§ 2.16 a.m.
§ Mr. Sydney Tierney (Birmingham, Yardley)I feel the responsibility of keeping the House later at this time of the morning, but the subject I want to 634 introduce is one long delayed and worthy of some debate before now. I am glad of the opportunity to introduce a debate on the supply, marketing and prices of the potato, or how did the humble "spud" achieve stardom? Perhaps, as some others put it, the King Edward rules supreme as the aristocrat of the fruit and vegetable kingdom. How long will it reign? This appears to be the main question.
In recent weeks potato prices have gone sky-high. The price of potatoes is now three or four times what it was this time last year, and there is still no sign of any stability in the market.
Even before the latest escalation of prices, potatoes largely contributed to the 23 per cent. increase in the cost of food last summer.
The quarterly return, July, August, September, from the Ministry of Agriculture showed that the amount spent each week on potatoes doubled from 7.9p to 16.15p, despite a 14 per cent. drop in sales. The overall food increase, including beef and milk along with potatoes, meant that the food bill for a family of four went up by £2.88 a week in that quarter.
I fully support the Government in their efforts to combat inflation, and I express whole-heartedly my appreciation of the restraints accepted by working people in co-operating with the Government's policy. That is why when they are contending with inflation in all areas of their domestic budgeting they have to have the best possible explanation why the potato—once the cheapest purchase on their list—is now in the luxury class. We in this House should ensure that they have all the support they need to help carry the burdens of inflation.
It is accepted that neither Government nor Opposition can do much about the weather. We all rejoice about that. The mind boggles at the thought of debates about long dry, sunny spells in the summer, with a week of rain in between, as long as it is not the time for our constituents' holidays. No one underestimates the difficulties created by the very fine summer.
I am grateful to my hon. Friend the Minister of State for a Written Answer to me on 15th January, when he explained that there had been a shortfall of 2¼ 635 million metric tons in the home crop of 1975. My hon. Friend also said that it was not possible to make good the estimated deficiency and that as prices were determined by normal forces of supply and demand, they would remain high over the coming months. He concluded:
I hope that all concerned will recognise that their long-term interests are best served by orderly marketing during the remainder of the season."—[Official Report, 15th January 1976; Vol. 903, c. 212.]In other words, we have potato rationing by the purse: "If you can afford, you can have. If you cannot afford, eat something else."Since the debate was announced, my hon. Friend has gone into more detail in answer to a Question by my hon. Friend the Member for Newham, South (Mr. Spearing) on Monday this work. It was considered important enough to place copies in the Whips' Office. I do not grumble about that answer. One of my objects has been to get the Minister to make a lengthy statement. One should have been made a long time ago. I hope that my hon. Friend will take this opportunity to go into still more detail about our future supplies of potatoes and whether reasonable price levels are gone for ever.
On 31st July last year, in answer to a Question by the hon. Member for Banbury (Mr. Marten), my hon. Friend said:
With regard to the main crop, this is not normally a matter involving imports, but we are keeping the position closely under review.In answer to a supplementary question, he said:The difficulties of last month were caused by factors that were hard to foresee. I have no doubt that in future we shall be better able to regulate supplies and, accordingly, ensure reasonable prices."—[Official Report, 31st July, 1975; Vol. 896, c. 2023.]In the light of those answers, it is fair to comment that we do not have regular or sufficient supplies, and that prices are extremely unreasonable.My hon. Friend has said that we were not able to make good the estimated deficiency of 2¼ million metric tons, and that as soon as it was known that the main crop was affected by drought, the Government lifted the normal import ban on main-crop potatoes. Bearing in mind 636 his answers to Questions on 31st July last year, can he say when the import ban was lifted? Was it soon enough?
It appears from all reports, particularly the reports we hear from Belgium about fines and imprisonment for hoarding, the problems of price-freezing and so on, that the Community countries are restricting their trade in potatoes and we have been unable to rely on them. The question I want to ask is why the United Kingdom has applied to the EEC Commission only last week, for the tariff on the imports of potatoes from non-EEC countries to be temporarily suspended. I am pleased to see that it has now been suspended for three months. What immediate effect will this suspension have on the regular supplies of potatoes at reasonable prices? In short, with or without the constraints of the Community, why have we not secured alternative supplies at reasonable prices for the British housewife?
Apart from the problems of the housewife there are problems for most suppliers, although some are obviously enjoying the situation. Whatever the problems for wholesalers and retailers, I think that they are fed up with the frustration and chaos in the present distribution and retailing of potatoes.
There are claims that farmers who struck lucky in the 1975 season are turning the potato shortage into handsome profits—indeed, in some cases exploiting the situation. Similar claims are being made about middle men, wholesalers and retailers. To be fair, I suppose that they are a cross section of the community and have in their ranks some who take advantage of the situation. As the great majority involved in the trade want a steady supply of potatoes at reasonable prices, I hope that some action can be taken to seek out and deal with undoubted exploitation. Even so, the trade as a whole would rather be done with the frustration, the chaos, the publicity and all the other features of the potato shortage.
Because of spiralling prices and the instability of the market, frustration and chaos abound. It is thought in some quarters that prices will continue to rise and begin to ease off only in August. I am sure that some feel that the best way to deal with the problem is to quieten it down by ignoring it and simply letting 637 market forces take their own course. If we take that line, and it seems to be the one that is to be taken, how do we begin to get rid of the activities of the silly fringe?
There are reports that potatoes have become valuable bingo prizes. They are offered as an incentive to buy secondhand cars. They are compared in value with jewellery. I heard on the radio this morning that someone had offered his super de luxe speedboat for 7½ tons of potatoes. It seems that suppliers themselves are watching their stocks by night seated on their tractors. It seems that someone has been fined £100 for stealing, presumably by night. No doubt there is much more to follow in this vein. It is a ready-made situation for such events.
It is claimed that any artificial restraint on prices would encourage consumption and lead to a run-down of stocks. One can understand the economics of that. But some limit must be placed on prices if only to stop the nonsense to which I have just referred. But, more important, the pressure on the cost of living for working families must be eased.
We have already been warned by the United Kingdom growers that seed potatoes will cost much more than they have ever cost previously and that potato prices in Britain are bound to remain high. The Community farmers are also claiming that unless their prices remain high, considerably higher than in the past, the danger of future shortages will remain whatever the weather. The European Commission is urging Ministers to extend the common agricultural policy to potatoes. These are some of the problems we have to face in relation to the supply and the price of potatoes.
My right hon. Friend the Secretary of State for Prices and Consumer Protection recently pointed out in a speech to the NFU that she had told the Council of Agriculture Ministers about the reality of consumer resistance to higher prices. She said that we should see a decline in butter consumption in this country over the next two years as prices moved to full CAP levels. That probably sounds good for margarine manufacturers.
We know that the beef premium, which the Minister of Agriculture is insisting on being retained, keeps beef prices 638 down and enables more in this country to eat a steak. My right hon. Friend the Secretary of State for Prices and Consumer Protection also said that high prices simply reduced consumption, depressed the market, caused a build-up in intervention stocks and solved nothing. Are we to have more, bigger and better mountains? Surely that is not the answer.
I do not claim that the Government are deliberately set on this course at present. But we have to go to the EEC to get permission to import from non-EEC countries. Given the attitude of the growers in the Common Market and that of the Commission, and the need for adjusting to common price levels in the Common Market, we shall eventually get such a situation.
Beef mountains exist only because people do not eat the available beef. Many in this country are priced out of a steak. It we are about to begin to build the largest potato pie in the world to solve our supply problems, many British consumers will have had their chips, too.
I hope that my hon. Friend will address himself to some of the points that I have raised, which I am sure are causing concern in the country at large. Any hope that he can give to the British housewife will be well received. I thought that this was a subject that ought to be debated. I am glad of the opportunity to introduce it and, even at this late hour, I want to say how grateful I am for the time of the House.
§ 2.32 a.m.
§ The Minister of State for Agriculture, Fisheries and Food (Mr. E. S. Bishop)I am grateful to my hon. Friend, the Member for Birmingham, Yardley (Mr. Tierney) for raising this matter tonight because it gives me the opportunity of describing to the House and the country, the reasons for the current potato supply difficulties and explaining the action that has been taken to alleviate the situation. I know that this matter is of concern to hon. Members and the public generally, and rightly so because the humble potato, as my hon. Friend implies, is an important part of the national diet.
I think that I should start by explaining our general policy on potatoes. The policy of the present Government, as of 639 successive Administrations since the passing of the Agriculture Act 1947, is that the United Kingdom should be self-sufficient in main-crop potatoes, except in years of unusually low yields. The guarantee and marketing arrangements under the Agriculture Acts are geared to this end. Our climatic conditions prevent us from being self-sufficient in new potatoes and there is a traditional market for imported new potatoes in the late spring as stocks of the old home crop begin to run down and before supplies from the new home crop are available.
Each summer, the Government and the Potato Marketing Board, in consultation with the National Farmers' Unions, determine the target acreage for Great Britain for the next year's crop. In fixing the level of the target we are aiming to secure a planted acreage which on normal yields would produce sufficient supplies to meet our estimated requirements for human consumption and other needs, such as seed, for the coming year and leave a modest surplus of some 200,000 to 300,000 tons.
The Potato Marketing Board, which operates in Great Britain, allocates acreage quotas to registered producers. But it is for the individual producer to decide how many acres he will plant to potatoes. A producer in Great Britain is not obliged to plant his quota allocation. If he does not plant up to his quota he knows that his entitlement is likely to be reduced in the following years. Conversely, if he decides to exceed his main-crop quota he knows that he will be liable for an additional levy to the Board in respect of the excess. The normal levy is reduced on acreage harvested as new potatoes.
For the 1975 crop the Government set a target acreage of 565,000 acres for the United Kingdom. The full acreage was not planted, but some underplanting of the target acreage has been normal over recent years. There were probably a number of reasons for the lower plantings. The 1974 harvest had been exceptionally difficult. The extremely wet autumn prevented lifting and many fields were so waterlogged that machines could not be used. About a fifth of the main crop was still in the ground at the end of November when all should have been lifted. When the potatoes were eventually 640 lifted many went into store in very wet condition. Also some other crops were perhaps more attractive propositions to some individual growers—namely, less labour intensive and with fewer production problems.
The actual planted acreage was down by 28,000 acres—about 5 per cent.—compared with 1974. This in itself was no great cause for concern since in normal weather conditions improvements in yields from technological factors combined with lower riddle standards would have ensured sufficient supplies to meet our expected needs. We have to go back several decades to find a year which approaches anywhere near the circumstances of this season.
Because of the adverse weather conditions in the autumn and again in the spring, the land was less well prepared than growers would have hoped. The weather continued to be against us for the remainder of the growing season. In fact, it could hardly have been worse for potato growing. If it were not so serious the saga I have to relate would have echoes of the Hoffnung tale of the workman who kept getting clobbered by extraneous objects. Planting conditions may have deterred some people from planting. The cold late spring discouraged early growth and the following prolonged dry spell affected the development of the crop. Yields were low and prices reflected the shortage of supplies.
The difficulties began even before the commencement of our own season as a result of a substantial shortfall in our traditional supplies of imported new potatoes because of poor crops overseas, particularly in Cyprus, and a low carryover into the late spring from the 1974 crop. As soon as the prospects for the 1975 harvest became apparent, the Potato Marketing Board adjusted the normal riddle sizes and in particular relaxed the riddles which normally apply to home produced main crop potatoes from 1st August. The top riddle size of 3½ in. was removed and the minimum riddle size of 1⅝ in. was reduced to 1½ in. Below this size potatoes can still be sold in the shops as "mids", and I am advised that all sound potatoes can now find a market for human consumption. Requirements on diseases and faults have not been relaxed.
641 Throughout the summer the Government kept the situation under close review. In August we consulted all major interests in the potato industry on the prospects of the 1975 main crop yield. The yield of potatoes then being lifted was still low and as a precautionary measure—even before the full extent of the shortfall was known—the Government lifted the seasonal ban on imports of new potatoes in September and October and, more important, the usual continuous ban on imports of main crop. My hon. Friend asked about the date of the lifting of the ban. Since 1st September last it has been possible to import main-crop potatoes from all countries satisfying our plant health requirements. As the prospects did not improve, we took the only other action open to us—we imposed a ban on the export of eating potatoes from 17th October 1975. This was not an easy decision to take as it meant disrupting the normal patterns of trade.
From what I have said of the events of last summer and autumn, hon. Members will note that the Government and the Potato Marketing Board took action early in the 1975 main-crop marketing season to conserve and supplement home supplies of potatoes for the United Kingdom consumer. But this action could not make good the shortfall in production of one third compared with 1974—an estimated shortfall of 2¼ million tons. European countries also had poor crops, caused by the hot summer, and although we estimate that we have imported about 170,000 tons of main crop so far, mainly from the Netherlands, imports cannot possibly bridge the gap.
Hon. Members will know that the United Kingdom has applied for a temporary suspension of the tariff on imports of new and main-crop potatoes from non-EEC sources. We hope that by our suspending the tariff additional supplies will be attracted into the Community. The suspension of tariff on main-crop imports took effect on 26th January, only a few days ago, and further discussions are taking place on the new potato tariff. There was little point in seeking a suspension of the tariff until this month, since under the tariff arrangements which applied up to 31st December the United 642 Kingdom had a significant preferential advantage over other member States.
We have also reminded our representatives in countries conforming with our plant health requirements of the supply position here so that importation of any stocks available for export can be facilitated. We have tried to find additional sources of supply. We must recognise, however, that we are faced with a difficult supply situation which will continue until early potatoes are available in quantity. Prices, which are determined by the usual market forces of supply and demand, will remain high over the coming months.
I do not underestimate the difficult position in which processors, fish friers, and all other users find themselves. I also appreciate the motives of those who have called for further Government action. I should like to deal briefly with some of these suggestions.
First, it has been suggested by some people that we should relax our plant health requirements. But these regulations are designed to ensure that we do not get serious potato diseases and pests which would be costly and difficulty to eradicate and would endanger future yields. Relaxation of our health requirements would hazard the long-term future of the industry, and this is a risk that I could not responsibly take for what is essentially a short-term problem.
I have also been pressed to prevent hoarding. Although some farmers sell their crop on to the market as soon as it is lifted, the far greater proportion of main-crop potatoes are put into store for release on to the market in the winter and spring. This is the normal seasonal pattern—indeed, the essential pattern if we are to have supplies for the whole of the season. Precipitous unloading of the remaining stocks on to the market would only increase the problem later on.
I have been asked why the Government will not take steps to stabilise prices. As my right hon. Friend the Secretary of State for Prices and Consumer Protection commented in her speech last week to the National Farmers' Union, any action taken by the Government or the trade to restrain prices artificially would encourage consumption and lead to a run-down of stocks which need to be marketed in an orderly fashion to cover the 643 remaining months of the season. As hon. Members know, the food subsidy programme was introduced to help those on low incomes during a period of sharply rising food prices.
The Price Commission has been monitoring potato prices and margins. All the indications are that the level of prices simply reflects the supply position and the Price Code covers wholesalers' and retailers' margins on their overall businesses.
Summing up, let me say that we are well aware of the present difficult situation and appreciate the very real problems of those whose livelihood is directly affected by the current supply shortfall. But we have to face the prospect of high prices continuing until supplies of new- 644 crop potatoes are available in quantity. In the meantime, it is in everyone's interest that the remaining stocks are made available to the market as consistently and regularly as possible. Over the coming months the exceptional circumstances which we are experiencing currently will be resolved by the new season's crop.
I am grateful to my hon. Friend for allowing me to go into detail on a problem that is of concern to the country. I assure him that we shall do all we can in the months ahead, before the new and main crops, to safeguard our supplies and to watch over consumers' interests.
§ Question put and agreed to.
§ Adjourned accordingly at sixteen minutes to Three o'clock a.m.