HORTICULTURAL PRODUCE (SALES ON COMMISSION) BILL. [H.L.] (Hansard, 20 July 1926)

§ THE PARLIAMENTARY SECRETARY OF THE MINISTRY OF AGRICULTURE AND FISHERIES (LORD BLEDISLOE)
My Lords, I beg to move that this Bill be now read a second time. It has been prepared as the result of certain recommendations which were made in the Interim Report on Fruit and Vegetables of the Departmental Committee which was presided over by my noble friend Lord Linlithgow in the year 1923. That Report endorsed and emphasised a view that was expressed in the Fourth Report of the Departmental Committee of the Board of Trade on Wholesale Markets, which was issued in 1921, that the methods adopted by commission salesmen when rendering sales accounts to growers of fruit and vegetables in respect of horticultural produce were unsatisfactory, as the sales accounts did not show in any detail the deductions made by the commission salesmen from the wholesale prices. The result is that the grower has been unable to dissect the deductions which were made in respect of transport charges, the cost of carriage, empties, market tolls and other matters, as well as commission, and he has been unable, therefore, to satisfy himself whether the price actually paid was fair and reasonable. In some instances, indeed, it is the practice to furnish him only with a net return, the actual selling price of his produce not being intimated to him at all.
Perhaps your Lordships will allow me to refer to two paragraphs in the Linlithgow Report in support of this Bill. Referring to what is called the practice of "averaging returns" on the part of commission salesmen, the Departmental Committee, in paragraphs 116 and 117, say this:— This practice consists in returning to all consignors, in any one day, the same price for any one quality of produce sold, instead of the actual price realised by each individual consignment. … Reputable firms deny that the practice exists, but there is reason to suppose that, taking the trade as a whole, it is not infrequent. It is certainly illegal. Every grower is entitled to receive the actual price which his produce realises, less the expenses of sale. Another practice is that of returning to the grower lower prices than those 82 actually realised. We cannot too strongly condemn this practice. It is dishonest. Growers are legally entitled to know, upon demand, the name of the buyer of their goods, and a more extensive use of their rights in this respect would enable them to exercise some measure of control over commission salesmen, though it is naturally difficult for the grower to check any state-merits made by the salesman. So impressed were the Linlithgow Committee with the disadvantage under which growers laboured through this procedure that they recommended that all commission salesmen in the wholesale fruit and vegetable markets should be licensed, such licences to be issued only under certain conditions governing commission charges and business methods.
The Ministry of Agriculture have very carefully considered this proposal and have found that the difficulties in the way of its adoption are very great. We hope, however, to achieve the object which the Linlithgow Committee had in view by a somewhat different method, which is embodied in this Bill, which will be less unpopular with the trade and which involves no Government control. The Bill provides that salesmen who sell horticultural produce on commission must keep records of the names of all purchasers and of the prices paid by each, and they must render accounts to the consignor showing the actual price paid for the goods, and where there is any variation in price, the number, weight or quantity sold at each price. The accounts must also contain details of charges for commission and for services rendered, and also all amounts paid by the salesman on behalf of the consignor in connection with the sale. If any goods consigned for sale on commission are in fact bought by, or on behalf of, the salesmen, that fact also must be stated in the account.
In support of the clause dealing with that matter may I refer your Lordships to paragraph 118 of the Linlithgow Committee's Report, which says:— It has been represented to us that commission salesmen, when prices are rising, sometimes act as merchants, buying and selling on their own account. In practice this operates in the same manner as the making of false returns of prices in account sales. It is illegal for a commission salesman to sell to himself goods he handles on account of a principal. The method adopted is said to be for the salesman to hold the produce pending a rise, the price returned to the grower being the price ruling earlier in the day. It has been suggested to us 83 that salesmen should be required to state clearly on each sales account whether they have acted in the capacity of commission salesmen or merchants, and with this proposal we are in agreement. That is the other main clause of the Bill and that paragraph is, I submit, a sufficient justification. If the salesman fails to comply with the requirements of the Bill, or delivers an account which is false in any material particular, he is liable on summary conviction to a fine not exceeding £20 in the case of the first offence, or to a fine not exceeding £100 in the case of each subsequent offence. By Clause 2 a grower is enabled, if he gives written notice within ten days of the receipt of the account, to have the salesman's records examined by a duly qualified accountant nominated by him.
The provisions of the Bill do not apply to the sale of agricultural produce unless the owner or consignor sends to the salesman an advice note specifying the nature and description of the packages consigned and their contents. For the purposes of the Bill all produce consigned for sale is deemed to have been consigned for sale on commission, unless at the time of consignment the consignor sends to the salesman a direction to the contrary. Horticultural produce is defined by Clause 3 as meaning vegetables, fruit, flowers and plants.
In asking your Lordships to agree to the Second Reading of this Bill I think I ought to say that the provisions of the Bill have been discussed by the Horticultural Advisory Council of the Ministry of Agriculture, on which all sections of the industry are represented, and general agreement has been reached. The National Farmers' Union, on behalf of the growers, and the National Federation of Fruit and Potato Trades Associations, on behalf of the wholesalers, have also come to an agreement upon its main points. I think, therefore, that I may claim that the Bill is uncontroversial. I beg to move the Second Reading.

§ LORD PARMOOR
My Lords, if I understand what the noble Lord has said, and my recollection of the recommendations of the Linlithgow Committee is correct, their recommendation was that these wholesale commission agents 84 should only act as salesmen under licence. I agree that there are difficulties in the way of a provision of that kind, but what occurs to me with regard to this Bill is that if it is the desire of the grower or consignor to obtain the best terms from the commission agent, this Bill throws very considerable expense and expenditure upon the commission agent, and of course as regards these expenses the disadvantage will be as regards the ultimate price which the grower obtains. Do I understand the noble Lord to say that all parties, the commission agents as well as growers, are in favour of this Bill? If they are, then I admit it is a matter for them rather than for any outside person, or even for Lord Linlithgow's Committee. Certainly I do not propose to impede the Second Beading, although some question may arise upon the later stages upon particular clauses by which the proposals are intended to be carried out.

§ LORD BLEDISLOE
I do not know that I can say much in answer to the noble Lord, except to say that I am instructed that there has been general agreement between the various branches of the trade, including, I am told, the commission agents. I doubt very much whether, in fact, any appreciable expenses will, as a result of the passage of this Bill, be thrown upon the class to whom the noble Lord has referred. The alternative suggestion—that of issuing licences—has many defects, and the main defect is that we shall never get the trade to agree to it, and, as this is an urgent and important matter, which is operating to the great disadvantage of growers of this sort of produce, we want, if possible, to pass what, in effect, is a non-controversial measure at once. Of course, the issue of licences would also involve some cost, at least to the wholesale merchants, and, as I have already pointed out, it would involve a large measure of Government control. As far as our Party is concerned, we are very much opposed to Government control in all its forms, and we do not want to introduce it by a side-wind into this Bill.

§ THE MARQUESS OF LINCOLNSHIRE
My Lords, I cannot say that I have any great sympathy with commission agents, especially after the revelations which were made in your Lordships' House, but 85 I venture to think this is a very useful little Bill. We are grateful to His Majesty's Government for bringing it in, and I hope it will be carried into effect as speedily as possible.