§ LORD TEMPLEMORE moved, That the Order made by the Board of Trade under the Act, which was presented to this House on the 8th instant, be approved. The noble Lord said: My Lords, this Order is one which has been made by the Board of Trade under Section I of the Agricultural Marketing Act, 1933, which your Lordships will remember received the Royal Assent last July, a week or so, I think, before the Act to which I referred just now. The House will recall that the imports of bacon and hams from foreign countries have been controlled since November last year. In that month, owing to the collapse of the meat market, emergency arrangements of a voluntary kind were made for controlling the importation of all kinds of meat and, at the same time, it was arranged to reduce the importation of bacon and hams by 15 per cent. The Government announced on December 19 last that they accepted in principle the recommendations of the Reorganisation Commission for Pigs and Pig Products, generally known as the Lane-Fox Commission. The basis of those recommendations was that in order to establish the home bacon industry on a firm basis of annual contracts the total supply of bacon and hams should be limited in the first instance to a quantity of rather over 10,500,000 cwts. per annum, which was estimated to be the average supply available in the years 1925 to 1930. It was decided to continue the reduction of foreign imports gradually so as to reach the Lane-Fox level in the autumn, when the first home contracts would be made and the Ministry of Agriculture were able to obtain the assent of the bacon-exporting countries to the successive reductions.
§ The reductions were calculated on the general assumption that the home supplies would, when the contracts were made, be found to be about 2.000,000 cwts. per annum, but it is a fact, as we now well know, that when the contracts were actually made the home supply was found to be no less than 3,000,000 cwts. per annum. Clearly in these circumstances the Government had no option but to effect a corresponding reduction in the imports from foreign countries, 416 and this they accordingly endeavoured to do. Unfortunately certain countries, and in particular the country chiefly affected—namely, Denmark (who has a Treaty right to 62 per cent. of the total importation from foreign countries)—could not see their way to accept so sudden and drastic a reduction by way of voluntary agreement. It should be made clear that we have no sort of complaint against the attitude of the Danish Government who, throughout the period of restriction, have helped His Majesty's Government in every possible way. They did not, however, if one may interpret their attitude, feel that they could impose upon their farmers a reduction of this magnitude without the sanction of a compulsory Order on our side. One or two other countries also demurred and it, therefore, became necessary for the Board of Trade to exercise their powers to regulate imports under Section 1 of the Agricultural Marketing Act of the present Session, which became law on, I think, July 21 last.
§ The Order which is before your Lordships was accordingly made on the 7th November. It is of the simplest character, consisting of a Preamble, eleven clauses and a Schedule, and provides merely that as from the 1st December bacon as there defined can only be imported under licence. By Article 7 of the Order bacon is to be deemed to be imported under licence if there is produced at the time of importation a licence issued by the Board of Trade, or a certificate issued on behalf of the foreign Government to the effect that the consignment is produced in that country and forms part of the total quantity arranged to be imported from that country. The countries to which the Order applies are the eleven countries named in the Schedule, and, by Article 3, any other foreign country imports from which exceed a rate of 400 cwt. per week. The actual quantities will be fixed from time to time as required. Under the existing arrangements the total importations from foreign countries in the period from the 10th November to the 28th February will be a little over 1,900,000 cwt. This quantity is at present divided among the several countries on an agreed basis, but the allocation is provisional only and subject to further 417 discussion with the countries concerned. I therefore ask your Lordships to approve the Order which has become necessary in order to carry out the policy already approved.
§ VISCOUNT ASTOR
My Lords, I should like to make a few observations and put one or two questions with regard to this Motion. I do so particularly because, unfortunately, owing to my being in the dentist's chair, I was not able to take part in the discussion in July, when your Lordships passed the original Order which this one is intended to amend. We have just dealt with two commodities, fish and bacon. There is an essential difference in our handling of those two commodities. As regards the fishing industry, we have given protection, without insisting on putting the industry in a strait-jacket and fixing domestic prices or limiting domestic productions. So it differs essentially from this Order under the Agricultural Marketing Act.
As your Lordships may possibly he aware, I have had misgivings about the ultimate effect of some of these Orders under the Marketing Act, and I think that what has happened already in connection with the bacon scheme, and what appears to be happening in connection with the milk scheme, justifies to some extent some of the misgivings I ventured to put before your Lordships. Take, for instance, one paint brought out yesterday in another place—namely, the amount of money which under the quota scheme leaves this country and goes into the pockets of foreign producers or the pockets of shippers. Under the quota the increase in the price leaves this country, whereas if you had a straightforward tariff any increase in price which results from it would go to the Treasury and thereby benefit the consumer in this country. I notice that, speaking yesterday in another place, Mr. H. G. Williams, who is an ardent Conservative and a staunch supporter of the Government and of the Conservative Party, estimated that under the bacon scheme more than £3,000,000 sterling a year would be given 418 to foreign farmers which, under a straightforward tariff, would have come to the Treasury. I have always said that as between the two forms of Protection—Protection through a tariff and Protection through a quota—it seemed to me that Protection through a tariff, in normal conditions, when you are not dealing with depreciated currencies, was far preferable.
I think the Government have made the mistake of not beginning with established industries like livestock, but have been attempting to create almost a new industry. After all, it is almost a new industry in connection with the pig which is being created, because we are to have a very large expansion; and the result is that live-stock producers are in a worse position than ever. It would be better if you had decided to protect live-stock farming as a going concern instead of trying to create a new industry. One of the fallacies, it seems to me, is that a great deal of the scheme is based on guesswork. Consumption cannot be accurately forecasted. There are two factors to be taken into consideration—one is quality and the other is price. If quality deteriorates then it is very probable demand will also diminish, and I am not sure myself—I should like very much to know what the noble Earl representing the Ministry of Agriculture or the noble Lord representing the Board of Trade and the consumers, feel about it—I am not sure that quality will be maintained if there is this very rapid expansion in the home-made bacon industry.
There is another point and that is the effect on consumption of price. Recently, as your Lordships know, there has been a very large importation of bacon. That has been due to the fact that bacon was cheap and people were poor. They were unemployed, trade was bad, and because people were poor those with reduced income bought bacon. If you put up the price of bacon—and the object of this scheme is to put it up—too high, it does not follow that people will consume the same amount. They will change their dietary, they will turn from bacon if it is made expensive to cheaper forms of food. There are many alternatives equally nourishing that would be cheaper. So it does not at all follow that the consumption estimated under these control 419 schemes will be constant if the quality diminishes or the price increases.
This question of the cost of food, particularly essentials, is vital to an industrial country like ours, which is dependent on its export trade. Under the Danish Agreement a great deal was made of the fact that the Danes, because they were given 62 per cent, of our imports, undertook to buy large quantities of English coal. If you are going to reduce substantially the amount of bacon we get from the Danes, it seems to me obvious that they will not buy so much coal, one of our basic industries, one of our hard-hit industries in this country. I have always felt that one of the results of this bacon scheme would be to disappoint either the British farmers on the one side or the Danes on the other side. The English farmers expect a very large expansion of pig production, with a consequent reduction of our imports of Danish bacon. The Danes, on the other hand, when they gave us large orders for coal, or whatever else, contemplated that 62 per cent. of our imports would represent a large figure. It is obvious, if you are going to restrict, to take the most extreme case, 62 per cent. of nothing is worth nothing; and if you reduce the total volume of your imports very substantially, it is quite obvious that the Danes will not be able to spend so much in helping British industry, coal or whatever else it may be.
There is another point I should like to put to the noble Earl or to the noble Lord, and it is connected with the formula in the Lane-Fox scheme. As I understand it, the formula was based on the assumption that there would be sixteen pigs per sow per annum. I think the noble Earl will remember that was the figure given. I should like very much to know whether the Ministry of Agriculture agree with that figure. I hold in my hand a report issued by the University of Cambridge Department of Agriculture. I shall read only one small quotation:The records collected in the Cambridge pig recording scheme show that in well-managed herds a reasonable average in pig production is seven and a-half pigs marketed per litter, or fifteen pigs per sow, assuming two litters per annum; but in practice two litters per sow within twelve months is achieved by only 40 per cent. of the sows.420 When the ordinary number of pigs per sow is not sixteen, as the Lane-Fox Commission suggested, but something very much below that—it may be twelve, it may be ten, probably it is some figure between ten and twelve, as far as I am able to ascertain—I would like very much to know what the opinion of the noble Lord is, because obviously, if the premises are not correct, the conclusions drawn from them must be faulty.
It seems to me there are two things brought nearer as the result of this and other schemes. One is the very rapid approach of monopoly import boards, which I have always felt was the logical and inevitable sequel to quotas. I would say honestly I would prefer the two—though I think tariffs are infinitely better—but under the import board scheme consumers would be able to get a commodity imported at a cheaper price, whereas the quota commits you to buying possibly in the dearest market. I do not think it is in the interest of the consumers, and if it is not in the interest of the consumers, sooner or later you are bound to have a reaction against your agricultural policy, because the majority of voters are consumers and townsmen. The next step towards which we must be inevitably driven is control of production. In an industry such as agriculture, depending as it does upon climate and so many other factors, I think that is a very dangerous sequel. I notice that only recently one of the leading supporters of the hop scheme stated publicly that the existing hop growers now wanted power to prevent any new person starting growing hops—that is to say, they wanted to obtain for themselves a monopoly in hop production. That seems to me an inevitable sequel, and I think you will find the same thing will probably arise in connection with dairying, pigs, and other things. I am not enough of a Socialist to see that sort of result with any equanimity.
There is only one last point I would like to put to the noble Earl. As I understand it, the Government have, what I briefly call, guaranteed an overdraft of something like £500,000 in connection with bacon. The figure does not really matter, but a substantial overdraft has been guaranteed. I would like the noble Earl to tell us how it is proposed to liquidate that. As far as I can make out, that amount can only be liqui- 421 dated either by making a gift or a sort of subsidy to the industry through the Board, or by raising the retail price to the consumer, or, possibly, by lowering the contract price. I may be wrong, and I should be grateful if the noble Earl would tell us how the Government propose to deal with that. I have always attempted, when examining these schemes under the Marketing Act, to deal with them constructively and not in any carping spirit or by way of obstruction. The whole policy is so tremendously experimental that I think it is vital we should scrutinise the scheme as carefully as possible. Therefore, I apologise to your Lordships for having taken up so much time.
§ THE PARLIAMENTARY SECRETARY OF, THE MINISTRY OF AGRICULTURE AND FISHERIES (EARL DE LA WARR)
My Lords, a number of points have been brought forward by the noble Viscount, with which the noble Lord, Lord Temple-more, has asked me to try and deal. I would take the noble Viscount's last point first and answer it very briefly. With regard to this loan which has been guaranteed by the Government, it will be liquidated by menus of a levy on pigs by the Pig Board in the future—that is, providing the loan actually has to be met. But so far, while not wishing in any way to be committed to what I am saying, I think it looks at the moment as if it were quite likely that by no means all of that sum is going to be required.
Then the noble Viscount raised the question of the accuracy of our figures, and he commented on the fact that inevitably, in initiating these schemes, we must work a great deal upon guesswork. We are quite ready to admit that; in fact one reason why it is so necessary to have these schemes is that it is quite impossible at present, with our existing machinery, to attempt the planning of this industry. It is essential, if we are to attempt the planning of agriculture, that we should have these new schemes in existence before we can have any really definite information to work upon, and, therefore, I make no apology to your Lordships for the fact that whereas we budgeted for something over two million pigs we found that about three million pigs have been contracted for.
The noble Viscount also raised the vexed question, which, I think, we have 422 very often discussed before between ourselves, of the tariff versus the quota. I am quite sure the noble Viscount would not wish me to enter into all the details of that controversy once again; but there is just one aspect of that question which I would like to be allowed to deal with for a moment. Later on in his speech the noble Viscount complained that if we were going to reduce pig and bacon imports from Denmark we would inevitably lose our foreign trade with Denmark. In another portion of his speech he complained that by our system of regulating imports we found ourselves in the position of having to pay to Denmark very nearly as much money as we were paying in the past for a very much larger number of pigs. Those two facts go together. It is because of this quantitative system of the regulation of imports from Denmark and from other countries that the foreign country as well as our own country does gain from a rise in price, and Denmark, and even other foreign countries, are enabled thereby to continue to buy from this country; whereas if we had adopted the method of a tariff and made it impossible for Denmark to get any benefit from any rise in price we would have found ourselves in the position inevitably of breaking the purchasing power of Denmark and making it quite impossible for Denmark to make any purchases in this country.
The noble Viscount went on to deal with the question of prices, and said that if we raised prices unreasonably in this country we were going to make it impossible for consumers in the towns to buy the product. That is perfectly true. Any man in his senses must be prepared to recognise that fact. But what are the actual facts of the situation? Are we in fact proceeding to raise prices unreasonably What are the prices of bacon at the present moment as compared with 1930, a year in which, I think the noble Viscount would admit, bacon consumption was at a very high level, though at not quite such a high level as in 1931? But in 1931 there was not a single bacon-producing country in the world that was selling bacon at the cost of production. The reason why bacon consumption was so very high then was that bacon was being sold at knock-out prices, below replace-merit value, and if that situation had been allowed to continue it would 423 not have benefited the consumer because producers would have been driven out of production. As a matter of fact at the time when we originated this system of quota regulation Denmark had already had to reduce its pig population by no less than 20 per cent. because of the ruinous prices. The effect of that must have been a shortage that inevitably would result in a rise in prices that would have hit the consumer. The average price for 1930 was 1s. 4 .10d. To-day, even with this rise of which the noble Lord has complained, the price of bacon is 1s. 1 ¼d. per lb., so that really even at the present moment, although we have had a very considerable rise as the result of the action of the Government, the price of bacon is still 3d. a lb. lower than it was in 1930 when consumption was high.
The noble Viscount asks, how are we going to guarantee quality? I think the noble Viscount is familiar with the scheme and has seen the provisions in the scheme for encouraging the production of high-quality bacon. The Minister of Agriculture has frequently given assurances and has frequently warned the farmers that if our producers are not able to satisfy the market as to quality or as to quantity—and the Minister made this very clear as late as last night in another place—then inevitably the Government will find itself in the position of having to lift the sluices and let in a greater quantity of imports. We have realised all along that the only justification for keeping bacon or, indeed, any foodstuff out of the country, is that we can produce it satisfactorily in this country and satisfy the market both as to quality and quantity. I think I have dealt with the questions raised by the noble Viscount and I hope these answers will satisfy him and your Lordships.
§ VISCOUNT ASTOR
My Lords, may I be allowed to point out that the noble Earl has not answered my query about the formula, the number of pigs per sow? There is one other point. I would not have intervened again if he had not suggested that the price of bacon was going down. Of course, it may be going down compared with any given year, but if he will read the speech made by the head of his Department made in another place yesterday he will 424 find this is what was said by Major Elliot: "I do not suggest that rises are not taking place."
§ EARL DE LA WARR
The noble Viscount is perfectly right. I think that is clear from what I said—that, even with the existing rise, the price is still 3d. a lb. lower. I think that in saying that I made it clear that there had been, in fact, a rise during the last few weeks. On the question of the formula it is perfectly true that the figures given by the Lane-Fox Commission do not agree with the figures given by Cambridge University. Neither of those figures have anything to do with the Ministry of Agriculture, and in so far as they affect the price, then they are purely a matter for negotiation between the two Boards, the Pigs Marketing Board and the Bacon Marketing Board. Of course they do affect the cost of production; they do therefore affect the price, and so they have to be dealt with in negotiation between the two Boards.
§ On Question, Motion agreed to.