HC Deb 15 October 1975 vol 897 cc1360-71
The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart)

With permission, Mr. Speaker, I should like to report to the House on the results of the meeting of the Council of Agriculture Ministers on 13th and 14th October.

The Council agreed that the representative rate for the pound—the green Pound—should be adjusted by 5.8 per cent. This will raise support prices for United Kingdom producers by about 6.2 per cent. in sterling terms. The change in the green pound will generally take effect from 27th October but will be deferred for certain commodities. For wheat the date of implementation will be 1st July 1976; this will defer any effect on the price of bread. For beef the date of implementation will be 5th January; this will avoid any incentive to put beef into intervention in the autumn period of heavy marketings.

The agreement reached in Luxembourg will be of real benefit to British farmers. It should be worth about £90 million to them in a full year, after taking account of its effect on feed costs. Of this sum, over £50 million will go to our milk producers. We shall now increase the guarantee for milk by an extra 2.3p a gallon from November, which will mean that the effective guarantee over the winter months will now be over 40p a gallon. The average guaranteed price for the year will be 37.04p.

I announced in the summer that the retail price of milk would have to rise by 1p in the autumn. Following this increase in the producer guaranteed price and the adjustment I announced on 29th September, the retail price will now rise by 1½p per pint to 8½p per pint from 2nd November.

I am sure that this settlement will help to meet the milk producers' difficulties. It comes on top of the increase of 2.2p per gallon decided in July, making 4½p per gallon altogether. There will be scope for a further increase at the beginning of the next milk year. This will be for the Government to decide after the Annual Review.

There will also be a useful increase in the producer price for sugar beet. For beef the new buying-in price will put a higher floor in the market in 1976. The cereals grower should also benefit in due course. Pigmeat processors, who have been in difficulties, will greatly welcome the reduction in monetary compensatory amounts.

We have agreed to these changes in the interest of our agriculture industry and in order to safeguard our food supplies. We have sought to keep a balance with consumer interests. The main effect on the consumer is on milk, which I have already mentioned, and butter and cheese, on which there may be increases of about 2p a pound depending on the market situation. Otherwise the effect is expected to be less than one-tenth of 1 per cent. on the cost of living. It will be postponed for bread and flour until July next year. This is a very considerable benefit. Even when everything is taken into account the total effect in a full year is expected to be less than 1 per cent. on the cost of food and less than one-quarter of 1 per cent. on the total cost of living.

Finally, I am glad to say that the representative rate for the Irish green pound has been devalued less than the United Kingdom green pound. In consequence, it will be possible to end the monetary charges which are at present applied to agricultural trade between the United Kingdom and the Irish Republic. This will be very welcome both to farmers and to traders, particularly in Northern Ireland.

Mr. Jopling

I thank the Minister for making this statement and should like to begin with a crucial question. Will this action be enough to halt the decline in the livestock industry?

Mr. Maxwell-Hyslop

No, it will not.

Mr. Jopling

Is the Minister aware that he is once more bringing forward proposals that the food-producing industry has already denounced as too little and too late? Does he recall that, when he made an announcement in the House on 23rd July of a 5 per cent. devaluation, we told him both before and after the event that it would not be enough to stop this decline? Is he aware that events have proved us right and that, in milk-producing alone, 270 producers went out of business in August and 300 in September?

Will the right hon. Gentleman get it into his head that this sort of patchwork policy is just not good enough and that the industry must have long-term policies and not these hand-to-mouth, short-term, shoring-up jobs which in the end will damage the interests of the housewives of this country?

Finally, is the Minister aware that last week we announced that, unless he did something quickly, we would put down a motion to reduce his salary? In future, will he start thinking ahead rather than waiting for us to light a bonfire under him before he does anything?

Mr. Peart

I had hoped that the hon. Member would be more constructive. It is true that people hoped that I would get a 10 per cent. change in the green pound last July. I was able to get 5 per cent. This time, I have got 5.8 per cent.—altogether, 10.8 per cent. in a short period. I believe that this will be welcomed by the farming community despite what hon. Members say.

The hon. Member should appreciate that this is an uncertain and difficult period for everyone in the country. The battle against inflation is of concern and must be won, but I have kept the dairy farmers ahead of inflation—

Mr. Maxwell-Hyslop


Mr. Torney

Shut up. The hon. Gentleman knows nothing, anyway.

Mr. Peart

Let me give the figures. The hon. Member for Tiverton (Mr. Maxwell-Hyslop) should listen. The average guaranteed price for the whole of 1975–76 will now be over 40 per cent. above the price set at the 1974 annual review. I therefore hope that the hon. Member will realise that the effective guarantee for the winter months from 1st November will be over 50 per cent. above the level of guarantee fixed at the 1974 annual review. I believe that this award is a positive contribution, and it has been recognised as such in the Council of Agriculture Ministers.

Mr. Torney

I should like to welcome my right hon. Friend's statement and to congratulate him. While helping the milk industry, which needed help, he has man aged to keep the increase in price to an absolute minimum. That is very good. Does he agree that much of the situation in the farming industry, particularly dairy farming, cannot have been caused since February last year when this Government came to power, but that many of the troubles caused must be due to actions or lack of action by the Tory Party? I should like to say that it is a great pity—

Mr. Speaker

Order. Many hon. Members want to ask supplementary questions. I cannot allow this to go on very long. I hope that questions will be short.

Mr. Peart

It is true that the decline in production took place a long time ago. In fact, the hon. Member for Westmorland (Mr. Jopling) knows that his own Government encouraged people to go out of the dairy industry.

Mr. Geraint Howells

On behalf of my Liberal colleagues and myself, I should like to congratulate the Minister on his efforts in Luxembourg and on achieving a little extra financial aid for the agriculture industry. Does he not agree that stability and confidence will not be restored in the agriculture industry until producers have adequately recouped their costs like any other industry in Britain? Does the Minister agree that the conversion scheme has had a disastrous effect on milk production in this country and that the sooner we do away with the green pound the better it will be for all concerned? Will he give an assurance that he will do everything in his power to retain the guaranteed price system that we have in this country?

Mr. Peart

I am grateful for what the Liberal spokesman has said on this matter. This must be seen in the context of what I achieved for the livestock industry. I have stated over and over again that the variable premium system has been welcomed by the industry and has strengthened the market. That has been appreciated by the farming community.

Mr. Jay

Will my right hon. Friend give an assurance that he will firmly resist the present efforts being made in the EEC to dishonour the agreement reached on New Zealand dairy products last spring?

Mr. Peart

I raised the position of the New Zealand dairy industry in a speech to the Council of Ministers yesterday. There was no major debate, but they have taken note of what I said. I am watching the situation very carefully. The promises made at the summit meeting, and what was agreed there, must be fulfilled.

Mr. Maxwell-Hyslop

Since every forecast the Minister has made to this House, since taking office 18 months ago, about the results of his policies has been proved wrong, will he tell us whether he believes that the measures he has just announced will check the decline in the milk industry? Is he aware that, as the Transport and General Workers' Union is finding that some of its members are losing their livelihoods through the closure of milk factories, it is now belatedly backing a sane policy? Does the Minister honestly believe that the measures announced today will check the decline in milk output and the increases in imports, with the flow of currency across exchanges which that implies?

Mr. Peart

It will make a contribution. I wish that hon. Members would praise what we have done instead of talking down the industry.

Mr. Maxwell-Hyslop

Answer the question.

Mr. Watt

While congratulating the Minister on his comparative success in Europe, will he not agree that the year-round figure of 40 pence a gallon which I gave him in July is the only sort of figure that will inspire the confidence of milk producers? Does he realise that it takes more than one man's lifetime to establish a dairy herd and that his Government have done more to destroy what has been built up in many lifetimes than any other Government in history?

Mr. Peart

I cannot accept that. If the hon. Member reads a very fine article in the Economist this week, he will see a graph which shows that the trend has been continuing for a long time. I hope that the measures which I have anounced today will help to arrest it.

Mr. Hardy

Is my right hon. Friend aware that the dairy farmers were in despair and that this was little eased by the electioneering gimmick of a small price increase during the February 1974 General Election campaign, but that he has now given them more than enough to meet their increased costs since then? Could he increase the assurance that dairy farmers need to feel at the present time by saying a little more about the possibility of increases in their returns in 1976, if this should be necessary, so that they can maintain the supply not only of liquid milk but of milk for manufacture.

Mr. Peart

We shall look at returns and the state of the industry and consider this in the annual price review negotiations which will be starting soon.

Mr. Biffen

Referring to the question of my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop), will the Minister indicate how, in the light of the new financial arrangements for the dairy industry, he thinks dairy herd inseminations for December and January will compare with the corresponding months of a year ago?

Mr. Peart

I believe they will show not as much improvement as they should show. What I have done cannot stop the drift downwards in a month or two, but for the long term we have shown that we believe that the dairy industry must be adequately supported. I am glad that the announcements have been welcomed by the spokesman for the Liberal Party.

Mr. Arthur Lewis

Is my right hon. Friend aware that I congratulate him on the statements he is continually making because they prove the correctness of the speeches he made for many years when he said that if we joined the Common Market food prices would rise drastically? Is he aware that telling pensioners and those on fixed incomes that a halfpenny, a penny or twopence on eggs, butter and cheese represents only a fraction of a per cent. on the cost of living is no help to them at all? Does he realise that the people of this country are getting fed up with the large increases in the cost of living, particularly in food prices, that he is having to announce almost monthly from that Box?

Mr. Peart

The figures I gave show that the effect on the consumer is quite small. Producers deserve a fair and adequate return and that is what our measures will achieve.

Mr. Molyneaux

While welcoming the reduction in the differential between the British and Eire green pounds, can the Minister indicate when we might expect the two pounds to be in parity?

Mr. Peart

I cannot say. There is still a difference. This will have to be considered at another meeting.

Mr. Swain

While congratulating my right hon. Friend on his statement, may I ask whether he is aware that there are two very important products of the agricultural industry that he has not mentioned? Is he aware that there has been a serious shortfall in potato production in this country and that there will be a serious shortfall in brassica production? When shall we have to start importing brassica and potatoes and at what cost? As my right hon. Friend is not responsible for the prices the consumer has to pay, will he introduce legislation to give himself some control over retail prices?

Mr. Peart

We have started importing and stopped exports of potatoes because of the situation created by bad weather conditions. I will look at the points raised by my hon. Friend but I could not deal with them in Luxembourg. They were not on the agenda.

Mr. Teddy Taylor

Is the right hon. Gentleman aware that I do not wish to attack or praise him on a subject which I do not understand, but can he tell me, as the hon. Member for a city constituency—if there is likely to be a shortage of milk—whether the Milk Marketing Board is wasting money by spending a great deal on advertisements on television urging people to drink more milk?

Mr. Peart

I cannot intervene in the operations of the Milk Marketing Board. It is an independent body. I believe that the award which I have announced today will help to restore confidence.

Mr. Buchan

Is my right hon. Friend aware that the dilemma which he faces and which he cannot solve, as has been shown by questions today, is how to reconcile within the Common Market structure the needs of the producers and the needs of the consumers? The problem is that the amount of money required to fulfil an expansion programme would add too much to food bills to be tolerated by the people of this country. Will he back the Germans and others who wish to oppose the present policy of cut-back in Europe and ensure that we continue an expansion programme in Britain?

Mr. Peart

I believe that the balance between consumer and producer, in the Market or out of the Market, has to be decided by individual Ministers and Governments. I am certain that even within the Market we can protect the consumer if necessary.

Mr. Arthur Lewis

It is necessary.

Mr. Peart

I have said that in this case I have done that. I have given a price increase to the producer. My hon. Friend the Member for Renfrewshire, West (Mr. Buchan) knows that a stocktaking debate is to take place in the Community, when the German attitude will be discussed. The Germans took the initiative on this matter and we have supported them in examining how the common agricultural policy is working. On Friday there will be a major debate in this House which I hope will be attended by all hon. Members who feel as strongly as does my hon. Friend about the agricultural policy.

Mr. Mills

Will the right hon. Gentleman bear in mind that there can be no increased production, no stopping of the slide out of milk, unless there is price parity between British farmers and European farmers? Will he also agree that it is no good defeating inflation but having no food for the British consumer?

Mr. Peart

I accept that and I agree with the hon. Member's comments about prices. Obviously we are still in the transitional period but the day will come when we shall need to have a full Community price.

Mr. Spearing

Does my right hon. Friend agree that the price of mutton and lamb is not protected at the moment by intervention buying? Can he say whether the question of a régime in mutton and lamb was discussed at the Council and what was the Government's attitude to that?

Mr. Peart

No, it was not discussed. There has been a proposal on these lines. The French and the Irish are anxious to have a new sheepmeat régime. I would rather see what the proposals are before commenting on them.

Mr. Marten

Did I understand the right hon. Gentleman to say that on the previous occasion—not this one—he asked for a 10 per cent. devaluation and got only 5 per cent.? That was the implication of what he said. If that is so, does it not show how we are increasingly losing control over our national farming affairs? Can the right hon. Gentleman say whether this new scheme will allow more milk to go into manufacture?

Mr. Peart

I was asked by people—including the Opposition and the NFU—to go for 10 per cent. I had discussions with my colleagues before I went to Europe and I was able to go to 5 per cent. [Interruption.] I have said that. Now we have got another 5.8 per cent. I believe that in the end this will help cheese and butter production and will arrest the decline.

Mr. James Johnson

In view of the obscurantist spleen of the official Opposition, may I ask my right hon. Friend who on earth speaks for the farming community in the United Kingdom? Is it the professional negotiators of the NFU or is it the amateurs on the Conservative benches who farm a few acres, who speak in this fashion today?

Mr. Peart

It is the Minister and the Government who make the decision and who negotiate in Brussels.

Mr. Crouch

Will the right hon. Gentleman accept from me my thanks at least for the result of his fight in the Commission to get a good and proper return for the milk producer in this country, which will enable him to remain viable? Will the right hon. Gentleman follow this action by dispelling any feeling which might arise from his statement that he is being complacent and has reached the end of the road in his attempts to make the farmer viable? Is he aware that he has not gone far enough?

Mr. Peart

I am grateful for the hon. Member's remarks. I am not complacent. I said so in my statement. At the annual review we have to discuss the dairy prices in the Community on a Community basis.

Mr. Sillars

Is my right hon. Friend aware that all fair-minded people will believe that a £50 million investment in the dairy industry at this time is substanstial? Will he confirm that the crunch will take place in the price review? In his conversations with the NFU, will he explain to it that some sensitivity on its part towards the needs of consumers might help to mobilise public opinion behind an expanded investment programme for agriculture?

Mr. Peart

I accept my hon. Friend's remarks. I hope that the NFU leaders in Scotland, England and Wales and Northern Ireland will accept that this is a reasonable agreement.

Mr. Boscawen

Does the right hon. Gentleman not agree that to behave in this way, throwing a lifeline at the dairy industry every three months or so, is no way to treat a great industry? Does he not agree that what is needed is a longer-term look at the needs of the industry aimed at giving it a long-term price structure so that it is able to plan ahead for two or three years? Does he not agree that looking only two or three months ahead is useless?

Mr. Peart

I hope that the hon. Member will appreciate that the price negotiations have taken place annually. We cannot help that. I believe that we should have a long-term strategy.

Mr. Corbett

Will my right hon. Friend ignore the clatter of empty cannon from the Conservative benches and instead accept that working farmers, particularly milk producers, will take the deal which he has brought back from Luxembourg as evidence of my right hon. Friend's good faith and belief in the White Paper "Food from our own resources"? May I ask my right hon. Friend to think again about the funding of this expansion and to recognise that all the money needed to obtain an expansion in home food production cannot possible come from the consumer, particularly at this time?

Mr. Peart

I believe, as I said in the White Paper, that the funding must come from the market.

Mr. Whitelaw

Would the right hon. Gentleman not think it wise to ignore some of the rather minor political points made by some of his right hon. Friends and instead recognise what is undoubtedly the fact about our farming industry—and what my hon. Friends have said all along—namely, that the long-term confidence of the industry is at risk? No doubt the right hon. Gentleman realises this. I hope that he will confirm the importance of accepting this for the future and will agree that short-term policies will not do when long-term confidence is needed.

Mr. Peart

I am grateful to the right hon. Gentleman, who speaks more constructively than does his neighbour, the hon. Member for Westmorland (Mr. Jopling). I agree that we need a long-term strategy. I explained this in Carlisle at the annual meeting of the Cumbria NFU. It is my intention to pursue this long-term strategy.