw.
A further element in the matter of confidence must be considered in the long term, namely, to remove the disincentives of capital transfer tax and the uncertainty of welfare tax. There is nothing in those two forms of taxation which allows for incentive to develop and for initiative to take charge. With these added impositions we return to the old cry of "Why should I bother?". That remains the position unless the taxes are alleviated. Unless confidence returns, who can blame the farmer if he sits back and says "I shall not trade in the car this year, I shall not do this or that; I shall just take it easy. Why should I bother?" Let us remove the disincentives and establish predictability. The fine words in the White Paper must be backed up with deeds.
To give the Minister some idea of the reaction to the White Paper in Herefordshire, I quote from the resolutions sent to the Herefordshire county branch of the NFU from the various branches in Herefordshire. From the Hereford branch the resolution reads:This branch views with the greatest suspicion the Government's five year plan for expansion in agriculture and urges the union to play no part in it unless cast iron assurances are received that farmers will receive prices that adequately compensate them for the extra capital outlay and effort involved.1154 From the Ross-on-Wye branch the resolution reads:That in the opinion of this branch the proposals give no confidence to farmers to increase their production at all and unless some concrete guarantees were arranged it was merely a waste of paper.From the Broad Oak branch the resolution reads:The branch also feels that any programme of expansion should be based on a much longer period than five years. The union should continue its campaign to educate the consumer that food should be given a greater priority in the weekly budget than it is given now and that to have an adequate supply of food in the future producers must have a fair return on the capital invested in their business.The men who formed those resolutions are not militants but ordinary, honest, down-to-earth yeomen farmers of England, either tenants or owners, with their capital invested in the land. That is a measure of the concern that is felt, and it is the duty of the Government and the duty of the House to give these men the backing and the confidence that they need.
§ 8.16 p.m.
§ Miss Joan Maynard (Sheffield, Brightside)
I give a cautious welcome to the White Paper. It is rather like the curate's egg—namely, good in parts. In fairness to the Government, they were obviously in some difficulty in that they did not know at the time of the White Paper whether we were to stay in the EEC or to leave.
I am unimpressed by the chorus of lament from the Opposition. Agriculture has the best record of any industry in this country in terms of production, communications and efficiency. We used to have agricultural executive committees on which many able people served. They provided a useful service to the public without charge. The committees were wantonly thrown aside by the Opposition when they were in Government. I believe that the right hon. Member for Lowestoft (Mr. Prior) was the worst Minister of Agriculture, Fisheries and Food within the lifetime of many of us who are now present. The right hon. Gentleman's motto was 'To hell with the industry. Let me get a 10 per cent. reduction in the civil servants who are serving our industry".
1155 Farmers in the NFU are not blameless. They could only see rising prices on a free market, but when the crash came and the bottom fell out of the market the disastrous policies that had been pursued were clear for all to see. It was then apparent that the safety net had been removed. As always, when British agriculture is exposed to the free market economy severe damage is done to those least able to bear it. I refer particularly to the stock rearers on the hill and marginal land. It will take them several years to recover.
As the White Paper suggests, British agriculture has achieved a remarkable production record in the past, and I know that it can do so again. As stated in paragraph 16 of the White Paper, the national farm of 47 million acres is steadily declining. We are losing 144,000 acres a year. This may be a bit of a hobby horse of mine, but one of the ways in which I would stop that loss is by stopping the putting down of all commercial motorways. Every time we put down a motorway or bypass it is rapidly filled up with cars. We then put down another motorway or another bypass to bypass the one that has already been built.
I suggest, too, that the Government should take a long look at reclamation. Erosion takes place in some of our coastal areas, and that which is eroded is washed up in others. Many acres in such areas could be brought into cultivation. I draw attention, too, to the Ministry of Defence establishments. Here are areas serving little or no useful purpose. Many acres could be brought back quickly into cultivation and into productive use.
I come back again to the hills, the uplands and the marginal areas. I know a little about the Northern Pennines Rural Development Board, which was wickedly destroyed by the Conservative Government. It was a splendid example of the co-ordination of agriculture, forestry, tourism and transport in areas which are sadly depleted of population and badly run down in general. Many small and uneconomic holdings which were badly fragmented were given help where it was most needed to bring them into more viable units. In this way, hope and encouragement was given to those living in these wild and inhospitable areas. The 1156 proper integration of afforestation bringing shelter to large areas would not only produce more timber for Britain and reduce imports of timber but also increase employment prospects in those areas. What is more, it would also allow upland farmers to increase their potential by improving their grazing land, by enabling them to keep their store cattle out a little longer in the autumn and to get them out a little earlier in the spring.
For too long we have not thought of grass as a crop. I am pleased that in more recent years we have begun to think and to act in terms of grass being not only a crop but a very important one. This has been brought about by the economic pressure of the cost of feeding stuffs. But we can do a lot more in our grass policy. However, it needs to be planned.
I know that the Minister regards the rural development board as his child. I hope that he will take his courage in both hands and re-establish the board and thus give encouragement to the many people in the Northern Pennine areas who wish to see its return.
I want to say a few words about our advisory service. This, along with the skill of farm workers, is one of the most important tools for the future which we have in agriculture. There was a period when the advisory service lost contact with farmers, especially those who needed it most. I believe that there has been a substantial improvement in morale, but contact needs to be improved if the Minister is to get what we all want from the White Paper. He must examine the work of the service closely and carefully and see what further action is needed to increase its help and advice to the industry. By and large, the dedication of the ADAS to our industry is tremendous. Under its new director, Mr. Keith Dexter, I hope to see an increase in the opportunities that it has to serve our industry.
I add a further word about consultation. The Government propose to continue their discussions with all interests and with all concerned in the industry. My own union, the National Union of Agricultural and Allied Workers, is playing an important part up and down the country. We object to being treated as poor relations in any consultations. We 1157 are needed, and we are ready and willing to play our full part in the industry and in any future proposals for it.
That brings me to the farm workers—the labour force in the industry. They are amongst the most conscientious, the most skilled and the most important workers in the country. I say that because here is a commodity which none of us can do without and which is even more important in the countryside as we know it today. I know farmworkers extremely well, and I know the industry reasonably well. I believe farmworkers to be the key to the success story of our industry. They have proved to be remarkably adaptable to the mechanisation of our industry. Their record of production is far better than that of any other worker in the country. They are rewarded by low pay.
I think that we ought to ask ourselves whether we would advise any son of ours to be a worker in this industry. If we are honest, we would have to say "No", in view of the pay prospects for workers in agriculture. There is a great deal of talk about job satisfaction, and that is good to have. But the snag about job satisfaction is that it does not pay the bills at the end of the week.
§ Mr. Richard Body (Holland with Boston)
Will the hon. Lady accept that three of my constituents, as farm workers, earned more than £100 last week?
§ Miss Maynard
If the hon. Gentleman says so, obviously I cannot deny it. However, I should like to know how many hours' work they did to earn it and how many weeks in a year they earn large sums of money like that. I can only tell the hon. Gentleman that the average earnings in the agricultural industry are running at between £10 and £15 a week below the average earnings in manufacturing industry.
We need urgently to attract to the industry willing and able men. We have an ageing labour force, and that spells disaster for any industry. For many years we have all paid lip service to the farm worker and to his skill, but nothing has been done to recompense him for that skill and that industry. I know why. Unfortunately, we live in the kind of touch society where a man gets only what he is strong enough to get. Unfortun- 1158 ately, the farmworker does not have the industrial muscle necessary to win the rewards to which he is entitled.
I come on to say a word or two about the industry's ability to pay, and I draw attention to the fact that, when the industry was booming in the 1950s, the Agricultural Wages Board was dolling out to our members wage increases of 4s., 6s. and 8s. a week.
Last, but by no means least, I come to a matter which was referred to earlier by an Opposition Member; namely, the tied cottage. It is in my view that the tied cottage gives our industry an archaic and out-of-date image. The hon. Gentleman suggested that our stock and dairy farmers would find it impossible to carry on without tied cottages. I remind him that veterinary surgeons do not live in tied cottages on farms and that midwives do not live in the houses where children are born, or even near them in many cases. Nevertheless, we manage to survive.
I welcome the Government's firm commitment that next Session they will at long last introduce the necessary legislation to abolish the agricultural tied cottage system. Our members rarely ask Governments for anything. Obviously, they are much too content. It is this that makes them such wonderful people. But it also mitigates against them. When they ask for something that I consider to be eminently reasonable, that their very home should not depend on their job, it is a tragedy that there are howls of protest from the farmers.
I welcome the fact that the Government have made a firm commitment to introduce legislation in the next Session to rid the industry and the workers of this anachronism, this feudal relic. We are supposed to live in the modern age, the twentieth century. Certainly, in machinery, animal husbandly and so on the industry is modern, but when we come to wages and housing for farm workers we are back to the eighteenth century. Nearly half our farm workers already live in free houses. I have not heard that the farmers who employ them have found it impossible to run their farms.
There are a number of ingredients which make our industry a success—land, machinery, livestock, fertilisers and the essential ingredient of the labour force. 1159 Without that labour force, its skill, adaptability and hard work, the industry would cease to function. It is high time that that labour force was rewarded with good wages and conditions. One way to do that is by the abolition of the agricultural tied cottage system.
§ 8.31 p.m.
§ Mr. John MacGregor (Norfolk, South)
I agree with the hon. Member for Sheffield, Brightside (Miss Maynard) on at least one point, the concern that we are still not doing enough to stop the loss of good agricultural land going into development. In Norfolk we have one of the highest rates of population growth and development in the country—about six times the national average. I have seen developments on quite a large scale take place on good agricultural land. Last weekend I visited in my constituency a village where the parish council was concerned about an application for an industrial site, which has not yet been decided upon, also on good agricultural land.
I acknowledge that the Government have clearly stated in paragraph 16 of the White Paper:Government policy is to ensure that, wherever possible, agricultural land of a higher quality is not taken for development where land of lower quality is available.I recognise also that this is very often a problem for the planning authorities rather than the Ministry of Agriculture. Nevertheless, I wonder whether we have yet got on board the enormous change in the cost of food imports and, therefore, the great importance of preserving all our agricultural land, a change which has taken place even in the past two or three years. Therefore, I hope that the Ministry will reinforce this point as strongly as possible, and that the Minister will do all he can with the Secretary of State for the Environment to ensure that this becomes one of the key priorities when planning permissions are given and development and structure plans for counties are settled and established.
I should perhaps declare that I have no personal interest in agriculture. Indeed, until about 18 months ago I knew very little about it. It is only since I have had a constituency with a big and important agricultural industry that I have got to grips with it. This is my first contri- 1160 bution to an agricultural debate, but I hope to have been able to bring some of my economic and financial experience to bear on the problems brought to me by my farmers in the past 18 months.
I asked many of those farmers this last weekend what I should concentrate on if called to speak in the debate, apart from the green pound and the capital taxes, which I had already intended to speak on. I explained that I would have little time, and so could pick only one other subject. They told me that the key question now was poultry. That was put to me by farmers with no interest in poultry, and it was confirmed by one of my moderate farmers who has never lobbied me before but who rang me in desperation last week to say that he had been losing £180 a week for some time on his poultry. He has a mixed farm, has been in poultry farming for many years, and it suits the balance of his farming to stay in it. Now he is in despair. He has been making losses on his poultry for the past six months, and he does not believe that he can go on for much longer.
I received a letter from that farmer this morning saying that he had just learnt that his feed costs would rise even more. Last week he thought that 10p a dozen was the necessary additional price to recoup from the market to prevent his making losses. Reinforcing the point already made in the debate, he feels that the Minister's action so far, which is welcome, is unlikely to influence prices here by more than about 4p a dozen, still far short of what he requires. If the Commission believes that the new export restitutions will stop imports to the United Kingdom, a ban would create no hardship to other EEC countries, but could go some way psychologically to restoring the confidence of poultry farmers in this country. I make that brief point because it is the area of greatest immediate concern to many of my farmers.
I do not wish to add much to the green pound argument, which has been well aired today, but it is important to recollect that farmers are not responsible for the decline in sterling, perhaps even least of all of those who contribute to our economy. Indeed, they could do something to restore its value if they 1161 could expand their agricultural import substitution contribution. It is, therefore, unfair that they have been particularly hit by this steep decline in sterling in relation to the EEC currencies, over the past 12 months.
My farmers have no doubt that a change in the green pound plus the speeding up of the transitional stages would be by a long way the best immediate measures to restore confidence in profitability and an assurance of decent cash returns. We all recognise that this would have some effect on food prices in the short term, but without quick action on this point the effect on food prices will be much worse in the medium term, and many of the higher-priced foods which we will have at that point to consume, given that there will be shortages in the United Kingdom, will be imported.
The present Minister has been courageous in his speeches in saying that the days of cheap food are over. He must recognise that there will have to be some increases in the coming 12 months. We all know that it will be difficult to achieve, given the other economic policies of this Government, but we hope that he will be courageous now in his actions as well and take swift action in the Cabinet on the green pound.
The point on which I wish to concentrate is the question of capital taxes. I have spent a great deal of time on this matter. I was on the Standing Committee on the Finance Bill which introduced the capital transfer tax. When one considers the White Paper and the mood of expansion in agriculture that it tries to put across, and then considers the mood of retrenchment in farming, which is the reality and which is confirmed for those of us with agricultural machinery factories in our constituency when they say that there is a substantial downturn in orders which they cannot foresee improving for some time because of the retrenchment, one comes to the major criticism of the Minister over the past 12 months and the Achilles' heel of the White Paper.
In paragraph 15 we read:In view of the greatly increased costs both of running a farm business and of further investment farmers have adopted a cautious approach.1162 Paragraph 52 says:The agricultural industry relies to a greater extent than most other industries on funds generated from its own income.It refers to the need for extra capital costs to reach…the projected level of output of £425–£500 million at current prices between now and 1980.Yet perhaps the most devastating indictment of the proposed taxes was in the report of the Chairman of the Agricultural Mortgage Corporation recently:At least no claim is being made that increased production will result. The AMC has helped, during the 45 years of its existence, to build a structure of farming which is the envy of Europe. Recently, the main purpose of our lending was to help farming enterprises to get bigger and more efficient. In future we shall probably be lending just to help them not to get smaller.That is a thoroughly authoritative source. It is only by taking action in this area, where the Minister will have to lean heavily on the Chancellor, that there is any hope of reaching the expansion of agriculture outlined in the White Paper. In my experience, this is by far the most important element in the farmers' present mood of caution.
I talk, of course, in particular of a farming community which is involved in sugar beet, singled out for expansion in the White Paper, and where some of the concessions given on the capital transfer tax, given that in sugar beet one needs large acreages, do not go very far. They have much less impact because of the ceiling of 1,000 acres and £250,000. Thus the concessions to sugar beet farmers are not as large as for others.
So we come to the review of captial taxes tucked away apologetically at the end of the White Paper. That says nothing at all about the Government's objective in the review, and the Minister has said nothing since. It is vital that a declaration be made soon by the Minister in the context of this review—I hope that it will come—about the need for the preservation of working wealth in relation to CTT and wealth tax. By that I mean working wealth not only in farming but also in businesses. The present concessions are not enough and, clearly, will still destroy many family farms.
1163 Similarly, the concessions in the present Finance Bill in relation to capital gains tax are not enough. They are not a relief; they simply make it easier to pay. We should have had the projected capital gains tax reforms before now. We are not talking of more expenditure or lowering taxes. We are simply talking of not imposing a crippling blow on the farming industry that was never there before.
The Minister assures us at Question Time that he is becoming increasingly concerned about the impact of these capital taxes. Let him set a very early target for the completion of his report, publish the findings and, above all, make sure that he makes the representations that he has not made to date to the Chancellor before the next Budget proposals are framed. If he does this, he will go some considerable way towards removing the tremendous lack of confidence in the farming industry at present.
§ Mr. Deputy Speaker (Mr. George Thomas)
If hon. Members will confine their remarks to six minutes each, everyone who wishes will have a chance to speak.
§ 8.41 p.m.
§ Mr. Richard Body (Holland with Boston)
I declare an interest in this subject, but as a farmer I question whether it is right to goad farmers into expanding production when, if left alone by politicians and civil servants, they would not do so.
Expansion can come naturally by the ordinary working of the laws of supply and demand or it can come artificially, being induced by Government intervention. So far, the Government have not made it clear which kind of expansion they advocate. Perhaps when the Minister replies he will make it plain what kind of expansion he has in mind. If it is a natural expansion, what makes him believe that he and his officials are gifted with such a fund of wisdom that enables them to assess the future change in demand better than the farmers themselves?
For generations our farmers have responded to the changes of demand. No one, absolutely no one, can deny that. They have made those changes in accordance with the price mechanism. Now, 1164 in accordance with that same mechanism, they are contracting.
On the other hand, if the expansion is to be artificial, the Minister has failed to explain how it will come about. The essence of an artificial expansion is that agriculture will become larger than it otherwise would be. It means that the Government intervene to cause it to employ more labour, absorb more capital, occupy more land and use more of our natural resources, such as fuel and fertilisers, than it would do without the stimulus of that contrived expansion.
It follows that when the Government pursue a policy of artificial expansion they decree that there should be less labour capital and other resources for other industries. Hence, a policy of artificial expansion is founded upon the premise that human and material resources should be diverted from where they would naturally be if the laws of supply and demand were allowed to operate, and given instead to a privileged branch of the economy.
"Privilege" is not an unfair word to use. Expansion induced by State intervention tries to put agriculture above the ordinary operation of economic laws. That privilege is enforced by the ordinary laws of the land. The importer of food must pay levies and duties, and the subsidies to the farmers are paid for by taxation which, as we are all painfully aware, is extracted by the State's powers of compulsion.
Thus, the British people are fiscally coerced to support an agriculture industry larger than it would be if it were left to their free choice, and the rest of our economy is correspondingly made smaller.
In the few moments remaining, I do not want to try to refute the arguments that are usually deployed in favour of expansion. I want to touch on one point, namely, whether such a policy is to the advantage of our farmers. I profoundly believe that it is against the interests of the farmers. I am not convinced that there is sufficient knowledge in Whitehall to calculate the precise degree of expansion that is desirable. A small error in percentage terms—just 3 per cent. or 4 per cent.—can cause havoc to a market and in so doing bring great hardship to producers.
1165 If the Minister doubts that, may I remind him of what has happened to those who have responded to the Government's call to produce more beef? Whitehall, in its wisdom, decreed that we should produce 8 per cent. more beef, and goaded farmers into changing over from dairying to beef. Large subsidies were offered and, not unnaturally, accepted by the farmers. The result was not an 8 per cent. expansion but a 30 per cent. expansion. We all know how the market collapsed and huge losses were incurred by thousands of beef producers, and vicious import controls had to be applied to comparatively cheaper beef from Australia and the Argentine. Now, on top of it all, there is a real risk of a shortage of milk this winter, as a result of that intervention. If the dairy farmers had been left alone and not molested by the politicians, none of that would have happened.
Secondly, the effect of an artificially induced expansion is that the marginal producer enters the market. The marginal producer is, almost by definition, less efficient. He also has, or has had, the capacity to switch from one commodity to another, or, more likely still, to add the commodity of which he is a marginal producer to the others he produces efficiently. A typical example—there have been many in the past—is that of the arable farmer who adds pig production to his other commodities when prices are high.
The entry of the marginal producer has two consequences, neither of which is good for agriculture. The first is that the average level of efficiency falls. Secondly, when prices begin to fall as a result of his entry, the permanent and relatively more efficient producer tends to suffer more than the marginal producer, who is still supported by his other interests, which may not be even connected with agriculture.
Any system of artificial expansion is an attempt to defeat the law of supply and demand. Controls, sanctions, levies and subsidies will distort its operation and hold back its natural consequences. Undoubtedly they can be made to work and succeed in the short term, but sooner or later the law of supply and demand takes its revenge. Economic history is littered with examples showing how painful that revenge can be. My fear is that 1166 my fellow farmers are now beginning to suffer that revenge. That is why I look forward to the day when we, as politicians, stop interfering with agriculture.
§ 8.47 p.m.
§ Mr. Robin Maxwell-Hyslop (Tiverton)
On Thursday of next week it will be exactly a year since the Eighth Report of the Expenditure Committee on Milk Production was ordered to be printed. The major recommendations in that report were as tollows—first, that there should be an increase of 8p per gallon as soon as administratively possible; secondly, that there should be reviews more frequently than once a year, and, thirdly, that the milk-to-beef conversion scheme should be terminated forthwith.
The Government did not bring in the increase as soon as administratively possible. They took four months to introduce it. They introduced it not at the 8p recommended, but at 7.7p—which costs someone producing 50,000 gallons of milk a year £3 a week. The Government did not terminate the milk-to-beef conversion scheme. That is where we are a year, less nine days, after this report was produced.
As long ago as April, the Government produced a White Paper called "Food from Our Own Resources". Since then they have consistently refused to provide any time for the White Paper to be debated. It is only because the Opposition have given a day of their time that this debate is taking place. The Minister of Agriculture, who is not present—neither is the Secretary of State for Scotland, who is to reply to the debate—succeeded in making a speech four months after producing the White Paper without at any time saying what he would do about any of the recommendations in it. That must be an all-time record.
The industry still has no knowledge of the Government's intentions. If farmers in the two most crucially affected sectors, milk and egg production, are to be creditworthy, so that they can buy fodder to last them through the winter, they must know now what their financial position will be in the winter. We have had nothing but words from the Minister. There has been no indication even of the action that is to be taken when it is entirely clear that on the milk front, 1167 certainly, an increase of 8p a gallon is overdue. Without it, we shall have heavy unemployment.
The astonishing thing is that the Government care so little about unemployment that they neither know nor are prepared to find out how many people are employed in making butter, cheese and cream. I tabled a Question and received the following written reply:I regret that this information is not available. My Department's employment statistics are analysed according to the minimum list headings…and the manufacture of butter, cream and cheese forms only a part of the heading for milk and milk products."—[Official Report, 2nd July 1975; Vol. 894, c. 451.]I would guess, in view of the evidence given to the Select Committee, that the answer is that between 20,000 and 30,000 people are employed in this way. There are 100,000 people in the milk processing industry in England and Wales. Of those, 45,000 are in distribution, leaving 55,000. The Government say that they do not know how many are engaged in making butter, cream and cheese. If we said that it was roughly half of the 55,000 remaining we would not be far wrong. It is worthy of note that in giving evidence the Dairy Trade Federation said, a year ago:Nevertheless the shortage of milk could accelerate the closure of some of the older and more labour-intensive plants and this would be in areas where alternative work would not be easy to find.That is where the creameries are.
Not only will the Government be faced with a quite unnecessary import bill across the exchanges, for butter and cheese in particular—which we ought to be making at home—but there will also be quite unnecessary unemployment, deliberately created by the Government as a result of their failure to take remedial action while there is yet time. The Government know this. They know that slaughterings in the dairy herd are running at above the normal average. Inseminations are down. Every week they do not announce an increase in price, the abnormal rate of slaughtering goes on. As night follows day, more people will lose their jobs as a result of a shortage of milk to process.
This is the direct and predictable consequence of the failure of the Govern- 1168 ment to act. At least the House had the right to expect that when, thanks to the Opposition, a full day is devoted to the problems of agriculture, the Minister would say what action the Government intended to take about their own White Paper.
Let me briefly deal with the topic of eggs. The British Veterinary Association and doctors' organisations frequently draw to our attention the increasing danger from human ingestion of food containing antibiotics which have been fed to the animals when they ought not to have been so fed. Yet we continue importing eggs from the Continent which are not free from antibiotics. We ought to clamp down on this, in the interests of our consumers. This is something which the Government ought to do, yet they do not. When there is any question of British produce not meeting Continental regulations, whether it is to do with sheep's heads having the skin still on them, or whatever, our produce is kept out. For heaven's sake, let the Government generate the guts to do the same for the genuine protection of our own consumers and producers.
Land use has been mentioned. One large-scale alteration of use from agricultural to non-productive land is by reservoirs. I ask the Minister, as I have asked the Secretary of State for the Environment, to ensure, as far as possible, that when there are alternative sites for new reservoirs, the sites chosen will either involve no loss of agricultural land at all, or only the minimum loss.
The problems of horticulture have been aired. Suffice it to say that the Minister went to Brussels and voted for the pattern to be distorted, in the sense of there being an oil subsidy for horticulturists in the other countries of the Community but not in Britain. He must have known in advance that the British Government were not prepared to pay that subsidy, and he thereby put our own producers in an uncompetitive position compared with producers in other Community countries. That had nothing to do with being in the Common Market. The position of our horticulturists has come about because the British Minister of Agriculture voted for a policy in Europe that he was not prepared to carry out at home. I wish that he were present to hear me say this.
1169 There is more that I would like to say, Mr. Deputy Speaker, but I must stop now in response to your appeal for brevity.
§ 8.56 p.m.
§ Mr. Peter Temple-Morris (Leominster)
I, too, welcome the White Paper. The case for Herefordshire has been admirably put by my hon. Friend the Member for Hereford (Mr. Shepherd). Beneath the vitriolic impression created by the resolution passed by the Herefordshire branch of the NFU, there is a welcome of the fact that at least there is an intention by the Government to produce a long-term plan for agriculture. However, the Government show little appreciation of the cruel realities of the situation. We know that the Minister has to compete with many other demanding Ministers for Treasury money, but unless the White Paper and the plan which is to go with it are linked with the promise of some sort of support, as well as regular review machinery in order to implement that support, it will all be worthless.
In order to get the money needed, we must stress the importance of the agricultural industry. One point which has not been sufficiently underlined is that we produce only half of what we need in food. That means we are nationally in a very vulnerable position, and, just as oil is used as an international weapon, so could food be. I am thankful, therefore, that the referendum result went the way it did and that we are now firmly inside the Community, which is self-sufficient in food production.
The major point I wish to emphasise is the need for confidence, without which expansion will not get off the ground. The centre-piece of the debate, which has not been underlined enough, is that, whatever we say here, whoever are in Government, will add up to nothing unless we make a national economic recovery. Unless we make such a recovery, it will be necessary to implement the interests of the urban consumers over the producers, and the farmer will continue to be a political football, which I regret to say he is now.
If I may make one plea, it is that agriculture should become more secure from party politics than it is at present. I do not say that agriculture should be immune from party politics altogether. If we took everything out of party politics, as is so 1170 often advocated, the House would have nothing to discuss. But we could remove a large measure of political dispute from agriculture. If we could take the dogma out of the situation we could go a long way.
I should like to turn to what I should term a couple of dogmatic points. The first is taxation, which has been mentioned ad infinitum. I do not wish to repeat what has been said about capital transfer tax, capital gains tax, development gains and wealth tax. However, I should like to select one item which has been dealt with before in the debate.
It may not be known to many hon. Members that the hon. Member for Dudley, West (Dr. Phipps) is one of my constituents. I am always glad to have my landowner talking to me, even if he does so from the other side of the House. I know the hon. Gentleman's lovely farm, but at the same time I shudder to think about the nightmarish consequences of 100 per cent. capital transfer tax, which will mean that a son's rights are reduced to those of a tenant. I should just like to make one comment. If that is the position, it follows that a person depends on the desperately needed capital to be invested in agriculture coming from the State, because private capital will not be attracted into the industry.
I know that the hon. Member for Dudley, West will not interrupt me because of the shortage of time, but in all conscience I wonder where he, my constituent, thinks that that capital will come from and what priority agriculture will have, especially if the Labour Party is in Government as at present.
I should like to make one other point about dogmatism concerning tied cottages. I completely disagree with the hon. Member for Sheffield, Brightside (Miss Maynard), although I understand her point of view. My hon. Friend the Member for Hereford and I recently had a long meeting with the agricultural workers of our constituencies. We realise the position they are in vis-à-vis their employers, their fears of eviction, and the lack of dignity that is so necessary for honest and good labour that results from that. However, because of that situation, is it necessary to abolish the tied cottage system? Or do we do as only this last week the Malvern Hills District Council has agreed to do—namely, take away the 1171 threat of eviction and give the security which is necessary for the industry. The Malvern Hills District Council has arranged that anyone who has been on the council list for more than five years will automatically be rehoused without the necessity for eviction to get preference upon the list, with special arrangements for ill-health and other considerations.
In my view, it is unnecessary for the House to spend half a day or a day debating this subject, as no doubt it will before the year is out. I wish that all councils could do what the Malvern Hills District Council has done to take the dogma out of the situation by reaching a solution which preserves convenient housing for the industry.
I realise that you, Mr. Deputy Speaker, have been kind to call me to speak at this late time, but I should like to say that the industry will get nowhere unless it has confidence. It will have no confidence unless the dogma is removed and more incentive is given.
§ 9.3 p.m.
§ Mr. Robert Boscawen (Wells)
I am very glad that at the end of this long debate you, Mr. Deputy Speaker, have found it possible to call some of the Members from the South-West of England, because it has been made abundantly clear during the debate that one of the most crucial areas in agriculture at present is that of dairy production.
Of course, in the South-West of England dairy production is not only highly efficient but extremely important. It is important that hon. Members who represent that area put as forcefully as they can the difficult situation that the industry is in at present. The Secretary of State, who, I am glad to see, has returned to the Chamber, gave his own analysis of the problems of the dairy industry, and I do not dissent from them. He said that there was falling production, cow cullings were higher, inseminations were down, and the return on cows was also down. He then asked us not to be gloomy. But I am gloomy about the industry. I believe, too, that what is wrong with the dairy industry at present is symptomatic of what is wrong with our country. This industry is without doubt regarded as one of the most 1172 efficient in the country, if not as efficient as any agricultural industry in the world. The industry has sufficient capital to meet its purpose, the back-up of specialised agricultural equipment, and a research organisation and a veterinary service second to none. There is a greater demand for its products than is being met. What then is wrong with the industry? It can only be the administrative control and interference with the workings of the industry which have got it into its present position.
I do not blame only the Labour Party; the Conservative Party also made mistakes when in office, but not so prolonged in effect as those which have been made since the present Minister of Agriculture assumed office. The right hon. Gentleman rightly said that something must be done to reverse the situation—but he has said that time and again. He said it clearly in the debate on the Queen's Speech, after the Labour Party won the last General Election, but he has not done much about it. When will he do something about it?
It is clear that the Minister must take seriously what many of my hon. Friends have said about getting the end price right. First and foremost, there must be an adequate return to the producer. The guaranteed price must go up again, and it must be announced as soon as possible. The right hon. Gentleman must make it clear to his hon. Friends as well as to the consumer and to the Opposition that the present price to the consumer is unrealistic. Something must be done to relate the price to the consumer to the cost of production and the demand for the product. Until that is done, not just for the short term but to last over a considerable period, the industry will not be put on the right footing. Therefore, let us have an assurance tonight that the Minister will do something to put the industry back on the right footing.
It is not only the right end price which creates a high rate of production in. say, the dairy industry; it is confidence in the long-term future of that industry, too. Nothing is upsetting that confidence more than the Government's plans for capital taxation. Whatever the right hon. Gentleman may say about fears being premature, the fears are there. People have learned from experience that when a Labour Government start tinkering with taxation, it is 1173 to the disadvantage of the industries concerned. For heaven's sake, if the dairy industry is to increase production steadily over the years, the Government must not tinker with its capital structure in the way that has been proposed.
I am glad that the hon. Member for Dudley, West (Dr. Phipps) talked about the difficulties of the capital transfer tax. I agree that it distorts this industry to have a different rate of tax for agriculture, forestry and, perhaps, small businesses. The hon. Gentleman's solution was a 100 per cent. capital transfer tax for land. But he does not consider the other solution; namely, to have a reasonable, not a confiscatory penal rate of tax, which people are prepared to accept and can pay from their earnings over the years in the industry. If that were to happen, we would not get such distortion and would not need a separate rate for agriculture. I hope that the Minister will consider that alternative.
The prejudices of the Labour Party over capital taxation are causing great concern and doubt about the future of family farms in particular. Until we end their doubt and get the end price right and people in the industry are able to look forward to a long-term future, production will not increase and the industry will not be able to contribute to the nation in the way that it undoubtedly wishes to do.
§ 9.10 p.m.
§ Mr. Peter Mills (Devon, West)
Thank you, Mr. Deputy Speaker, for calling me at this late hour. I may be Tail-end Charlie, but I assure you that I still have a sting in my tail.
I must declare an interest, because I am intimately connected with the agriculture industry. Once again we have been examining the situation in the industry. It is important that we should do that, not only for farmers but, above all, for consumers. We have had the same old cry from the Minister. It is almost like a film which comes round time and again. The Minister has used the same old words—"consultation", "White Papers", "discussions", "looking at it", "considering the matter", "reviewing the situation". Many of us are getting tired of it. What we need is action.
1174 People in the South-West of England and in other farming areas are wondering how what comes out of the debate will help them to pay the bills. They are saying "Will what the Minister has said help me when I see the bank manager this week? Will it help to achieve the increased production which this country needs?" I do not think it will. The Minister needs to put forward further measures of assistance for the industry. I am not asking for subsidies. What people in the industry want is a better price for their products to enable them to pay the increased costs.
What we heard from the Minister was well-intentioned, but it was not enough. What we want is action, particularly on milk production. I echo what has been said today. Whenever I go to my constituency, I hear of two or three more milk producers who have gone out of business. The case of the latest one—that of Mr. Farrer and his farm with nearly 200 cows—was well documented in the Farmers Weekly. It is a shame that producers like Mr. Farrer should go out of business. It is not in the interests of the country or of the consumer.
I beg the Minister to do something about the question of the green pound and about achieving an increased price for milk.
It is feared that there will be a repetition in the beef industry of last autumn's problems. There may be good quality hay, but there is a shortage of it. I ask the Minister to consider carefully the question of straw burning. If he would help in this regard, it would show that he was concerned about the matter. I hope that he will act.
The Minister should also consider carefully the problem of Irish beef imports. People in Eire can send fat cattle to this country at £15 a cwt. because of the subsidy which they are receiving. The situation has become so distorted since we agreed to go into the Community that it has become nonsense. The high subsidy which the Eire producers and producers in other parts of the Community are receiving for the export of their cattle is seriously affecting the beef industry.
My time is up and, therefore, I shall resume my seat. I am a man of few words, anyway. I hope that the Minister 1175 realises that we are not crying "Wolf". The agriculture industry is in a serious state. It needs better prices, not subsidies, so that it may have the confidence to produce the food which this country needs.
§ 9.15 p.m.
§ Mr. Alick Buchanan-Smith (North Angus and Mearns)
My hon. Friend the Member for Devon, West (Mr. Mills) may say that he is a man of few words. Some of us may think otherwise, elsewhere. However, in a few words he summed up the feelings of hon. Members on both sides of the House about the seriousness of the present position of farming. I hope that the many words spoken in this debate will not be lost on the Government, who will be encouraged to take action. This debate, like that of a fortnight ago on fishing, has been remarkable for the unanimity of views expressed by hon. Members on both sides, expressing the concern of people living in all areas about the serious situation of agriculture.
I thought that the speech made by the hon. Member for Banff (Mr. Watt) was slightly out of context. He started by urging greater unanimity in respect of agriculture. He continued by expressing the greatest degree of partisanship about the Common Market shown in this debate. I should have thought that his party would by now have accepted that we were working with Europe rather than against it.
This is a debate not just about farming or food production. It concerns food for our people. We are all thinking of the consumers. If the wrong agricultural policy is adopted the food supply policy will also be wrong.
My hon. Friend the Member for Westmorland (Mr. Jopling) opened the debate with an extremely able speech, in which he summarised agricultural problems. The Minister criticised my hon. Friend for taking a short-term view and for concentrating on short-term problems. I take exception to what the Minister said. If the consumer is not to be held to ransom by scarcity and high prices, he must have long-term continuity of supply. If that is to be achieved we must adopt the right policy towards food producers.
The Government must realise that this debate does not concern only farmers and 1176 those working in the industry, it concerns the consumers. We must ensure that they obtain the right supplies at the right price. Agriculture plays an important rôle in relation to our balance of payments. This was mentioned by the hon. Member for Gloucestershire, West (Mr. Watkinson).
In recent weeks the value of the pound has been falling across the exchanges. Every 1 per cent. fall in the value of the pound adds £36 million a year to our bill for imported food. When the pound is weak, by replacing those imports agriculture can make a contribution to the country's economic strength.
I support the Government's objective set out in the White Paper of a 2½ per cent. per annum rise in output, and I hope that they will achieve it. If it is achieved, by 1980 there will be a saving of about £500 million per annum. An expanding and healthy agriculture industry helps not only those who work on the land but the country's general economic position.
We must not think of food production simply in terms of its import-saving rôle. It also has a positive rôle. Our agriculture and food production are export earners. The Ministry of State pointed out in Nottingham a week or so ago that last year food exports earned the country twice as much as did car exports. Food exports earned over £1,500 million, and I am not speaking of other exports connected with a healthy and strong agriculture industry, such as chemicals and engineering equipment. The agriculture industry serves not only those who work on the land but the consumer. It strengthens our economy and helps us to keep our place as a trading nation in the world.
The question of Government expenditure is important in the present economic crisis. How much better is it to use taxpayers' money to make the agriculture industry healthy and strong than to invest it in nationalising the oil, shipbuilding and aircraft industries. How much better to use that money on strengthening the agriculture industry rather than on schemes which are not worth while.
The amount of money that is available is limited, and the Government must examine the way they are spending money on food subsidies. What sense does it make to increase food subsidies right 1177 across the board for those who do not need help as well as for those who do, instead of putting the money where it is of most use? The money should be concentrated on those who need it. It would be far more help to consumers if money which is not required to help needy people were used to support the production side of the agriculture industry to ensure continuity of supply and to give the consumer what he needs.
The Minister sounded a little hurt by the note of criticism in the remarks of my hon. Friend the Member for Westmorland. Indeed, the Minister defended himself robustly, as he usually does—and also as usual, said very little. No doubt the Secretary of State for Scotland will defend himself equally robustly and will say even less. However, the Minister of Agriculture should not be concerned and upset by criticisms, because they are genuinely made in respect of the Government's record. No wonder many people engaged in agriculture are feeling cynical. Let me turn to our other great food industry, fishing. In a debate on 21st May the right hon. Gentlemen said that there was great interest in this matter, and even anxiety in the industry to learn about the Government's intentions. Furthermore, on 30th June the Minister of Agriculture said that the Government were considering these questions urgently and would announce their decision as soon as possible. However, another fortnight has passed, and fishermen are still losing money. Boats leaving the ports are losing over £100 every day they are at sea. Is it any wonder farmers should share fishermen's worries about the Government's intentions when they see that other great food industry being held up and being given promises, but with no Government action being taken to help those concerned?
The Government should accord much more importance to the matter of confidence than the Minister of Agriculture has been prepared to give it. It is not good enough to say that the Government are examining the situation, or are watching to see what will happen, or will consider what is to be done. That attitude does not help to create confidence.
I should like to quote a few words from the White Paper. Many parts of it are realistic, and face the issues. On page 5, in paragraph 15, the Minister 1178 of Agriculture says—and I assume that he wrote the document:It is realistic to acknowledge the difficulties of 1974 and the effect on confidence.We appear to be faced with mere words and promises, but with no action. This is leading to the tremendous decline in confidence which we now see.
§ Mr. Peart
The hon. Gentleman is not right, to say that we have done nothing. I have already told the House that we have given considerable help to horticulture. Furthermore, we have brought in a beef régime which is second to none in Europe and which has been welcomed by farmers. The hon. Gentleman must not denigrate our efforts.
§ Mr. Buchanan-Smith
I appreciate what the right hon. Gentleman has done, and certainly do not denigrate the Government's efforts. However, the Minister must not forget that in regard to beef most of the problems were of his own creation. In other words, I welcome what has been done, but it would have been better if the Government had taken action earlier. As has been said earlier in the debate, too little has been done, and undoubtedly it has come too late. That has been the mark of the right hon. Gentleman's reign of office. He has helped the glasshouse industry, but he has not continued that help, and it has left the industry facing seriously unfair competition.
I wish to deal with four areas which have affected industry. Most of my remarks at this stage refer to Scotland. In regard to the glasshouse industry all we and the industry require is equality of competition. Surely the Minister will be prepared to give that.
I wish to put one specific question to the Secretary of State for Scotland. Although it is true that the prices of some of our horticultural produce—for example, tomatoes out of the Clyde Valley—have improved in recent weeks compared with last year, what worries me is to what extent our production is taking advantage of the present stronger market.
The evidence I have—it is based purely on observation, whereas I hope the right hon. Gentleman is able to state the position on the basis of information within his Department—is that there has been a considerable cut-back in the Scottish glasshouse industry's production. From 1179 my observation the crop is down. However, at the same time we are seeing much less intensive cultivation in the Clyde Valley, the centre of the Scottish glasshouse industry. Although we are seeing higher prices, I am worried that the Scottish industry will have a smaller share of the market this summer.
I shall be glad to hear what evidence the Government may have. I simply ask for information. Given the present market in Scotland, is the proportion held by the Scottish growers being threatened by imported tomatoes from Holland? Although prices are better, my evidence is that the Scottish industry is not getting the full advantage because production has been cut back as a result of lack of confidence. I understand that it is the Dutch producer who is benefiting from the stronger prices in Scotland and not the home producer. I hope that the right hon. Gentleman can answer my question. It is a very important matter. I believe that the cut-back demonstrates the worry and concern that is now felt in the industry.
I now turn to the egg sector. I take up the points raised by my hon. Friend the Member for Norfolk, South (Mr. MacGregor). Tremendous losses are being suffered by producers. I quote the Press release, with which the right hon. Gentleman will be familiar, which was issued by the convenor of the Poultry Committee of the Scottish National Farmers' Union, which reads:Unless in the next few days the Government is seen to have a strong and effective policy we might as well tear up right now that part of the White Paper referring to the poultry industry. Producers simply cannot continue indefinitely with the present level of losses.It is true that we have seen the action of the Minister of Agriculture. Fisheries and Food, for which we are all grateful, as regards MCAs, but, as my hon. Friend the Member for Norfolk, South said, the kind of loss being suffered by our producers is of the order of 10p per dozen. The adjustment of approximately 2p nowhere like makes good the kind of losses which the industry is suffering.
Thirdly, I turn to the milk industry. In Scotland in the past 12 months we have seen one in 13 of producers giving up and going out of production. What worries me is that not merely the small 1180 and inefficient producers have given up and gone out of production but in many cases the larger producer as well. That is the problem facing those who have expanded and invested. They have borrowed money and have tried to be efficient by investing in the industry. They are the ones most vulnerable at present.
I ask the Secretary of State to reflect on two matters. First, let us consider the conversion scheme from dairy to beef. It is interesting that, although this country, and particularly Scotland, is reckoned to have the most efficient dairy industry in the whole of Europe, it has the largest proportion of producers applying under the scheme. In proportion to the size of the industry, we have seen the largest number of cows covered by the scheme compared with other EEC countries.
I give the right hon. Gentleman another fact on which to reflect which again relates to the size of this country's herd. We have the largest size of herd. I believe that the average for Scotland is about 60. The average for the United Kingdom is about 40, and the average for the rest of the EEC is approximately 10. However, in this country, with a larger herd which is operating with extra efficiency, we saw numbers decreasing over the past year, whereas in Europe numbers have been increasing. That seems to suggest that there is something wrong in this country.
The Government must consider their own policy for the milk industry. They must bear in mind the lack of confidence and the worry about the future that is causing many people to leave the industry.
Fourthly, I turn to the beef and sheep industries. I should like to deal with them in much more detail but I shall refer to only one matter which was emphasised by my hon. Friend the Member for Dumfries (Mr. Monro)—namely, the worry we must feel on both sides of the House about the store sales later this year. Here I refer to the Department's own publication, "Scottish Agricultural Economics", printed only last week. Referring to 1974–75, it says that hill sheep and upland farms had substantial reductions in net income as they were very adversely affected by the drop in livestock prices. My information is that last year producers in hill sheep areas saw a downturn in their incomes of the 1181 order of 60 per cent. In the upland areas the downturn was between 30 per cent. and 35 per cent. It is no wonder that in these areas farmers are going to store and stock sales with desperate worries. They were hammered last year. Seeing a weakening in the stock market at present, they are worried about being hammered again. This is a sector which can least stand low prices for a second year running.
I hope that the Secretary of State will be able to say something tonight about the sheep regulation which affects the continuity of our exports to Europe. I hope that we shall be seeing this later this year. I hope, too, that the right hon. Gentleman can tell us when such a regulation is likely to come into force.
I turn finally to two matters which have been the subject of a great deal of discussion today. The first of them concerns the capital transfer tax. This was touched on by my right hon. Friend the Member for Cambridgeshire (Mr. Pym), by my hon. Friend the Member for Dorset, North (Mr. James), who referred to the effect that this will have on the whole fabric of the countryside, and by my hon. Friend the Member for Hereford (Mr. Shepherd), who summed it up by asking the question which many of my own constituents are asking; namely, "If we are to have a burden of taxation like this, why bother?"
The Government are taking away all incentive from our farmers. I refer the right hon. Gentleman to a report which appeared last week in The Scotsman which concerned a farming estate in Berwickshire where Mr. Free, the farm manager, said:There is no point in continuing to put capital into this business in the light of CTT, so we are cutting back investment.He is cutting back, for a start, by turning down a grant for £40,000 which has been approved from FEOGA. He is cutting back investment in a Buckler unit for 300 beef cows—beef from grass to which the Minister referred earlier today. He it cutting back on a drainage scheme of 100 acres. He is cutting down on the modernisation of houses on his farm. He is doing all this because of capital transfer tax. That is what is happening in Scotland at present.
1182 The second matter to which I refer is that of tied houses. We want less dogma and more practicality from Government supporters, and I say this with deep respect to the hon. Member for Sheffield, Brightside (Miss Maynard). I ask Government supporters to look to the Scottish Farmers' Union and to the farmworkers' branch of the Transport and General Workers' Union. They are united in their opposition to the abolition of tied houses. I ask Government supporters to get away from dogma and doctrine and to listen to what farmers themselves are saying.
I want finally to ask two questions and to make two requests of the Secretary of State. First, will he confirm that by the end of this month he will be able to announce the monthly target prices for beef for the remainder of this year and the early months of 1976? The level of those prices will determine the level of confidence in the store industry and the store markets later this summer. I beg the right hon. Gentleman to set these at a realistic level and to take account of costs.
In making my second request I can do no better than refer to what my right hon. Friend the Member for Knutsford (Mr. Davies) said. The Council of Ministers meets on 22nd July. I beg the Government to adjust the artificiality of the green pound and thereby destroy at least some of its fiction. I am sure that EEC Ministers are persuaded about it. Equally, I am sure that the right hon. Gentleman is as well.
The Opposition do not intend to divide the House at the end of this debate because we want to give the Secretary of State a chance. I hope that he will go from this debate with his arm strengthened to persuade his Cabinet colleagues of the need to bring the negotiations in Brussels to a successful conclusion. If he does that, it will be the biggest possible boost that he can give the industry, and it will be a start to putting some reality into the White Paper. If he does not do it, he will put at risk the livelihood of men and women throughout the farming industry and gamble dangerously with our future food supplies.
§ 9.40 p.m.
§ The Secretary of State for Scotland (Mr. William Ross)
The fact that about 25 back-bench Members have spoken in the debate is a fair indication of the extent to which the advice given by the Chair was heeded. This has been one of the best agriculture debates that it has been my privilege to listen to. On both sides of the House justified concern was expressed about the state of the industry, although it should be appreciated that when we talk about the farming industry we are talking about not one industry but a whole range of industries. The problems in one area may not exist in another, even in the same section of the industry.
For example, the fodder problem in Wales was acute last year, but it was less of a problem in Scotland. It varied in different parts of the country. It is not always easy to find a single, generalised solution to various problems.
That is true of the tied cottage issue. The hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) took my hon. Friend the Member for Sheffield, Brightside (Miss Maynard) to task, but we know quite well that the position and the law in Scotland are entirely different. The attitude of a sheriff to anyone seeking eviction would be different. The whole tradition in industry is different.
I deplore the exaggeration of difficulties, such as we heard in the hon. Gentleman's speech, and the apportionment of blame to one side of the House compared with another. Such things do no good.
I listened with interest to the first speech I have heard the right hon. Member for Knutsford (Mr. Davies) make on agriculture. He started by saying that we must return to guaranteed markets and prices. He should appreciate that we have moved from guaranteed markets and prices, because they involved a considerable element of direction of production. We have dismantled the whole constitution that made that possible. It was the right hon. Gentleman's Government, although he was not here at the time, who moved away from that and then made the final move in relation to deficiency payments and basic guarantees.
Conservative Members cannot escape their past. The hon. Member for North Angus and Mearns was, I believe, a 1184 Scottish Office Minister in 1973, when the dairy farmers in my constituency were hammering at the door month after month asking for help, and nothing was done. If we had not had an election at the end of February we might not have had the generous, if belated, settlement on milk.
In the Conservatives' intervention policies at the time, there was, to judge from the statements made by the right hon. Member for Grantham (Mr. Godber), in a speech in his constituency, no solution to our problems of a year ago. According to the prognostications of the Opposition during a series of agriculture debates at that time, we should by now have no agriculture at all. It was ruin, ruin, ruin and disaster, and all the fault of a Government who had been in office for about three months. That is why exaggeration does us no good.
We start with a White Paper which has been accepted by most hon. Members as a reasonable suggestion of what this nation needs in agricultural expansion—about 2½ per cent., but selective. This has been welcomed by NFU representatives in different parts of the country with varying degrees of enthusiasm. The country must face the fact that this has to be paid for. The hon. Member for Westmorland (Mr. Jopling) spoke about two exceptions to cutting Government expenditure—agriculture and housing, but every Front Bench speaker comes along with two choices, and at the end there is little left. I have read the suggestions made in our debates.
We have to remember the present position. There must be a mixture of prices and support. This debate will do good if it shows that we appreciate the justified concerns of the industry. If we mean what we say about expansion, we must face up to it. But we must face up to it in conditions in which we cannot be unmindful of the effect of increasing food prices. It has been said that adjusting the green pound would add only half a point to the retail price index, but we have not heard what it would mean for food prices themselves.
These things are not so simple, and we must appreciate their importance for the consumer. The consumer can resist too. Most of the troubles of 1973 were 1185 the result of the consumer saying "No" to high beef prices—
§ Mr. Ross
There is also the question that the hon. Gentleman did not mention. I represent one of the finest dairying areas in Scotland, and have done so for nearly 29 years. I know the community of interest among agriculture, employment and commerce in a county town. It is no accident that we have one of the biggest agricultural equipment manufacturers, supplying exports as well as the home market. I, too, applaud the speech of the Minister of State on this point. There is a £500 million saving here to our balance of payments, which could be even greater.
Those are prizes worth striving after, and paying for, but there is a limit in present circumstances. When we are watching every pound spent in this way we must get the balance of cost right. I am surprised that I was asked about target prices, since I thought that my right hon. Friend had made this clear. I agree that very much depends on target prices when it comes to considering whether the market will be maintained and whether people will keep stores off the market and on the farms. They should be made known by the end of the month. There is no need to fear what my right hon. Friend said about that. There is no monthly ceiling.
Taking into account what happened over the past year and the fact that in the early part of this year no payment was made, we shall be able to be more generous. I do not believe the position will arise to which my namesake the hon. Member for Londonderry (Mr. Ross) referred. I hope he appreciates that he was blamed by BBC2 last week for what I said in Glasgow on housing. We shall have to share that burden. So long 1186 as they do not attribute to me all the speeches that he makes in Northern Ireland, particularly during this season, I do not mind.
I was asked about the tomato crop. We do not know the position of the Scottish tomato crop. So far, it has not all been sold. As soon as we receive information we shall make it available. It is too early to speculate about what share we shall maintain. The tomato and glasshouse industry has always had a grouse that the English and the Dutch get the benefit of the Scottish market and the Scots come in at the last minute and do not get a very big share.
As a Government we gave help to the fishing industry and the horticulture industry. We gave that help at the right time. When Conservative Members say that they want fair competition, and that all countries in the Common Market are getting the benefit of the help, they should appreciate that only one country has said it will apply this, namely, Belgium, and that is only modestly, until December. The hon. Gentleman who raised this point should be fair about this and at least give us the credit of having given the help.
The point was mentioned about the assurance that intervention will operate for beef and cereals. My hon. Friend made clear that support buying as a fallback device would not be discarded. We shall be operating the EEC cereals régime, which includes support buying. Support buying is not unfamiliar to us in other spheres. The hon. Member for Westmorland asked for an assurance that the increased output of milk and sugar would be profitable. We hope that this will be so. If it is not, we shall not get it. [Interruption.] The fact is that I place our record of being sensitive to the needs of the industry and our timely interventions against anything done by the Conservatives. I know that the injection in 1974 into the industry in Scotland amounted to £45 million. In relation to the hill lands, we took timely action.
I have been asked what we can do about the fodder situation. We are in touch with the farmers' unions. Farmers in the areas most likely to be affected will at least have learned from last year that they must pay attention to conservation.
1187 The hon. and learned Member for Montgomery (Mr. Hooson) referred to straw and asked the Minister directly whether he would impose a ban on burning straw. We have to marry up the places where straw will be required with where it is available. We also have to remember that to be efficient it might have to be burnt right away. A man cannot be sure what it will cost to get that straw in. It could be a considerable cost. Therefore, we must improve the communications in relation to where it is available and where it is likely to be needed. We must get that done in a timely way. That is what we are doing.
I have been asked about imports. The cost of imports is very considerable. I was grateful to those hon. Members on both sides of the House who referred at length to the question of grass conservation. We are examining this subject at present. Our research people are on to it.
As regards eggs—[Interruption.] would not turn over the page, because the hon. Member for North Angus and Mearns must know the nature of this industry and the nature of what the Government have already done. We have done something through the EEC in respect of the MCAs. We have also got the EEC to turn its export attentions outside the Market. This has not been ineffective. We have already seen some improvement in relation to pricing.
I appreciate the difficulties of Northern Ireland. Northern Ireland has always had this problem. Both Governments, to a certain extent, have realised the importance of this matter to Northern Ireland. That is why we gave a special transport subsidy. That was not always popular with certain egg producers in parts of Scotland, especially remote parts—Orkney, for instance—which were also producers. As the hon. Gentleman knows, there are very considerable helps.
While on the subject of Northern Ireland, I should like to say that I appreciate very much the special difficulties it has with its proximity to Southern Ireland and the effects of the green pound. We have made some changes in respect of that. Many people have spoken about the green pound. I think that the right hon. Member for Knutsford had an 1188 interest in this. He said that it may be regrettable, looking back, that we started this.
We must take this point of view. Let us once again appreciate the balance in this; from the feedingstuffs point of view, any change will work through into prices. Automatically it means that if those people are to benefit, the benefit is in higher prices. Therefore, it is not quite a black and white position. However, the Government are considering this matter. [Interruption.] Let not the hon. Member for North Angus and Mearns complain about his Government saying that. He knew the words so well. He used them all himself when in the same Department.
Co-ordination of the EEC egg market is being examined at present, but I cannot give any very full assurance.
We do not deny the difficulties with which farmers are faced, especially the livestock section. This was hard hit by very substantial cost increases and escalation of world feed prices in 1973–74. But we took action. The fact that we were able to get the new beef regime shows the extent of our concern. My right hon. Friend gave his attitude as a determination, as far as he was concerned, to see that this was continued.
The same thing is true in relation to many other aspects. I am surprised that the hon. Member for North Angus and Mearns does not appreciate the improvement that there has been in the pig position in Scotland. He has almost a hereditary interest in this matter. He will be glad to see the strong recovery in pig numbers from the low level last December. Young gilts for breeding have increased by no less than 28 per cent. on the April numbers. The June figures, admittedly, do not show the increase over the previous year, but they suggest that the industry will once again be in a position from which further expansion can be achieved.
The dairy herd position in Scotland is not quite so bad as it is in England. We already have our census figures for June. They will be coming later in England. The position in Scotland is not nearly as bad as some people feared and predicted.
§ It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.