HC Deb 24 July 1975 vol 896 cc791-803

4.16 p.m.

The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart)

I am glad to report to the House on the meeting of the Council of Ministers (Agriculture) on 21st–22nd July and on the decisions which the Government have taken following the meeting.

The Council has agreed to a change of 5 per cent. from 4th August in the green pound, the representative rate at which prices under the common agricultural policy are converted into sterling. This means, first, that the monetary compensatory amounts will be cut by about one third. More important, the common support prices for British farmers will rise automatically by about 5 per cent. in sterling terms.

The changes should increase returns to British agriculture by over £100 million in a full year. This is a valuable step towards the longer term objectives set out in the Government's White Paper "Food from our own Resources".

The consequences for producer prices of particular commodities are as follows. For milk, the effective level of the guarantee will be increased by about 2.2p per gallon from 1st September. The new annual average guaranteed price for 1975–76 will be 35.92p per gallon. This increase will be worth some £33 million during the period to next March. This mid-year adustment means that the guaranteed price for milk is now about 37 per cent. above the level set at last year's Annual Review.

For beef, I was concerned to give beef farmers a better prospect over the winter but to avoid undue support buying in the peak period of autumn marketings. It is part of the arrangement that, although the change in the representative rate will take effect for beef on 4th August, the effective buying-in prices will not be increased this year. I shall be announcing a scale of producer target prices rising from £21.90 per live cwt. in October to £25.75 in February. The buying-in price will rise by at least £1 per live cwt. when we take the next transitional step in the spring, and the seasonal scale of target prices will continue to increase until May. The seasonal differential should provide a strong inducement for fatteners to hold stock over the winter. It should strengthen prices at the autumn sales of calves and store cattle.

For wheat and barley, the September intervention prices for the 1975 crop will be increased to about £54.90 and £47.60 per ton respectively. Nevertheless, the United Kingdom guarantees for wheat, barley and oats will continue for 1975–76.

For sugar beet, the guaranteed minimum for the 1975 crop will rise to £13.11 per ton. When transport and pulp payments are taken into account, growers should receive something of the order of £16.75.

For poultry and for pigmeat products, the adustment will have the effect of reducing the subsidies payable on imports and of strengthening the competitive position of our own producers.

Many food prices in the shops will not he affected at all by this change and the total effect on consumers will be small—[HON. MEMBERS: "What will it be?"] I will explain, if I am allowed to finish—[HON. MEMBERS: "It is your Government."] Of course it is my Government. When the adustment is fully reflected in food prices, they may increase on average by about 1 per cent. The financing of the increase in the guaranteed price for milk, together with other costs, will require a further increase of 1p in the maximum retail price of milk later in the year, in order to keep within the provision available for the food subsidy programme.

None the less, because of the paramount importance of the Government's attack on inflation, this has not been an easy decision for the Government to take now. We have taken it because an increase in producers' returns and support prices is needed in the interests of our future food supply. We remain ready to consider further adustments should these be necessary to assure our agricultural industry of a fair return.

I turn now to the other matters which were discussed. The council adopted a recommendation on feed wheat, to the effect that next year producers of feed wheat should not expect a return higher than the equivalent feed grain value. This recommendation has no binding force, but it accords with our traditional policy. It holds out the prospect of a less expensive cereal régime and a better balance between livestock and feed wheat prices. This should be to our benefit.

The council agreed certain measures designed to help deal with the surplus of skimmed milk powder. These included improvements in the arrangements for sales at reduced prices for developing countries and provision for aid to private storage of powder. The council will be considering further measures in the milk sector, including longer-term policies, at its meeting in September.

Mr. Joplin

I thank the Minister for that statement, but is he aware that we regard it as most disturbing, when considering the interests both of the consumer and of the producer? Is he aware that we believe that it will not stem the decline in production which is already apparent? Is he further aware that we regard a 5 per cent, devaluation in the green pound as insufficient to halt that decline? Is he aware that the relatively small extra cost in food which would result from a larger devaluation would be considerably less than the much larger increase in food prices which we believe will be caused by declining production?

We believe that, as a result of this statement, future food supplies from our own resources are at risk. We regard much the most disturbing feature of the right hon. Gentleman's statement what he said about milk. When milk production is falling—last year we produced 59 per cent. of our dairy requirements and this year we are likely to produce only 53 per cent.—when herd numbers are falling, when we have the ludicrous situation of no butter production in this country between the next few weeks and next March, when the Chairman of the Milk Marketing Board has described the Minister's action as "gravely inadequate" and has estimated that an extra 10p per gallon would be necessary to get back to the path of expansion, while the Minister has offered only 2.2p, and when the right hon. Gentleman has said repeatedly that there is no more cheap food in the world, where will this shortfall in production be made up and what price in foreign exchange will be necessary to buy from abroad?

Finally, where does the Government's White Paper stand now? In all seriousness, is it still official Government policy after this statement, or is it, as some of us have suspected for some time, a public relations exercise similar to others performed by this Government? Is the right hon. Gentleman aware that if this is to be his attempt to implement the aims of the White Paper, it has little chance of success, in our view? What we hope is that—[HON. MEMBERS: "Too long."] When we have had a statement twelve pages long from the Minister I believe that I am entitled to reply—

Mr. Spriggs

On a point of order. The hon. Member is turning what should be questions to the Minister into a speech. I wish to protest against this practice.

Mr. Deputy Speaker (Mr. George Thomas)

It is a long-established custom that when a major statement is made, whoever speaks for the Opposition is entitled to take longer than usual in questioning it.

Mr. Jopling rose—

Mr. Hardy

Further to that point of order. Is it the custom and practice for the Opposition Front Bench spokesman to take longer in responding to the statement than the Minister took to deliver it?

Mr. Deputy Speaker

Order. If we cool down a little, we shall get on better.

Mr. Jopling

Is the right hon. Gentleman aware that what we had hoped for was a Minister who meant what he said and was prepared to stand up to his Cabinet colleagues to get more food from our own resources? Is he further aware that we are sick and tired of sitting here listening to his endless platitudes? We welcome the fact that the National Farmers' Union has asked to go direct to the Prime Minister, because that demonstrates the total ineffectiveness of the Minister in the eyes of the food producing industry.

Mr. Peart rose—

Mr. Lee

On a point of order. Will you, Mr. Deputy Speaker, permit an anti-Marketeer as much indulgence as you have permitted the pro-Market hon. Member for Westmorland (Mr. Jopling)?

Mr. Deputy Speaker

Interventions like that only take up the time of the House.

Mr. Peart

I am surprised at the remarks of the hon. Member for Westmorland (Mr. Jopling). If I had brought back a crock of gold, he would still have complained. My statement is not a platitude. It represents a 5 per cent. increase in prices across the board for farmers. For milk, it represents, after the feed cost effect, about another £50 million. For cereals, it represents another £39 million, for beef another £31 million and for sugar beet another £6 million. That is not mouthing platitudes. It is the reality of our decision.

Mr. Jay

Does not all this mean that the rise in food prices due to abandoning deficiency payments under the common agricultural policy has hitherto been disguised by the green pound and that we are now beginning to discover the reality?

Mr. Peart

It is right that producers should have certain increases, which I have decided were right and to which the Council of Ministers agreed.

Mr. Hooson

But does not the arrangement still mean that the farmers of this country are deprived of a rightful return because the green pound, even at its new valuation, is still completely out of touch with the reality of the value of the pound sterling? Is it not also correct that the forecasts reaching the Minister are that farmers in this country are going in for a policy of entrenchment? Against a background of the Soviet Union buying grain this week in the United States at prices far higher than Labour Members have said would be the world price, does this not show that the decline in the production of British agriculture is a serious matter for this country? Does the Minister appreciate that the change that he has been able to obtain this week will not substantially increase food production in this country?

Mr. Peart

I agree that the green pound has to be carefully and continually looked at, in the sense that there may have to be further adjustments, but this is a step in the right direction. I have now made three moves as Minister over the green pound. The Conservative Party did nothing about it. They just kept at it. They made not one move forward.

Mr. Torney

Although I recognise and appreciate what my right hon. Friend has done to help the farmers, and the need to do even more, does my right hon. Friend agree that at this time of inflation, when they are endeavouring to fight inflation and to control wages—which they will—it is wrong for the Government to take action, whether by means of the green pound or in any other way, that will increase food prices in the shops, even though it be by only 1 per cent? Does he accept that if he agreed to some of the demands of right hon. and hon Members opposite further to deflate the green pound, the prices in the shops would be pushed up even higher? Therefore, will he look at the possibility of helping the farmers not from the consumers' pocket, but from the Government's own resources?

Mr. Peart

I believe that we achieved the right balance in Brussels. As I have said, the full effect on food prices will not be large. It will be only about I per cent—that is, one quarter of 1 per cent. on retail prices as a whole. In my view that is the right balance.

Mr. Powell

Did the right hon. Gentleman and his colleagues take the opportunity to correct the anomalous and indefensible difference between the sterling green pound and the Irish Republican green pound and if not, why not?

Mr. Peart

I believe that the move that we have made will help. I accept that Northern Ireland is in a special position, with the possible problem of smuggling because of the differential. I agree with the right hon. Gentleman. As he knows, I took action to help Northern Ireland when I made a previous adjustment.

Mr. Watt

Does the Minister recognise that the increase of 2.2 pence per gallon is regarded by dairy farmers as derisory and that nothing less than 40 pence per gallon will persuade the farmers to stay in milk production this winter?

Mr. Peart

The hon. Member for Banff (Mr. Watt) knows that this and all that we have done previously represents a tremendous increase over last year. People should not spread "woe, woe, woe" and gloom as does the hon. Gentleman.

Mr. Dalyell

Will my right hon. Friend quantify the extent of the advantage to us provided by his arrangements on feed wheat?

Mr. Peart

I do not think I can. On cereals, after feed cost effects, I said that it amounted to approximately £39 million; on milk and milk products £50 million, on beef £31 million and on sugar beet £6 million. I cannot estimate for feed wheat.

Sir David Renton

How can the right hon. Gentleman say that he has achieved the right balance when the gap between the market rate of sterling and the green pound, after his efforts is still about 15 per cent? What further steps will he take to close the gap?

Mr. Peart

We have taken a step in the right direction. The friends of the right hon. and learned Member for Huntingdonshire (Sir D. Renton) have talked about a figure double mine, but even if we had agreed to that, we should still have the same problems. The right hon. and learned Gentleman must remember that his party did nothing about it. I have made three moves.

Mr. Hardy

Does my right hon. Friend agree that although Opposition Members may properly seek to defend the interests of farmers, they should not show the callous disregard that they have exhibited this afternoon for the consumer? When will my right hon. Friend inform the House about the arrangements for orderly and adequate marketing in beef? Is he hopeful that the appalling decline in dairy farming, which was deliberately started by the Conservative Party, will be arrested, and, if not, will he make further arrangements to ensure that it is arrested?

Mr. Peart

I take note of that point. An immediate announcement will, be made.

Mr. Maxwell-Hyslop

Will the right hon. Gentleman arrange for the next issue of his White Paper to have a change of title—"Food from Imported Resources"—because his actions have provided the basis for a low farming policy rather than a high farming policy? Where does he imagine the extra foreign currency will come from to pay for the additional imports which his policy will cause? Will he give the House his prediction of how many people will have lost their jobs in the milk processing industry by December? Already one factory in my constituency has summoned all its employees and said that they will lose their jobs in October and not get them back. What is the Minister's projection of extra unemployment deliberately caused by the Government's policy of under-production of milk?

Mr. Peart

Even before the announcement, during the last debate. I expressed concern for the dairy industry. I cannot quantify the figure. I hope that this positive award will considerably help. The hon. Member for Tiverton (Mr. Maxwell-Hyslop) as always is too cynical.

Mr. Norman Buchan

Does my right hon. Friend agree, that the amount of money which he can put on to the consumer and which would he sufficient to solve the problems of the producer would be quite intolerable at present in view of wage restraint? Therefore, if he is projecting this, along the lines of his White Paper, it means that the White Paper will be rendered nugatory? Does he accept that a policy which demands direct investment by the nation is what is needed at present? Already we are facing a major crisis equal to last year's dimensions. The money he has offered is totally insufficient to deal with the situation and we should not accept that more money should come at the expense of the consumer. We have got to invest directly.

Mr. Peart

I agree with my hon. Friend the Member for Renfrewshire, West (Mr. Buchan) that we are facing an important battle and that we must conquer inflation. We are in an extremely serious position. We must do everything to try to achieve good results in that direction. I believe that what I have awarded is reasonable and that in the end farmers must get adequate returns from the market.

Mr. Ralph Howell

Is the Minister aware that he has not only dismally failed the agricultural industry but has also failed to ensure the food supply to this country? What adjustment did he ask for in the first place? Would there have been any resistance from the Council of Ministers if he had ask for a total adjustment of the green pound?

Mr. Peart

I cannot answer that question. It is speculation. It was agreed by all Ministers at the council and I accepted it.

Mr. D. E. Thomas

I should like to draw attention to the figure that I was given by the Milk Marketing Board of the decline of 20 per cent. in milk production in my constituency in the course of one year. Is the Minister aware that there are two milk processing factories in my constituency which are likely to be in jeopardy because of this decline? Will he now go to the European Community and seek the introduction of a milk premium scheme similar to the beef premium scheme, which now exists, to ensure that we do not have to accept dumped EEC milk products in Britain while our own producers go out of business?

Mr. Peart

I do not believe that our beef system could be applied to the dairy industry. We have made a move in the right direction which I hope will help milk producers.

Mr. Swain

Is my right hon. Friend aware that the Common Market chicken now appears to be coming home to roost? Is he also aware that the British farming industry can survive and improve its conditions and production only if the Minister has the courage to tell the Ministers in Brussels that if some improvement on the offer he has made to the House is not forthcoming, we are prepared to act unilaterally and to go back to the support grant?

Mr. Peart

I hope that my hon. Friend the Member for Derbyshire, North-East (Mr. Swain) will not look at the common agricultural policy in that light. I believe that the common agricultural policy—[Interruption.] My hon. Friends must listen. We are to have a debate on the stocktaking document tomorrow.

I certainly want to improve the system in Europe. I hope that I shall have the support of all my hon. Friends, even those who oppose the Market.

Mr. Charles Morrison

How can the right hon. Gentleman justify as seasonal what he said was a valuable step and a move in the right direction bearing in mind the requirements for increased milk production, explained by farming leaders before he went to Brussels, and given their reaction since he has come back following his announcement?

Mr. Peart

There are always some people in the farming world who, whatever I do, will attack it for other reasons. I believe that the country will regard the £100 million award, which after all is in mid-stream, as it were, before we have the main price negotiations, as an advance.

Mr. Arthur Lewis

Is my right hon. Friend aware that there are over 1 million unemployed and many sick and disabled and old-age pensioners? Is he further aware that I and many of my hon. Friends deeply resent him and other Ministers coming and standing at that Dispatch Box almost weekly and saying it is only a1; per cent. increase, it is only ½ per cent. or it is only a penny? Many people have not got a penny to spare. It is his job to see that prices come down, not bow to the Common Market. Why does he not get back to his attitude of 12 months ago when he attacked the Common Market and do something for the people of this country?

Mr. Peart

My hon. Friend speaks sincerely about the people affected.

Mr. Lewis

Yes. What will my hon. Friend do for them?

Mr. Peart

I believe that this move represents a reasonable and sensible balance.

Mr. Geoffrey Johnson Smith

Is the right hon. Gentleman aware that milk production in the South-East is down by 14 per cent. compared with last year and that this is not wholly attributable to the weather? The East Sussex NFU has attacked his proposal not for other reasons but because it knows the facts. It knows that the 5 per cent. devaluation is totally inadequate and that all this timorous action or representation in Brussels is likely to lead to the far greater danger of bankrupting farmers and of impoverishing consumers.

Mr. Peart

I am surprised that the hon. Gentleman should talk about timorous action. This is a £100 million award to the farming community.

Mr. Jopling

Tedious.

Mr. Peart

The hon. Gentleman's contribution was too long and tedious. If he has any courage, he should get to his feet if he wishes to intervene. There are problems in the dairy industry, but this is a move in the right direction.

Sir G. de Freitas

Does my right hon. Friend recognise that many of us welcome the Government's White Paper, but are deeply disappointed that the Government are not doing enough to encourage agricultural production which, in the long run, will be for the benefit of all with respect to the balance of payments and the consumer?

Mr. Peart

I believe that what we have achieved in Brussels—this interim measure, if I may use that term—is a positive measure. Despite criticisms by hon. Members and farmers, I believe that it will be regarded in the country as a sensible agreement.

Mr. Peter Mills

Will the right hon. Gentleman come back to reality concerning the consumer? Will he bear in mind that what he has done will not produce the milk which is required for the consumer? Will he also bear in mind that the £100 million is on the gross for the year and that there has been £100 million of additional costs in the last five months?

Mr. Peart

The hon. Gentleman knows that we shall soon have major price negotiations. I believe that this measure will be welcomed by all sensible people. I only wish that the hon. Gentleman and others would not talk the industry down.

Several Hon. Members rose—

Mr. Deputy Speaker

Order. This is developing into a debate.

Mr. Spriggs

On a point of order, Mr. Deputy Speaker.

Hon. Members

No.

Mr. Deputy Speaker

Order. We may save a lot of time if the hon. Gentleman is allowed to raise his point of order.

Mr. Spriggs

The Minister of Agriculture in his statement referred to the poultry industry on which not one question has been asked or answered. May I put a question on it?

Mr. Deputy Speaker

I am very sorry, but there must be other aspects as well, and we have already been half an hour on this matter, which is not unreasonable for questions on a statement.

Later—

Mr. Roper

On a point of order, Mr. Deputy Speaker. I do not want to question your selection of questioners to the Minister of Agriculture, but there was one matter in his statement which affects tomorrow's business. The Minister referred to an agreement on feed wheat which was reached at the meeting of the Council of Ministers. During Business Questions, the Lord President of the Council said that we were to debate the Community instrument on wheat tomorrow and that that would be appropriate as it has been referred to the House by the Select Committee on European Secondary Legislation. But if the Council of Ministers has already come to an agreement, surely there is no point in debating it tomorrow.

Mr. Deputy Speaker

That is a matter for tomorrow. We have enough to deal with at the moment.

Later—

Mr. Spearing

On a point of order, Mr. Deputy Speaker. May I revert to the point of order raised by my hon. Friend the Member for Farnworth (Mr. Roper) which I attempted to follow but did not manage to catch your eye? My hon. Friend referred to the statement made by the Leader of the House that we shall be discussing tomorrow a document on feed wheat. Subsequently, the Minister of Agriculture, Fisheries and Food said that the Commission had taken action on that matter. Therefore, action will have been taken prior to a debate in the House.

I hope that the Leader of the House will at some time confirm either that the undertaking which the Government gave as to debates on EEC matters has been broken or that it has not. If the proceedings on the Remuneration, Charges and Grants Bill continue until tomorrow it will not be possible to raise tomorrow a matter which is of great importance to many hon. Members.

Mr. Edward Short

That is rather a silly quibble. All I said was that the document was relevant to the debate. It is for the convenience of hon. Members to have the relevant documents pointed out. I thought that it was for the convenience of hon. Members that I should point out that this document also was relevant for the debate tomorrow.

Later—

Mr. Spearing

Further to my point of order, Mr. Deputy Speaker. I am sorry to have to pursue this matter, but the House has been thoroughly mystified by my right hon. Friend the Lord President. In his business statement he referred to the EEC document and he has now repeated that it is relevant to the debate. Will he tell us whether the document is before the House and whether it is likely to be before the House on a motion either to take note or to approve? If it is not, will it be taken by the House on such a motion in the future?

Mr. Deputy Speaker

Points of order are for the Chair and not for Ministers or anyone else. I cannot answer the question.