§ EARL DE LA WARE asked His Majesty's Government whether they will cause inquiry to be made into legislation under which agricultural co-operative societies in other countries work, with a view to introducing similar legislation for the protection and encouragement of societies in this country. The noble Earl said: My Lords, it may, perhaps, seem rather strange that on a subject of such vital importance as agricultural co-operation I should have put down a Question that admittedly touches only one corner, and that a comparatively small corner, of the whole problem. But I did this because it seems to me that there is at the present moment a very general recognition of the importance and the necessity of helping the co-operative movement.
§ It is being increasingly realised that it is impossible for the farmer, as an individual, to meet and carry out his deals satisfactorily with the great combines that at the present time virtually control his industry. We all know that if a farmer wants to buy cake or fertilisers he may go to a dealer, but behind that dealer is the cake combine and the fertiliser combine. If he wants to sell his milk, to whom does he sell it? He sells it to a milk combine. He sends his beasts into the market. What happens there? More likely than not they are knocked down practically at no price at all to a butchers' ring. Therefore, it seems to me that what is wanted is not so much a general discussion on the principle of co-operation, but rather practical suggestions for helping the extension of the movement.
§ The progress made in this country during the last few years has been extremely unsatisfactory, both from the point of view of the demands of the 742 situation and also in view of the development in other countries. In this respect other countries are developing very much more quickly than we are. This can be accounted for by many reasons. One reason is the fact that we supply a varied home market, whereas in many countries where co-operation has developed strongly, they have to supply a standardised export market. Again, it may be said that our national character is against it, that we are essentially individualists. But even more so, and here we come to more contentious ground, I believe that to a great extent the existing system of land tenure undoubtedly inclines the farmer to look rather to the landlord for a reduction of rent and other help in times of trouble, than to the development of his own resources.
§ Some of these difficulties are in a sense unavoidable, and certainly we can take it that the last difficulty I have mentioned is not likely to be altered in the near future by the present Government. On these particular points we differ from foreign countries. It is difficult to compare ourselves with them, but there are other points on which we do not differ and where it should be possible for us to learn from them. I suggest that my Question on the Paper is one of these points. In nearly all countries where agricultural co-operation has been successful, where its development has been rapid, it will be found that there has been legislation which regularises the incorporation and the procedure under which these undertakings work. In England we have no such legislation; we are tied down to the Industrial and Provident Societies Act, which has nothing to do with co-operation. If your Lordships were to read that Act through I do not think you would find the word "co-operation" mentioned once. Even the word itself receives no protection, and it can be used by anyone who likes, while the very provisions of the Industrial and Provident Societies Act set conditions on our back which make it almost impossible to borrow loan capital on anything like a commercial basis. When we have wanted to borrow loan capital we have had to depend largely on the kindness and benevolence of the local landed gentry who are willing and able to lend money without much regard to the security which they can obtain.
743§ There is the further question as to the extent to which members should be bound to their societies. There is also the question as to whether the societies should be organised on a corporate basis, or on a non-corporate basis, as they are in Denmark. There is also the question of compulsory legislation for grading and packing, which has been found to have had such remarkably good results in the United States of America. It is on points such as these that I ask the Minister of Agriculture to compare the conditions in this country with those in other countries, to examine them, see what has been done elsewhere, ascertain the effect of what has been done elsewhere and then make up his mind as to how far we can utilise the experience of these foreign countries. In this way we can learn a very great deal.
§ I am trying to be brief in asking this Question and there is only one other point, which the noble Lord who is going to reply has very kindly allowed me to add to the Question. Last year a sum of £200,000 was put aside under the Agricultural Credit Act for advances to co-operative marketing societies, but under this amendment to that Act very little money has been lent. On the whole, the terms are fair and reasonable, but it has been found that the Regulations, under which these loans are made, are far too inelastic. I have in mind at the moment the case of two societies. One society was able to fulfil the Regulations and, consequently, the Ministry lent it a sum of money, a very large sum of money. Within a few months of that sum being lent the society practically went bankrupt, and the question is now being discussed as to whether it will go into liquidation or not. I have also in my mind another society, very well known and prosperous, which, if the Ministry had been able to lend it money, would have made very good use of that money and would have been able to go ahead, but they did not come within the strict letter of these Regulations and so they will not be able to have the loan. I submit to your Lordships, and specially to the noble Lord, that if you put business men on a Committee of the Ministry of Agriculture and ask them to administer a sum such as this £200,000 for the benefit of farmers' co-operative societies, it is essential that 744 you allow these business men to use their judgment and to lend, not according to Regulations which may or may not apply, but according to their own best judgment.
§ There is one further point in this connection. At the present moment these loans are really of use only to marketing societies. They are of very little use to purchasing societies—societies that exist for the purpose of farmers' requisites. They have very few fixed assets. What they need is working capital, and this at the present moment it is almost impossible for them to obtain. I know that there are particular difficulties attached to lending working capital to societies, but I hope that the noble Lord will consider this question when he is going into the other. If he does so, and if he goes into the first question that I put to him concerning co-operative legislation. I believe not that he will be providing a panacea for co-operation in this country, but that he will be helping to forge a very strong link in the prosperity of a movement which I know that all of your Lordships who are interested in agriculture would desire to see prosperous. If, having done so, he is able to help to build up a really strong co-operative movement, I do not think that he will have provided a panacea for the troubles of British agriculture, but I do venture to hope that he will have forged a very strong link in the chain of prosperity which many of us believe that British agriculture deserves and which the whole nation must desire. We all of us wish to see a healthy and strong population reared in the country, and I believe that in taking this step the Minister will be taking a great stride in the direction not only of helping the farmer but of helping the farmer to help himself.
§ THE PARLIAMENTARY SECRETARY OF THE MINISTRY OF AGRICULTURE AND FISHERIES (LORD BLEDISLOE)My Lords, I very strongly welcome, both personally and on behalf of the Department which I represent in your Lordships' House, the Question which has been put upon the Paper by the noble Earl, because it is quite evident that he, fortunately amongst many other young landowners and farmers in this country, is one of those who are beginning to take a very lively interest in what is, after all, one of the chief conditions, if not the chief 745 condition, of a successful and prosperous agriculture in every country in the world at the present time.
I ventured to say yesterday, in the course of my reply to the noble Marquess, Lord Lincolnshire, that, unfortunately, agriculture is pre-eminently in this country an unsheltered industry. It is obvious that it is impossible, especially in view of its unsheltered condition, for British farmers successfully to compete with co-operatively-produced and marketed agricultural products from other countries unless they are similarly organised themselves, and it is worthy of note that the most serious competition which farmers in this country have to face is in respect of agricultural commodities which are produced under a strict and almost meticulous system of agricultural co-operation. Fas est ab hoste doceri. If, as the noble Earl has pointed out, there is an excessive number of middlemen dealing in agricultural products to the disadvantage of the agricultural producer and the consumers of this country, a defect which has certainly been endorsed by the findings of the Linlithgow Committee—and may I say what a debt of obligation we are under to the noble Marquess, Lord Linlithgow, for his services in this connection?—it is quite clear that the only answer, and the most effective answer, is not so much, if I may say so with deference to the Government of which I am a member, to be found in setting up Food Councils, desirable though that is so far as overseas produce is concerned, but far more in developing agricultural co-operation, for thereby the farmers can achieve their own salvation and indirectly the salvation of the consumer far more effectively than by any other Government-conceived process.
The noble Earl seems to invite some expression of opinion from me as to the extent of the Government's sympathy with the development of co-operation and some statement as to the steps which they are taking to give evidence of their intentions or their sympathy in this respect. The Government are warm friends of the agricultural co-operative movement but, as noble Lords will realise, it is no use whatever imposing a system of co-operation upon the agricultural industry of this country if the farmers do not want it. If and when the farmers 746 are satisfied of the immense advantages to themselves of the adoption of co-operative methods, then, but not till then, will there be a healthy expansion of the co-operative movement in the rural areas of this country. Whenever they take up vigorously the co-operative movement with something like the confidence which inspires the co-operative movement in other competing countries they can count upon full Government encouragement and support.
The noble Earl, in the course of the reasons which he gave for the lack of progress of the co-operative movement in this country, referred incidentally to the existing system of land tenure. I have no doubt that he desired to draw me on this subject, and I am very glad to be drawn, because, whatever defects there may be, or may have been, in this connection as the result of a tendency of farmers to lean for their support in bad times upon their landlords, it is quite obvious that, with the growing impoverishment of the agricultural landowners of this country, that support cannot be relied upon or expected to the same extent in the future. Whatever Governments may do it looks as if the economic trend is going to help in removing this alleged defect, which, according to the noble Earl, is standing in the way of the development of the co-operative movement in this country.
The noble Earl, I think, was not altogether accurate in suggesting that the progress of agricultural co-operation in this country is very unsatisfactory. I think, on the other hand, that there is a distinct improvement in this connection amongst the farming class, and this is more than evident by the fact that the National Farmers' Union, which was by no means sympathetic to agricultural cooperation a few years ago, have taken over what I may call the carriage of the movement from the Agricultural Organisation Society and have recently set up a special committee in order to foster the movement on lines likely to be approved by the farmers themselves.
The noble Earl's first Question—and he has tacked on another question to it, which I am very glad to answer to the best of my ability—is whether inquiry can be made into legislation under which agricultural co-operative societies 747 operate in other countries. I am not quite sure whether anything very effective is to be gained by an elaborate inquiry into, or an exhaustive survey of, this subject, but in any case it is a difficult task to undertake and would involve some time in carrying out. We are fully alive to the importance of collating all available information as to the experience and practice of other countries in this direction. The noble Earl will no doubt be glad to know that a certain amount of material has within the last few months been assembled by the Ministry of Agriculture as a preliminary to making an inquiry of the sort he contemplates in his Question. The Ministry are also approaching the international Institute of Agriculture at Rome, with a view to seeing how far the Institute has gone in the collection of similar material. It may be found that the ground has already been covered, or is likely to be covered, by the Institute in the near future, and if that is so it obviously would be a work of supererogation and an unnecessary expense for the Ministry to undertake the task on their own account. If, on the other hand, we find that the Institute at Rome docs not propose to proceed to a full inquiry, I can assure the noble Earl that the Ministry will pursue the investigations with a view to publishing, if practicable, a compendium of information as one of the series of economic publications which the Ministry now have in hand.
I rather presume that the noble Earl has studied the Red Book which I have in my hand, but if not, I would like to commend it to his notice, because we are given to understand that in publishing this work upon co-operative marketing of agricultural produce in England and Wales, we have presented a more useful and practical survey in relation to the subject in this country than has been achieved by any other country in the world in so short a time. The noble Earl no doubt realises as well as I do that legislative crutches alone cannot keep the agricultural co-operative movement on its feet, and that it must gain and retain its footing on its merits as a method of doing business. He referred, I noticed, to legislation on parts of this subject in certain countries in the world. Well, there is legislation existing, notably in the United States, in Canada and in South Africa, which governs the methods 748 of incorporation and internal administration of co-operative trading organisations. We, as the noble Earl has pointed out, have no special legislation relating to agricultural co-operative organisations, nor, indeed, any legislation which regulates exclusively the incorporation of co-operative organisation or seeks to give the force of law to what are known as co-operative principles, but in some countries legislation has been introduced with special reference to co-operative marketing, notably in the United States and Queensland, and this deals with such questions as the grading and standardisation of supplies as well as the application and forms of membership contracts. On that particular subject I do not know that I can usefully say any more.
The noble Earl referred to the intended grant of £200,000 by way of loan to co-operative societies, especially those which were intended to produce bacon or act as milk depots. As a matter of fact, the Treasury were reluctant to make the full grant of £200,000 and, indeed, there has been no demand for anything like that sum up to recent months, but the sum of £50,000 has been placed in the Ministry's Estimates for the purpose of making loans for the development of forms of cooperation directed to the preparation and marketing of agricultural produce. In order that a society may be eligible for a loan the share capital paid up by the subscribers must not be less than 5s. per £1 share and the rate of interest on the paid-up share capital must be limited to 5 per cent. The noble Earl used the expression "inelastic" in reference to the terms which govern these Government loans. There arises the not unfair question as to what elasticity is desired or desirable in this connection; whether, in fact, the word "elastic" is intended to mean lack of adequate security on the part of the borrower, whether tangible or personal. The question is to what extent is the Government justified in taking a risk which an ordinary joint stock bank or a prudent commercial lender would hesitate to take. What we hold out as the great advantages of the Government loan are that it is generally a long term loan, not likely to be called in if the conditions of the loan are properly complied with, and involves a moderate and uniform rate of interest.
§ EARL DE LA WARRPerhaps I did not make myself quite clear upon that matter. When I used the word "inelastic" I meant that the present Regulations were so inelastic that a loan could not be made upon an efficient basis, and then I gave the instance of these Regulations allowing a loan to be made to an unsound society and not allowing it to be made to a sound society, because the Regulations restricted the judgment of the business men who formed the committee.
§ LORD BLEDISLOEOf course, if the noble Earl's suggestion, which he has just made, can on the facts be justified, there is certainly scope for examination of the whole practice upon which loans are made to-day. But the only case to which the noble Earl referred was that of the Lenham Co-operative Bacon Factory. As many noble Lords are no doubt aware, most of these co-operative bacon factories are experiencing considerable difficulty at the present time in carrying on their business, and the reason for the possible insolvency or bankruptcy of the concerns to which the noble Earl refers is not, as I am informed, so much if at all. the terms on which the original loan was made to these organisations by the Government, but the fact that, like many of these co-operative bacon factories to-day, they were wholly unable to obtain the right kind of pig to convert into bacon which could compete effectively with the Scandinavian product. And I take this opportunity of saying that you are expecting far too much, both of the co-operative movement and of loans made for promoting co-operation, unless high quality and uniformity of product, comparable to that of the competing article which comes from abroad, are to be found as the result of co-operative organisation. The sad fact to-day is that whereas most of the competing countries where co-operation is an effective factor produce high quality goods of uniform type, we are very far from producing articles of that description as the result of agricultural co-operative effort in this country. I may be misinformed, but I am given to understand that that is one of the reasons, if not the main reason, for the unfortunate position in which the Lenham undertaking finds itself.
Of course, as the noble Earl says, it is desirable to have business men on the 750 committees of these societies, particularly if they are trying to carry on a factory business. Unfortunately, there are only a limited number of farmers in this country who sufficiently understand the proper conduct of a factory business, or even a retail trade, to enable them to handle a large amount of Government money without the risk of some of it being wasted or misapplied. I think I have answered the noble Earl's Question. I can only assure him that so long as the money which is provided by the Government is administered or likely to be administered according to business methods and with due prudence, we, at any rate, shall not be reluctant in making advances with the approval of the Treasury for reputable undertakings which are likely to prove a commercial success.
§ VISCOUNT HALDANEMy Lords, I am far from undervaluing the keenness and earnestness of the noble Lord who has just spoken on behalf of the Government to get on with this policy of co-operation among the farmers, but he made, at the beginning of his speech, a very significant observation. He spoke, and spoke deprecatingly, of the want of keenness among the farmers themselves to take up the subject of co-operation. Now that is perfectly true. I think it has been more true in the past than it is true to-day. My information is that the younger farmers, particularly in the north, are getting more in earnest about this matter and are coming to see how much cost, not only in production but in distribution, can be saved by co-operative methods.
That being so, I am not sure that the noble Lord has quite appreciated the point which my noble friend Lord De La Warr made. The noble Earl, as I understood him, is anxious to educate the farming community of this country and for that purpose he wishes a comparison to be made public between legislation abroad in reference to agricultural co-operative societies and the legislation in this country. I am not for a moment saying that the noble Lord has not got on perhaps as far as agricultural opinion will let him at this moment, but I am very anxious to press this point, that it is really part of the business of the Government to educate and lead opinion 751 in these matters, and the purpose of the Question is just as much to educate as to get things done at the present moment. For myself I should like to see a clear and simple account of the legislative measures which prevail in Denmark for dealing with this subject, and I should like to know what is being done in the States of the United States, where the conditions probably differ very much in the various States. I should like to know about the State of Wisconsin, for instance, where these things have been carried very far, and I should like to know very much what was done in the past in Germany, and what is still being done to-day. There are other cases of that kind, and, if it were possible for the noble Lord to give us a conspectus of these things, and then a conspectus of what we have in this country to compare with them, I think we should have gone a long way towards attaining the legitimate purpose of my noble friend's Question.
I have risen not for the purpose of making any criticism on the zeal of the noble Lord who has just spoken, because his zeal is very great, but for that of drawing attention to the truth with which he started—namely, that above all we have got to educate the farming community in this country. The only way to educate them is to spread knowledge, and I think, even if they do not assent to the foreign methods which are set out in such a conspectus, at least public opinion will learn what these methods mean, and we shall got on faster than we have done hitherto.
§ LORD BLEDISLOEI should like to assure the noble and learned Viscount that we will do our best to present such a conspectus as he has asked for. It is difficult to obtain the material in any thing like a comprehensive form, but if the noble and learned Viscount will be satisfied with such material as we are able to obtain from Denmark, which I think would be easy to obtain, from Wisconsin and other sources which he has mentioned—
§ VISCOUNT HALDANEIncluding Germany.
§ LORD BLEDISLOE—including Germany, although Germany is a little more difficult, but we will see what we can do— 752 we, no doubt, should be able to present to him something like a conspectus. It will not be comprehensive, but at least it will be instructive.