THE SCARCITY OF BUTTER.

HL Deb 20 November 1917 vol 26 cc1086-93

LORD STRACHIE rose to call attention to the scarcity of butter, and to move for Papers. The noble Lord said: It is undoubtedly a fact that there is a great scarcity of butter, and I want to elicit from the Government the reason—whether it is owing to the action of the Food Controller, or owing to other causes over which the country has no control. I noticed some ten or twelve days ago a rather curious announcement, made, I suppose, at the instance of the Food Controller. The announcement was— The Ministry of Food announces that in view of the recent high prices of Danish butter, and in order to get an approximately flat price throughout the country equivalent to the price of Irish butter, the Food Controller has now decided to fix the first-hand price of Danish and Dutch butter at 229s. per cwt. export. I think it requires some further explanation why the Government should think it was necessary to reduce the price of foreign and English butter to the price of Irish butter. Undoubtedly it is a fact that in Ireland they are able to produce butter at a cheaper rate than it is worth while to produce it at in this country, from the fact that in Iceland they have not that great market for milk that we have in this country and in Scotland. Up to the present moment, I believe, there is no maximum price fixed for milk in Ireland, and I suppose it is the old principle of supply and demand, and that the milk in Ireland is probably still sold at such a price that it still pays factories to buy milk and turn it into butter, though it does not pay in this country. The announcement goes on to say— These prices come into force for Dutch and blended butter on November 6, and for Danish butter on November 13, and the general effect will be to bring imported and home-produced butter to approximately the same level of prices. Now this is a statement which I venture to think should not have been made, because it entirely misleads the public. The public will naturally think from this statement that after the dates mentioned—November 6 and November 13—the effect will not only be to reduce the price of English butter, but also of all imported butter, Danish and Dutch, to the price of from 2s. 3d. to 2s. 6d. per lb. At the present moment the price fixed for Irish butter in this country is 224s. per cwt., that is, 2s. per lb., and for British factory butter and farm butter a little over 2s. per lb. I should like to know, as regards that, whether the Board of Agriculture was consulted in fixing these prices. Perhaps later on the noble Duke who represents the Board of Agriculture here (the Duke of Marlborough) may come into the House, and we shall be able to ask him. This is a very important matter, and we ought to know whether the English and the Scottish Boards of Agriculture approved the fixing of this price.

Now what has been the effect of this Order in Holland? Exactly the effect that any one would expect. In The Times the other day I read this announcement— THE HAGUE, November 9.—The export of Dutch butter to England has been stopped. The reason given is that the maximum price fixed by the British Food Controller for Dutch butter—namely, 299s. per cwt.—leaves no profit for Dutch producers, as the production price of Dutch butter is fixed at 5¼ florins per kilogramme. This, roughly speaking, in English money is 4s. a lb. That is exactly what you would expect the Dutch producer to say—that he certainly cannot send butter into this country at 2s. a lb. when it costs him 4s. a lb. to produce. And in practice that is what would be the cost of butter in this country if you take the price of milk as it was fixed last October.

Perhaps I might tell the noble Duke who has just entered the House that I was asking whether in the fixing of butter prices by the Food Controller the Board of Agriculture had been consulted, and whether they had approved of English factory and farmers' butter being reduced to 2s. a lb., a price at which the noble Duke knows it is perfectly impossible to make it.

Then I would ask whether the cost of production in this country has been considered by the Food Controller? The general public were no doubt very pleased to think they were going to get butter at 2s. 3d. or 2s. 5d. per lb. But, as a matter of fact, the noble Duke and the Lord Privy Seal will know perfectly well that the effect of such prices will be that the Dutch will not send us any butter on account of the high cost of production, and that the English farmer will take exactly the same line. It is ridiculous to fix such prices for butter when very much larger sums can be obtained by the farmers for their milk. Three imperial gallons of milk are taken as the average quantity required for a lb. of butter. Taking the October price of milk, which was 1's. 5d. an imperial gallon, a lb. of butter would have cost 4s. 3d. to produce. Taking the November price for milk of 1s. 7½d., a lb. of butter would cost 4s. 10½ d. After November the price of milk has been fixed at 1s. 9d. per imperial gallon; therefore if the farmer were to get a fair price for his milk he would receive 5s. 3d. for what would be necessary to produce a lb. of butter. There are, of course, some by products, such as skim milk and buttermilk, but the amount of those commodities is infinitesimal. Even in these days one could not take off more than 3d. for those by-products. Consequently the net price to the fanner for the three gallons of milk used in making a lb. of butter would be 5s. If the object of the Food Controller is to increase the supply of butter and to make it cheaper for the public, I venture to think that this is not the right way to go about it.

I cannot help thinking that the real object of the noble Lord—and I would ask him whether this is not so—is not only to prevent the production of butter in this country but also its importation from abroad. The Food Controller may say that butter is not a very valuable food and that it; will not matter if none is made here in the future. If that is so, I can understand the position; at the same time the public ought not to be told that they can buy butter from 2s. 3d. to 2s. 5d. per lb. It may be that it is very desirable that the whole of the milk supply in this country should be conserved for consumption as such and not turned into butter at all. That may be a right principle. But there are great difficulties in the way of small holders, for instance, distributing their milk owing to restricted railway facilities, difficulty of conveyance to the station, and so on. The only way such people can get rid of their milk is by turning it into butter. I am sure that the Food Controller is anxious to obtain such a wholesome food as skim milk, and to see that its production should not be reduced.

I venture to think, in connection with butter, that it would have been very much better if the noble Lord had allowed the law of supply and demand to have play, because I cannot see that it is going to do much harm if butter is dear. The poorer classes are fortunately able to purchase margarine, which is now manufactured in very large quantities in the country, and which is very good indeed. In fact, speaking as an agriculturist, I am afraid that the people will find margarine is so much like anything but the very best butter that after the war that commodity will come down to the price of margarine, except in a small number of cases where the public taste has been educated to best butter. Therefore I cannot see why the Food Controller should not leave butter alone and let it find its own price in competition with margarine. Perhaps my noble friend will tell me why he could not have done what he did in the case of cheese. He raised the price of cheese so that its manufacture should not be stopped. The noble Lord is, of course, aware that had this step not been taken no more cheese would have been made. I can assure my noble friend that, if his Order is carried out in its entirety, butter-making will cease to a large extent in this country, and the public will not get cheap butter because they will get no butter at all.

LORD RHONDDA

My Lords, I must apologise to the noble Lord for my absence during the early part of his speech, but from what I have been able to gather from my noble friends beside me, I think the answer that I shall give will cover the points raised by him. In respect of the shortage of butter, the main reason is the restriction of the supplies from Denmark and Holland, from which countries comes in normal times the bulk of our imported supplies. The reduced supply is due to the shortage of fodder, and in particular of imported feeding-stuffs. Lord Strachie has said that it would have been very much better to have left butter to the free play of the law of supply and demand. I would say now, as I have already said several times in the House, that whereas I am a firm believer in economic laws and in allowing them to have free play in normal circumstances, it is inevitable that the Government must interfere in times such as these; otherwise in the case of an article of prime necessity even a small shortage below the requirements would send the price up by leaps and bounds to a stage altogether beyond the reach of the poorer classes. That, in fact, had already happened before the Government stepped in and began to regulate supplies artificially, and before any maximum prices for butter were fixed at all. The price had, I think, nearly doubled under the free play of the law of supply and demand to which my noble friend referred.

The policy of fixing the price of butter has had to be governed by different considerations in the case of home-made and of imported butter. This is an important matter, and I shall probably travel beyond the scope of the noble Lord's Question, but I think the House will like to hear the general position. In regard to butter produced within the British Isles the most important consideration is the relation of butter production to that of milk and cheese. The increased cost of production due to the war has been taken into consideration also, but the encouragement of the production of milk has had to be put first. According to the Royal Society's Report on the Food Supply of the United Kingdom, it is calculated that it take 2½ gallons of milk to make 1 lb. of butter, but only one gallon of milk to make 1 lb. of cheese; and it is obvious that in any general consideration of the food supply the production of milk, which cannot be imported fresh, must be put first, and next the production of cheese, which is relatively more important than the production of butter. It is for this reason, therefore, that the maximum prices fixed for butter are less remunerative to the producer than those fixed for milk, while they allow for a reasonable increase, over the pre-war price.

With regard to imported butter, the best bargain possible has been made in the interests of the consumer in whatever quarter butter supplies are available, but at the same time when butter has been purchased from European neutrals it has been necessary to make price concessions so as not to divert supplies of butter to enemy countries. Purchases of butter have been arranged with the Dominions, and, in particular, the whole of next year's production of butter, amounting to 30,000 tons, has been bought from Australia; negotiations are also in progress for securing the New Zealand output, which is estimated at 15,000 tons, and 8,370 tons have been bought from the Argentine.

It is, however, impossible to buy at similar prices from Denmark and Holland, because of the competition of Germany and the high prices which she is willing to pay. While the price of these butters was left uncontrolled, there was a temptation to sell the various butters whose price was controlled as Danish in order to obtain the very high price which then ruled for this article. It has therefore been necessary to fix a maximum wholesale price for Danish butter on a parity with the prices fixed for Irish and British-made butter—namely, 229s. per cwt.—and this has been done by a system of pooling. After December 1 an arrangement will come into force for pooling all the butters imparted direct by the Ministry of Food at various prices above and below the maximum, and striking an average price; this will be done by the Import Committee.

The policy of pooling imports from all these different sources, together with the supply from Ireland, will also result in the fixing of an average retail price based upon the total cost of the whole supply. It is estimated that this price will be, in the next few months, about on a level with the retail price for British-made butter—probably 2s. 6d. per lb. In view, however, of the considerable imports which have been arranged for and the possibility of using substitutes for butter, it is desirable that the British farmer should put the production of milk foremost, and, next after that, the production of cheese. The noble Lord does not entirely agree with me, but this is the considered opinion of the Ministry of Food, and I have acted under the guidance of experts.

With regard to the shortage generally, the noble Lord expressed the view that if butter was not obtainable the deficiency might be made up with margarine. The difficulty of getting butter from Denmark, however, applies also to margarine. Before the war, we got a good deal of our supplies from Holland. Before the war, the consumption of margarine in this country was, as compared with butter, about one to three; that is to say, of the total consumption of margarine and butter one-third was margarine, and two-thirds butter. The difficulty of getting butter and margarine from the old sources of supply has largely increased, and before very long those supplies may practically cease altogether, and therefore we must look to other sources. The production of margarine in this country has largely increased in the last couple of years. I have not the figures for 1914, and I do not remember ever having seen them, but in December next the potential production in this country will be two and a-half times what it was in 1915, and by next June, I hope, it will have increased to nearly four times what it was in 1915. The relative consumption of margarine and butter has entirely changed, and from now on the consumption of margarine will largely exceed that of butter. Although there is a shortage now of margarine and butter, I hope that, by next summer the production of margarine and butter will be equal to that of butter and margarine prior to the war.

THE MARQUESS OF SALISBURY

Can the noble Lord tell us how much is the shortage, now, as compared with the production before the war? He gave us the figures of the import of butter which he is going to buy from, I think, Australia, New Zealand and the Argentine. Can he give us the import of butter from Ireland into this country at the present time?

LORD RHONDDA

I am sorry that I cannot answer either of those questions. I cannot, charge my memory with the figures, but if the noble Marquess will give notice, I shall be pleased to supply the information.

LORD STRACHIE

May I ask the noble Duke—or perhaps the Food Controller will be able to answer the question which I put to the noble Duke—whether the figures fixed for butter meet with the approval and consent of the Board of Agriculture? And also whether—he was talking of pooling it is the intention still to keep the price of Colonial butter about 2s. per lb., and then make up the loss as it is made up in the case of the sale of bread at 9d.

LORD RHONDDA

I do not think it would be desirable to state the figure that we have paid to the Dominions. The full price we are told will be about 2s. 6d, a lb. and there will be no charge on the Treasury. With regard to the other question, I would rather not commit myself definitely, but as a matter of fact we are working on very cordial terms with the Board of Agriculture. I have to take the whole responsibility for the fixing of prices, but we generally do it in consultation and in agreement with the Board of Agriculture.