§ THE PARLIAMENTARY SECRETARY OF THE MINISTRY OF AGRICULTURE AND FISHERIES (EARL DE LA WARR)
My Lords, I beg to move, That the Special Order, as reported from the Special Orders Committee on the 19th of June last, be approved. This debate is really a very important one not merely because this Order will be of great assistance to a small but nevertheless very old and vital section of the agricultural industry, but because it is the first time that certain principles are to be applied to the marketing of agricultural produce. It is perfectly true that your Lordships—indeed, Parliament in general—have already given definite approval to these principles, but as your Lordships know there is a very big difference between the enunciation of a general principle and the application of that same principle. We deal to-day with the application of the principle which your Lordships discussed when passing the Agricultural Marketing Act, 1933. Really we should be grateful to the noble Viscount, Lord Astor, for putting down his Motion—not that I hope he is going to carry it, but because it would be most regrettable if an Order of this importance were to go through your Lordships' House without the very fullest discussion.
I only regret that the noble Viscount should apparently, judging from a letter that he has in the Press this morning, be under the misconception that the Government have not been entirely straightforward in their treatment of your Lordships' House on this subject. He tells us that we have created an inaccurate impression about an alleged unanimity among the members of the Committee set up to consider this Scheme. There never was a Committee set up to consider the principles of this Scheme. The Committee was set up in order to consider the basis on which the Scheme should be operated, and on that point 352 they achieved complete unanimity. It is quite true that the Brewers' Society have made it clear that they do not wish to be committed to complete approval of the principles of the Scheme, but we have received since Tuesday, when I read to your Lordships certain communications both from the Brewers' Society and the Hops Marketing Board, a further letter from the Brewers' Society on this point, ending as follows:I wish to assure you that the Hops Committee of the Society will do everything in their power to see that every brewer will do his part in carrying out the Agreement and so conduce to the smooth working of the new arrangement.I think your Lordships will be very glad to hear that this Scheme is to be operated with the full co-operation of both parties—the Hops Marketing Board and the Brewers' Society. I brought this question up not merely on its merits, but because the noble Viscount had accused the Government of bad faith on this point. He suggests further on in his letter that we might have informed your Lordships at an earlier stage of the letter of the brewers. We informed your Lordships of that letter at the very earliest stage possible. The only reason the noble Viscount was in a position at least to imply to your Lordships that this letter was in existence, while I at this box was denying its existence, was that he had had the good fortune to see the correspondence between the Government and the Committee, or to be aware before the Ministry of Agriculture itself was aware of the existence of this letter. I make no complaint. I think we all must be delighted when old enemies make friends, and to see the noble Viscount, Lord Astor, working in such close and happy co-operation with the Brewers' Society must indeed be a pleasure to all true Christian gentlemen.
I mentioned the fact that we had already approved the general principles of this Scheme. We have to discuss today the particular application of those principles to the marketing of hops. There are certain special features attaching to the situation with regard to hops. The noble Viscount will, with a certain amount of justification, warn your Lordships that in giving approval to this Scheme you are making a precedent that may take us very far. That is a possibility, but the day that you approved the 353 general principle and laid down the general precedent was the day on which your Lordships, passed the Marketing Act of 1933. I think the Government have shown quite clearly, in putting their policy before the country, that they are determined to treat each agricultural commodity upon its merits. Each separate scheme that has been brought before you has been on very different lines, for the simple reason that we do not intend that the manner in which we deal with one commodity should necessarily lay down the principle or the manner in which we shall deal with another. We recognise that each commodity has its separate problem.
With regard to hops, I say that there are very special features. To begin with the consumption of hops has decreased steadily, but very greatly, over the last thirty years. In 1900 there were, approximately, 50,000 acres of hops being grown in this country; to-day the figure is, approximately, 17,000 acres. That is a very peculiar position for any industry to find itself in. The most disturbing factor in the situation is that that is not due to any sudden decrease as between one year and another because of some particular happening, but is a steady decrease going on year by year and still continuing. When there is a surplus of hops there is no use to which that surplus can be put other than the brewing of beer. With milk, if you have a surplus in the liquid milk market it can be made into cheese or butter or tinned milk. Admittedly the market is not so profitable, but still milk can be diverted. Hops cannot be diverted. Nor is it found—and for a very good reason—that the presence of a. surplus with the consequent fall in the price of hops leads to their increased consumption. The ratio that the cost of hops bears to the general cost of the finished commodity, beer, is so small that it cannot have the slightest effect. It is something like half a crown on a barrel of thirty-six gallons, worth a matter of £6 or £7 in sale value. Therefore, a fall in price can make no contribution to the increase of consumption.
Thus the hop industry is in the position of being the one section of agriculture which, before the passage of the Agricultural Marketing Act, 1931, did make a real effort to organise itself on voluntary 354 lines—with what effects your Lordships are fully aware. I think the position is clear, but perhaps I might help to make it clearer if I give your Lordships an example. Let us assume that there are four growers of hops A, B, C and D. The market can absorb, we will say, thirty pockets of hops and the capacity of production of the four growers is ten pockets each. It is obvious that if all these four men grow hops to their full capacity only three-fourths of the production can be sold. Suppose these four men get together and agree to limit production. Three of them reduce their production from ten to eight but the fourth man, call him D, sees an opportunity of doing well and, instead of reducing, increases his production. Therefore we have A, B, and C producing eight pockets each and D producing, say, sixteen. They are still paid out at the rate of three-quarters. That means that A, B, and C, who adhered to the agreement, are paid on the basis of six while D is paid on the basis of twelve. What is the inevitable result? It simply comes to this: next time A, B, and C, seeing that agreements are not going to be kept, grow sixteen so that you have sixty or seventy pockets being grown and the market smashed.
That is the situation. I would be the very first to admit that some of the criticisms that I know the noble Viscount, Lord Astor, is going to make are very strong criticisms. They relate to matters on which we certainly would have been very greatly to blame if we had not considered most deeply before allowing this Scheme to go forward. I think your Lordships would like to know, and are justified in asking, what is, the alternative. It is perfectly easy to criticise any scheme that is put forward, but His Majesty's Government have not been able to see, and I am inclined to doubt whether the noble Viscount or the brewers can see, in what manner any alternative scheme is to be introduced that will meet the situation. If there is no other use for hops, if increased consumption when there is a surplus is not to be brought about by a decrease in price, what is to be done? Of course, the usual argument against the restriction of production is that what the Government ought to aim at is increased consumption—a very fair point. The Government are at the present moment preparing to spend a 355 very large sum of money on publicity for increased milk consumption, but I do not know how many of your Lordships will be prepared to advocate the spending of a similar sum of money on publicity directed towards increased consumption of beer—certainly not the noble Viscount, Lord Astor, I am quite sure.
I think another point is bound to be put. For the last two years the situation has been perfectly satisfactory. A marketing scheme has been in operation without the particular powers which are outlined in this Order and prices have been very good. It may be asked then: Why not leave well alone? It is true that there has not been in operation in the last two years any quota imposed by Government or any quota imposed by a Marketing Board; but there has been a quota in operation, the quota of the weather, and it is in consequence of that that there has been a very short crop of exceptionally good quality. Nature has put us in the position of being able to do without this power to impose a quota. But there is no reason to suppose that these conditions are going to continue, while there is every reason to believe that increased planting is taking place, and is going to take place in the future unless some steps are taken. What exactly is this quota that we are discussing? The principle is that there is to be a basic acreage quota based on the last five years—1928 to 1932. There is also to be an annual quota based on the actual demand. The way which these two quotas will operate in relation to each other is that the basic quota will really give the proportion on which the annual quota, which equals the demand, will be split up among the growers.
Proceeding from that basis two accounts will be sent to each grower, we will call them "A" and "B" accounts. The "A" account will represent the payment received for quota hops. The "B" account will represent payment for hops sold in excess of the quota. Let me be quite clear on this point. The Board have to accept all the hops and the only question which arises here is as to which shall be sold at the full market price first. When all the "A" hops—quota hops—have been disposed of, then the surplus hops can come on to the market. If the estimates of demand which are made are falsified and 356 the demand proves to have been underestimated, then it may well be that there is at least some place on the market for the non-quota hops. It is said that that is conferring a monopoly on the existing growers, and that if your Lordships confer a monopoly, you will want to know what form of protection is being given as regards other sections of the trade and as regards the public generally. The protection in the Scheme and in the Act is, first, that if the annual quotas—that is, your Lordships will remember, the demand for hops—exceed 110 per cent, of the basic quota, then a new basic quota must be allotted. The first 10 per cent, increase will be left to be absorbed by the existing growers. The existing growers have had a number of very bad years, and I think your Lordships will agree that it is only fair that the first 10 per cent, should go to them. But if the demand increases—and after all the only reason for this Scheme at all is that the demand is not there—then a new basic quota must be allotted. There is the further point that brewers are left at perfect liberty to plant themselves.
As to the question of quality, there is to be payment very strictly by grade, and the graders will be appointed on the recommendation of a joint body to which I will refer later, which is to be set up under an Agreement between the Hops Marketing Board and the Brewers' Society. Furthermore, where any producer produces in excess of his quota and consequently some of his hops are to be non-quota hops, then for the purpose of fulfilling the quota his best hops will be chosen.
Your Lordships will notice in the Scheme that it is to operate only for five years. A good deal is said on the subject of creating a monopoly in the land. Surely your Lordships will realise that a right given only for five years is not a very serious item in future land values. A man who buys land on the basis of this so-called monopoly right conferred upon the land is, in my view, a very foolish man. Moreover, the Hops Marketing Board have agreed to the proposal of the Government that during those five years a Reorganisation Commission shall be set up in order to consider the whole of the working of the Scheme, with particular reference to the amendments which we are discussing to-day, in order 357 to see how they are really working out. I think your Lordships will agree that there is tremendous public protection, and tremendous protection against this fear to which the noble Viscount gives expression in his Amendment on the subject of land monopoly. Finally, of course, there is the machinery of the Act, under which, if the Hops Marketing Board uses its powers in such a manner as to be against the public interest, the Government have the right after investigation to revoke the Scheme, have the right to let in further imports, and also have the right, if the brewers break out of their Agreement, to keep imports out. That really means that right through the working of the Scheme the Government do maintain a hold en all the key positions. But those last sanctions are very final sanctions, and I should like to make it clear that the Government are not thinking in those terms at all.
We have throughout the preparation of this Scheme made it clear that we consider that these powers must be used and this Scheme should and must be operated with the agreement of all the various bodies within the industry. Accordingly it was arranged that the Hops Marketing Board should meet the Brewers' Society with certain disinterested members, on a Committee for the discussion of the basis of an Agreement by which this Scheme could be operated between them. This is the Agreement about which there has already been some discussion between the noble Viscount, Lord Astor, and myself. It was decided to set up a Permanent Joint Committee of four representatives nominated by the Brewers' Society, four by the Hops Marketing Board and three by the Minister of Agriculture. It was agreed that the brewers should do what- they could to give certainty of market to the Hops Marketing Board by agreeing to purchase forward 66⅔ per cent, of the total annual requirement of English hops, and that provision should be made for a levy to deal with the unsold quota hops. It was agreed that the Permanent Joint Committee should be responsible for estimating the total market demand upon which the annual quota would be based. It was further agreed that they should take responsibility for the joint recommendation for appointment of graders; and, furthermore, a price was agreed 358 upon for the next five years of £9 per cwt.
Now I want to return for a moment to a point which I have already mentioned, as to whether it is considered that this Amendment is really necessary. Not only is it necessary in the opinion of His Majesty's Government but it is necessary in the opinion of the Hops Marketing Board, to the extent that, having received £15 per cwt. for their hops last year, they are prepared to enter into an agreement to-day to sell their hops for the next five years for £9 per cwt. I think we shall all agree that they have shown very great wisdom and statesmanship in taking this course, and certainly we must equally agree that it does not look as though the Hops Marketing Board are out to exploit against the community those monopoly powers which are being given them. They have shown that what they value is what the Government value and what the brewers value—namely, increased stability of the market. Increased stability of supplies, increased stability of prices, increased guarantee of quality—surely it was in order to obtain these ends that your Lordships passed the Agricultural Marketing Acts of 1931 and 1933, and personally I am inclined to agree with a letter that the National Farmers' Union have put out to-day. A Committee is considering these Amendments and the Committee felt that Lord Astor would have been in a very much stronger position to criticise had the industry under existing conditions neglected to utilise the powers already conferred on them by these Acts.
In the past the farmers have been repeatedly criticised and have been told by Parliament after Parliament and Government after Government that no Government could help them unless they helped themselves. Here is a Scheme put up to your Lordships by an almost unanimous industry, an industry composed of 1,100 men, with only 14 of that whole industry voting against the Scheme, asking your Lordships for leave to bring order and efficiency into their industry. His Majesty's Government have examined this Scheme most carefully. There has been public inquiry, there has been discussion by this Joint Provisional Committee and there has been our own Departmental examination. We are satisfied that the Scheme is necessary. We are satisfied 359 that it is conceived on right lines. Further, we are satisfied, from the terms of the Agreement with the Brewers' Society particularly, that the Scheme is going to be operated in a manner which will be to the advantage, not only of the industry, but of the public as a whole. My Lords, we are very fortunate in making this experiment. We are dealing with a comparatively small market. We have got, I think, a particularly far-seeing Board. We have got a processing industry which the letter from the Brewers' Society read to your Lordships to-day shows clearly is willing to cooperate, and I suggest to your Lordships that this is an attempt, the most complete attempt, which has yet been made really to take control and to plan a market. The Hops Marketing Board are taking a very bold step in thus making themselves pioneers of a great experiment and, speaking on behalf of the Government, I should like to say that we hope your Lordships will give them not only your support, but every encouragement you can, in carrying through this great task. I beg to move.
§ Moved, That the Special Order, as reported from the Special Orders Committee on the 19th of June last, be approved.—(Earl De La Warr.)
§ VISCOUNT ASTOR had given Notice that, on the Motion for the affirmative Resolution, he would move, That this House declines to approve a Scheme which for five years would establish a monopoly; would deprive many of their property without compensation; and would create a precedent leading to stagnation in agriculture. The noble Viscount said: My Lords, I beg to move the Motion down on the Order Paper in my name. I understand that next week we are going to have before us two schemes dealing with other commodities—namely, milk and sugar. If we were discussing milk I might be considered to be interested as a producer. If we were discussing sugar, I might be considered to be prejudiced as a great consumer of sweet things. We are, however, now concerned with hops, and I need not remind your Lordships that I have no interest either as a producer or as a consumer. A few years ago I knew very little about hops. I was first induced to take an interest in hops by one of the most successful hop-growers, the 360 late Sir Walter Berry. It was he who asked me to take an interest in the hop industry in this House, and since then I have been very largely guided and influenced, and if I might say so coached, by dispossessed members of the hop industry.
§ I am very glad that the noble Earl welcomes discussion here, to-day, because I have noticed that the Government, when they have put down this question for discussion in another place, have invariably put it down for discussion after 11 p.m., when there is not usually-time for a full and complete discussion. To-day we shall be discussing, I hope your Lordships will bear in mind, two distinct points, one the Scheme and the other the White Paper. The Scheme is an Amendment of the original Hops Marketing Scheme which was passed in 1932. My Amendment deals in fact only with the Amending Scheme, which was introduced as far back as December, 1933. Then, in addition to that, there is what is called the White Paper. It deals with an entirely subsidiary matter; what I might call the trade bargain between the producers and the processors, the brewers, dealing with hops. Although we are aware of the existence of the White Paper it is not actually before us this afternoon. I try to make that clear, because the public are apt to confuse the White Paper proposals with the Amending Scheme.
§ By the Scheme which we passed in 1932 we established monopoly control over the sale of hops. The noble Lords on the Labour Benches are in favour of control, and I would point out that whether or not this Amending Scheme is adopted we have established monopoly control over the sale of hops, and that holds good even if the Amending Scheme is withdrawn. The Hops Board in 1932 disposed of hops at the price, I think, of £8 5s., which was generally accepted by hop growers, and newspapers in the hop-growing districts, as being remunerative and profitable for hop growers. I understand that during the period of hop control £7 16s. was the average price and that that was considered profitable at that time. Then, in 1933, the price of hops was raised from £8 5s. to £15, owing to world shortage and increased demand from America. The noble Earl said that he favoured schemes of control because, he said, 361 it gave increased stability of price, but I suggest that a jump from £8 5s. to £15 is not stability of price, and if you are going to be guided by world prices you do not require monopoly control over sales. I fully realise there was very great temptation to the Hops Marketing Board to profit by soaring world prices, but it is inconsistent with the avowed policy of the Board, which is to have stability of price. I understand the Hops Marketing Board claim merit for not having charged the brewers £20, and if they had done so the brewers would have had to pay it, but if you take 100 per cent, there is not much merit in not asking for 200 per cent.
§ So much for the past. We now have before us this Amending Scheme. The Amending Scheme is intended to give to existing hop growers a complete and absolute monopoly of the market, plus an increase of 10 per cent. It is to prevent new people coming into the hop industry as hop growers, and—and it is very largely on behalf of these men that I speak—it is intended to prevent the return to the hop-growing industry of any hop growers who, in response to the appeal made to them by their leaders and by the Hop Controller, reduced their acreage or went out of the industry. At the present moment they find themselves completely frozen out. But prosperity has returned to the industry, and now the object of this Amending Scheme is to prevent those people, who carried out the instructions and demands of their leaders, from getting any share in the return of prosperity. If the Hops Board had announced at the end of last season that they would go back to a price of £8 5s., which had been satisfactory in 1932—if they had even announced that their price was going to be somewhere round about £9 or under—I do not believe there would have been any fear of a rush of new entrants into the industry. It was only a suspicion among the hop growers that the Hops Board meant to charge the growers more than £9—£10, £ll, perhaps even £15 again—that made the existing hop growers fear, not unnaturally, that other hop growers would want to come in and join in the boom. If there had not been that prospect of high prices I do not believe that this Amending Scheme would have been necessary.362
May I very briefly put before your Lordships the chief objections to the Amending Scheme? The first objection is, us I indicated just now, that there are some hop growers who, in response to the appeal of their leaders and of the Hop Controller, very largely reduced their hop acreage, or even temporarily went out of the business, and now they cannot come back. I have quoted publicly, and I will quote again, the figures showing the loss involved in actual property in a case which has been brought to my notice. A hop grower whom I know bought a farm for over £7,000. He grubbed up his hops. His farm now is valued at £4,000, and he cannot come back into the hop industry if this Amending Scheme goes through. That is to say, the effect of this Scheme would be to deprive him of £3,000 in capital value. I suggest that that is not fair. He gets no compensation. There is another man who reduced his acreage. He has now got an uneconomic unit, an uneconomic hop garden. He is not allowed, if this Scheme goes through, to increase his acreage so as to make it an economic unit. He has no redress, and he gets no compensation. I suggest that the cases of those two types of hop growers are deserving of better treatment than they would get under this Scheme if it goes through. I have received a considerable number of letters from hop merchants. I will merely read a brief extract from one which is typical:
If the Scheme passes it will mean ruination for hundreds of men employed by the hop merchants.
They evidently feel it very strongly. That is merely typical of many letters which I have received.
§ There is another point. I have dealt with the grievances of the hop growers who are to be deprived of their rights and of their property. The present hop growers are to be guaranteed by this Scheme their output during the datum period of 1928 to 1932. That is an entirely arbitrary figure. If a different datum period had been adopted the existing hop growers would have different quotas. Any hop grower who increased his acreage in 1931 has a bigger quota than he would have had if the datum period had been 1928 to 1930. The dispossessed hop growers feel very strongly that it is unfair that hop growers who did not make an adequate reduction in the size of their hop gardens, when they were asked to 363 do so by their leaders, should have this unfair advantage, as they consider it, no doubt for the next five years, with the quotas with which mere luck has presented them. Assuming that the farm to which I referred just now, worth £7,000, had not been grubbed up, and that it had continued under hops: if this Scheme goes through, that farm would have been worth anything over £10,000. That is to say, we should be presenting that fortunate man with an increment of several thousands of pounds, while at the same time depriving other hop growers in the neighbourhood of similar large amounts. I suggest that that is creating an actual injustice, and I know that it rankles very seriously among hop growers.
§ Then there is the obvious point referred to by the noble Earl of the risk of having a monopoly. He says there is a monopoly for only five years. But if you guarantee the output of individuals for five years it is going to be very difficult to change their quotas at the end of five years. If I had a big quota now, and during the next five years I put up new buildings, it is going to be very difficult to reduce my quota, at the end of five years. And, if anybody decides that my quota is to be reduced, who is to-decide how much is to be taken from me and to whom it is to be given? Is it to be given to Mr. A, Mr. B, or Mr. C? Who is going to have that invidious task? You may call it only five years; in fact I think you are creating something much nearer a permanent endowment.
§ Further, there is the other point which I have put down in my Amendment—namely, the creation of stagnation in industry. You are going to stop internal competition as between grower and grower. The man with a big quota is to be guaranteed his quota during the next five years, the man with a small quota is to be restricted to the small quota. The one man cannot increase his quota, the other man need fear no competition. I have used words which are not my own, which were put forward in a letter to The Times by a very distinguished agriculturist, Dr. Orwin, head of the Agricultural Economics Research Institute at Oxford. It is all very well to say that you are going to have progress. If you prevent new men and new methods and new land being employed 364 you may indeed be preventing progress. Nobody knows when progress will come to agriculture or to any other industry. We have recently seen a complete revolution in milk production. There is no reason why you should not have an equally drastic revolution and improvement in hop growing. This Scheme prevents progress, and I suggest that when the nation is trying to help agriculture it should do nothing to stereotype a great industry like that. Then there is the other point—namely, the danger of creating a precedent. You may say it does not matter what you do with hops, but it may be very dangerous if the same powers are going to be used later on for milk, bacon, or what I may call the necessaries or essentials of life.
§ These are the main criticisms which are directed against the Amending Scheme. Let me return to the White Paper, the Report of the Provisional Committee, composed of brewers, hop growers and independents. When I first saw that that Committee had been set up, I assumed—and many others did too—that because of the criticism directed against the Amending Scheme the Government had decided to set up an impartial Committee to see whether it was possible to devise a better scheme. It was only careful study of the terms of reference that made one realise that that Provisional Committee was specifically precluded from discussing the merits or demerits of the Amending Scheme, that its terms of reference limited it to discussing supplementary points—for example, the price agreements which have been indicated. I am going to mention only three points in this White Paper. One is that in future the basis which is to be followed by the Hops Board is cost of production plus fair profit. That is to say, it rules out soaring prices like £15 or that sort of thing, fixed on world prices. The next point is that the maximum average price is to be £9; and the third point—a point which I commend to noble Lords on the Labour Benches—is that the net profits to hop growers are to be 20 per cent.
§ That is very interesting—the net profits are to be 20 per cent. Cost of production is to include interest on capital employed and remuneration to the producer as manager of the concern, and profit is only to be calculated after those two items have been taken as costs of produc- 365 tion. And the White Paper recommends that the figure of 20 per cent, be adhered to in the future. If any noble Lord is going to speak from the Labour Benches in support of that, I invite him to come down to Plymouth during the next Election. If the Labour policy is going to be, when they fix prices, to guarantee to the producers a minimum net profit of 20 per cent—if they do that in the case of hops, why not also in the case of milk products and other things?—I can only say that any Labour member who conies down to Plymouth during the next Election will be a tremendous help to us if he will visit my wife's constituency. After all this question of prices is really in a. way a domestic one as between the brewers and the processors.
§ What is the position and what are we to do? Very likely we may hear to-day appeals from noble Lord? from Kent telling us of the plight of the hop industry. The hop industry had a bad time in the past. So had the cotton industry and the coal mining industry. I grant that absolutely. But the hop industry has not done badly recently. It had a good profit in 1932, it had what I may call a stupendous profit in 1933, and it is going to have a net 20 per cent, profit for each of the next five years. But I do not want to discuss that. What I do suggest is that the hop growers ought not to take up a dog-in-the-manger attitude. They ought to consider the hop growers who reduced their acreage, and they ought somehow or other to allow these dispossessed hop growers to share the period of prosperity. I admit that the hop industry has had a bad time, but when prosperity comes I suggest that the men who through sheer luck are now saddled with small quotas ought not to be kept out. I suggest that they ought to be allowed to share in the better times.
§ The noble Earl made a great deal of the Agreement arrived at between the brewers and the growers. Of course the ring of hop growers like it. They are going to be given a monopoly for live years. Of course the men with big quotas like this Agreement. The other party to the Agreement—the brewers, the processors—are satisfied also; they are now inside the ring. Recently the noble Earl read out the letter which had been sent 366 by the acting Chairman of the Hops Board. There was one sentence in that letter that took my fancy. It said that the brewers in Kent would work the new arrangement to the mutual advantage of all parties concerned. The brewers realise they are now inside the ring with the hop growers. I have spent a great deal of time in my public life trying to improve the quality of milk. There are many of your Lordships who have been keener on trying to improve the quality of the product of hops.
§ This White Paper is a very interesting document. The brewers have agreed to buy two-thirds of the hops grown, regardless of quality, and to pay an average of £9 for them, and to take over the other one-third roughly at a valuation; and the imports of hops are to be restricted to 15 per cent., and no more, of the brewers' requirements—that is to say, if the hops are bad in any year there will be no better hops to be provided from overseas. It is the consumer who is going to suffer. Of course the brewers are satisfied. The person who has the right to be dissatisfied is the person who has to drink the beer made with hops produced in a year when the quality is less good than it usually is. So when we hear about this Agreement let us realise that it is what I call, for short, the ring—the growers and the brewers, now inside— who are satisfied because all of them have a good profit. The hop growers are going to have a minimum profit of 20 per cent.; I do not know what the brewers are going to make, but anyway it will be satisfactory to them. I suggest this point to your Lordships. Next I appeal particularly to the noble Lords on my left. I have heard many speeches here telling us of the terrible things that will happen when Sir Stafford Cripps and his friends come in and what they will do in the way of taking property away without compensation. Sir Stafford Cripps cannot do anything worse than is being proposed in this Scheme whereby these unfortunate hop growers who reduced their acreage in response to their leaders are now to be left out in the cold without compensation.
§ Now I have finished. Let me just repeat, there are two documents. There is the White Paper, which is a price agreement, and on that I suggest that the mere fact that two parties, producers and processors, have; come to an agreement which gives them a lucrative monopoly is 367 no reason why we should feel committed to implementing their bargain. As to the Scheme the fundamental objection still stands. Reference has been made to the attitude of the Provisional Committee. The Provisional Committee, the noble Earl admitted, were not asked to report on the merits or demerits of this Scheme, but although they were not asked to do that a minority of them, four of them, have already indicated their dissent. I have studied this White Paper very carefully, and I cannot find anything in it that indicates that the independent members of the Provisional Committee have expressed any approval of the main Scheme. It is conceivable that if they had been asked to express their judgment on the Scheme now before your Lordships the dissenting minority might not have been four, it might have been a dissenting majority; but there is nothing in this document that indicates that the minority is restricted to four.
§ I never like to criticise without suggesting an alternative. The noble Earl suggested that I ought, if I criticised the Scheme, to offer an alternative. Dr. Orwin has written a letter to The Times, and has suggested two alternatives, one based on the analogy of the wheat quota and the other based on the analogy of the Potato Scheme. I am not going to go into these in detail now, but there you have a recognised agricultural authority, an economist, who thinks he sees two alternatives which in his opinion would be better for the industry. I agree with him that either of them would be fairer to the men in the industry. If you were to adopt either of these alternatives you would give to the existing men in the hop industry a preference but not a monopoly, and I suggest that that would be better. You would have competition and initiative instead of stereotyped stagnation in the industry, and you would not be depriving any one of the value of his property as is now being done.
§ There is another suggestion I want to put which has not been made publicly before but which I place seriously before the noble Earl. It was suggested to me by one of those hop growers with whom I have been in contact and who feel aggrieved. He suggests that those hop growers who are going to benefit by this Scheme should pay something into a compensation pool and that out of that pool compensation should be paid to those 368 men who have gone out of business, or who have made very big reductions in their hop acreages in response to the appeals of the leaders of the hop industry and the Hop Controller. It does seem to me that that would be a perfectly reasonable and fair proposal. Here you are going to give vast profits to hop growers inside the ring. Why should they not be asked to pay a levy into a compensation pool and the money so raised be used for compensating those who are less fortunately situated through no fault of their own?
§ Owing to our procedure I have had to put down a Motion for the rejection of the Amending Scheme. I would much rather have been able to put before your Lordships a Motion for the Amendment of it. What I do suggest, if there is anything in the arguments and the criticism I venture to make, is that the present Agreement should be limited, not to five years but to one year, that the Government should set up a Committee to see if there is anything in the two alternatives which have been put before the country and your Lordships' House by Professor Orwin. If they will not agree to that, I suggest that the Government ought to consider the question of a compensation pool which I have suggested and which, I believe, would very largely remove the grievance of those hop growers on whose behalf I have been speaking to-day. I apologise to your Lordships for having taken up so much time in discussing this question. It is a relatively unimportant crop that we are dealing with, but I venture to suggest that there are big-principles involved, and that if this Scheme does go through in its present form a real injustice will have been done to deserving people.
Leave out all words after ("That") and insert ("this House declines to approve a scheme which for five years would establish a monopoly; would deprive many of their property without compensation; and would create a precedent leading to stagnation in agriculture").—(Viscount Astor.)
THE MARQUESS OF LOTHIAN
My Lords, in rising to address your Lordships I do so by courtesy of the noble Lord on the Labour Benches, as unfortunately I have to leave this House before very long. I am afraid I cannot claim anything like the expert knowledge 369 on the subject of hops possessed by the noble Viscount who has just sat down, but I think I can venture to tell your Lordships that there is evidence of very considerable disquiet about the merits of this particular Scheme. I am not going to argue on the general merits or demerits of the marketing proposals of the Government as a whole. I wish to confine my remarks solely to the details of this particular Scheme. I was under the impression that when the earlier objections to the Scheme were, put forward and a Committee of Inquiry was set up to investigate it, that Committee was going to examine the real merits of the Scheme. So far as I can make out from reading their Report, all that the members of the Committee did, in fact, was simply to try and bring about an Agreement between two sets of monopolists, the brewers on the one hand, who are in fact sole buyers of hops, and the Hops Marketing Board, on the other hand, which is simply the representative of the registered producers of hops. The Committee were solely concerned with trying to bring about an Agreement between those two sets of monopolists.
The question I wish to submit to your Lordships to-night is, whether the State is entitled first of all to create this extraordinary monopoly, and then to give it such very exceptional privileges, especially when I suggest, as the noble Viscount who has just sat down has done, that in that process they are going to inflict very grave injustice on quite a large number of individuals. It has been tradition in this country that State-created monopolies are always dangerous. It has been the experience that where you create monopolies you are driven inevitably to make those monopolies Government monopolies. I think this Scheme, in the first place, is going to lend itself to very damaging criticism, and lead to very strong arguments against the kind of policy to which I strongly object, and which some noble Lords who sit on my immediate left are endeavouring to induce this country to adopt. But as to this monopoly, I think a certain amount of misunderstanding is created by the constant use of the words Hops Marketing Board. To the ordinary man's mind they seem to imply that this is a Government body—a body in which the Government have some direct 370 interest. It is nothing of the kind. It is purely a board of directors—that is what it is in fact—for those who are growing hops. It is a body that allots basic quotas on certain lines laid down in the Scheme, regulates seasonal quotas and adjusts the price. There is a clause in the Scheme under which in those respects, in the event of a dispute between individual producers and the Board, an arbitrator may be appointed to settle the question. That is the remedy as between the registered producers.
Now the members of the Board have two further functions. They have to decide in the first place who is a producer in respect of the years 1928–1932, and what the value of his production in those years was, in order that they may allot to him a basic quota. That is a very grave power. It is precisely the power to which attention was called by the noble Viscount who has just sat down. It puts at a disadvantage those growers who, in response to appeals, or for other reasons, reduced their production. Then look at the further power. I particularly ask the attention of noble Lords and members of the Government to this point. What happens when the demand rises above 10 per cent., and when it is the business of the Hops Marketing Board to allot additional quotas? They are then told that they must publish a notice, in such manner as they think best—this is the monopoly board—adapted to bring it to the notice of persons concerned. Applications are then receivable, and, in selecting which application shall be acceded to and to what extent, the Board shall give preference so far as it is practicable to those who undertake to make the highest payments.
That is a principle, it seems to me, which has never been adopted in this country before. I can understand an open auction at which the thing sold goes to the highest bidder, but to allow producers, apparently in secret, to receive applications for what is admittedly an extremely profitable monopoly, and then to allot as they think best, seems to me a proceeding which lends itself to every kind of abuse, and to introduce into this Scheme the possibility of charges of corruption and charges of favouritism which, even if they are not wholly justified, will cause very great disquiet in the country and very grave resentment among hop growers. It seems to me that 371 the case for consideration and re-consideration of the Scheme is made out. On its fundamental merits it has not been considered at an impartial inquiry. The so-called impartial inquiry was concerned with negotiating an Agreement between two sets of monopolists. It is the other side of the Scheme to which I think attention ought to be directed. Therefore I invite your Lordships to support the general thesis put forward by the noble Viscount who has just spoken.
He made various suggestions. He said there were alternative schemes. I am not sufficiently an expert to say whether alternative schemes are possible or not, but Professor Orwin is certainly a great authority, and the Wheat Scheme and the Potato Scheme have not this particular demerit of creating a sole monopoly board possessed of these very formidable powers. The Potato Scheme attempts to regulate production by imposing a fine of £5 per acre on new-producers. I venture to think that if this Scheme were examined you would find if you tried to apply the Potato Scheme to hops that a fine, not of £5, but of £50 or £100 would be needed to prevent new producers coming into the field, which is an indication of the immense privileges which are being given to a very small body of producers by this Scheme. Therefore, I ask your Lordships to support the criticisms that have been made and invite the Government seriously to reconsider the Scheme.
My Lords, we do not want to intervene in the disagreement between the noble Viscount, Lord Astor, and the Government on a question of hops. We only want to examine the merits of the Scheme put forward by the Government. I do not speak as a producer of hops and my consumption of hops represents, I understand, rather less than one-tenth of a penny per glass of beer which I drink, which does not amount to a very large sum in the course of the year. Therefore I hope I can examine the matter from a purely impartial point of view and see to what extent the Scheme falls in with the general policy of the Party I represent. I think that there may be details in the Scheme which may cause injustice to certain producers, as the noble Viscount, Lord Astor, who was supported by the noble Marquess, Lord Lothian, has 372 pointed out, and I think there are details which are not altogether desirable; but in broad principle I believe that the Scheme is one which is well worth the support of your Lordships' House and, broadly speaking, is well worth the support of the Party I represent.
It will be remembered that it is just two years since a debate took place here on the original Marketing Scheme. That Marketing Scheme, which was debated on July 6, 1032, was admitted by the noble Earl, Lord De La Warr, to have been produced in a great hurry. It originally contained a quota scheme of the type which is included in the present Amending Scheme. That was only dropped because of certain disagreements and it was dropped, I think I am right in saying, unwillingly by the Government, because they were pretty certain that the Scheme would not work perfectly without some form of quota restriction. When I spoke on that occasion I said that some form of control of imports would be needed to make the Scheme work and I remember how annoyed by that suggestion was the noble Viscount, Lord Astor. I have refreshed my memory as to the remarks I made on that occasion. I suggested that the Scheme would not work without some form of control of imports being applied. The present amending measure is in our idea exactly the right way to deal with schemes of this experimental type. A Scheme is started; you try it out, and just in so far as it is found a year or two later not to be a complete success you amend it by plans based on the experience of those two years. That seems to me an admirable way of dealing with this sort of experimental legislation.
I support the Amending Scheme on behalf of the Party for which I speak only in so far as it is in agreement with the agricultural policy of that Party. In our agricultural policy we say with regard to fruit and vegetables:Wherever mutual organisations of producers can deal with their requirements and those of consumers in practical and effective ways, the Labour movement will seek to use the powers of the State to assist and support them.We believe that that is what this Scheme is doing. I know there are dangers and I am quite aware that some members of my Party do not believe that this represents an application of that principle. I 373 have even heard it described as a measure of Fascism which the Government are being asked by a scheming Minister of Agriculture to support without knowing what they are doing. I confess I do not see it in that light. I may be wrong. The noble Earl may wear a black shirt like the noble Marquess, Lord Salisbury, who we were told a short time ago wore a black shirt under his waistcoat. But I do not see this measure in that light, and I only want to consider the measure as I see it and support it along those lines.
We believe that it is a definite improvement of the existing Scheme and I want to discuss for two or three minutes the reasons why we believe it is an improvement. First of all, I believe very strongly in the control of imports in connection with this Marketing Scheme. Here again let me quote the policy of the Labour Party. We say:Co-operation among British farmers can only achieve partial results in oases …. where the market is dominated by imported supplies. It is necessary in order to achieve a steady price that the import of such commodities should be carefully controlled. Hence the proposal of import boards.This Scheme, according to paragraph 18 of the Report, proposes to use the control of imports for the purpose in the first place of compensating for any short yield in hop production in the country. Secondly, it proposes to use the variation in imports to prevent deterioration of quality. That is clearly laid down in both the Report and the Scheme. Thirdly, it proposes to use the variation in imports—the opening or closing of the sluice gate of imports—for the purpose of forcing off the market bad quality hops or hops of an undesirable quality produced in this country. The proposal definitely allows elasticity and variation in the import of hops.
The noble Viscount, Lord Astor, suggested that there was a definite limit of 15 per cent., but I venture to think that if he read the proposals more carefully he would see that there is wide power of variation in that 15 per cent. Regulation of production by quotas is not, of course, a perfect method, but it does apply what we like to call a five-year-plan to hops. That naturally secures our general support, because we believe that all production has to be planned if it is to be successful and adequate. I do not 374 think that the price is so unfair as the noble Viscount, Lord Astor, suggests.
§ LORD MARLEY
Yes, but it is based on 20 per cent, profit. I am rather inclined to accept his invitation to come down to Plymouth and give my reasons for my support of this. The reasons are very clearly given in the Report of the Commission of Inquiry. I do not think it is so unfair. In any case it can very easily be modified in the future by a Government of a different complexion, and I think it presents no insuperable difficulty. But what is of more importance is the question of stability of price. We know that the question of price is only a quarrel between Lord Astor's friends the brewers on the one hand and the producers on the other. This question of profit is what affects the price. The noble Viscount says that profit does not affect the price. That is a suggestion which is new to me. I wish I were in large-scale production, and could hold that desirable economic belief. I think it does affect it and I think the advantage of the modifications of the Scheme is that by the use of quotas and import boards we are going to have stability of prices. We have not had that in the past.
I happen to have here particulars of the variations in the price of home-produced hops in the last few years. During the last five years the price has varied from £3 15s. per cwt. up to £15 1s. 8d. per cwt., simply because the Scheme did not contain a provision for fixing a reasonable price. It gives of course a price much less than the £15 1s. 8d. of last year, but it does give a certain income to the growers which on an average may be 20 per cent, of profit, but may be more or less than that according to the yield and value of their crop. It is also used so that the best and most suitable crops will be encouraged. It is only an average price, and you may very well get a very much better price—and indeed the Board lay down that they will definitely do this— for hops that are desired, which are suitable and of better quality.
In that connection the Report, on page 9, says this:In general it is desirable that the price scale should be so arranged as to encourage 375 the production of those varieties and grades of hops which are most in demand.Certain noble Lords have suggested that there is not correspondence between the Report and the actual Scheme; but the actual Scheme says the same thing:… in selecting the hops which are to be treated as quota hops, the hops haying the greatest value shall he selected, irrespective of where they were produced.That means that this variation in the average price can be used to secure the production of the best quality hops and not those of poor quality. Quality is safeguarded because you are going to have the producers competing amongst themselves for the higher prices of hops. Aided by the use of the variation in imports, you are going to have quality secured by the fact that the brewers need take only two-thirds of their estimated requirements, and you are going to have a provision for arbitration in case of bad quality. I think that the fears of the noble Viscount, Lord Astor, are really fears which do not interest our Party very much because they are quarrels between one set of landlords and another set of landlords, and I do not think that we worry much about how they work it out themselves. At the same time I think his idea of a compensation pool might get rid of some of the injustices which undoubtedly exist, and I hope very much that the noble Earl, Lord De La Warr, will induce the Government to consider that suggestion.
There is only one further point that I want to make. The noble Viscount quoted from a letter in The Times from Dr. Orwin. That letter was written before the publication of this Scheme, and I believe that Dr. Orwin was really under two misapprehensions when he wrote that letter. I read it very carefully. He first of all claimed that competition was going to be eliminated. Now that is really not the case as I see it. or I certainly would not be supporting this Scheme. Competition is going to continue for the reasons which I have given. I may be wrong, but that is as I see it. Secondly, he said that it was going to secure a profit to the inefficient producer. That again, I think, is not the fact, because the inefficient producer, as will be seen when one reads the Scheme, will get a much lower price and will therefore be induced to become more efficient both in the yield per acre and 376 in the quality of the hops which he grows—the quality required for the consumers. We would not give any support to this Scheme if it were applied to other crops, because we feel that in all these control boards the consumers must be fully and adequately represented. In this case the consumers are the brewers and no one else, and the brewers are fully represented. Therefore we think that as far as hops are concerned—
§ VISCOUNT ASTOR
I do not want to interrupt the noble Lord, but the brewers are processors. They are not given representation on the Consumers' Council which is set up under the Marketing Act.
§ LOKD MARLEY
No, but they are given representation by this Scheme as the sole purchasers of the hop crop. No one buys hops except the brewers. It is a matter of opinion, but if I am wrong in this then certainly when it comes to the consideration of Boards for meat or milk or other products I would not accept this Scheme, because in those cases the consumers are all the people like ourselves, and they have got to be adequately represented. In this particular Scheme applying to a peculiar crop, hops, I believe it to be reasonably suitable. Without, then, committing ourselves to support of every detail of the Scheme, and committing my Party only to support the Scheme in so far as it agrees with the agricultural policy which has been adopted by the Party, I give general support to the proposal of the noble Earl and the Government, and I hope very much that it will go through this House.
§ LORD CRANWORTH
My Lords, like the noble Lord who has just sat down I have never grown a hop, and like him I am considerably interested in beer, and not only financially but also because (again like him, I gather) I believe beer to be the best beverage that the human intellect has yet evolved. I venture to think that if this Amendment were passed and this Scheme were lost it would be little less than a disaster not only to the hop growers but to agricultural interests generally. I do not agree with everything in this Scheme but, as noble Lords know, we cannot amend it. It suffers from the disability which practically all these Schemes seem to me to have: it is operated by a Board which is of such size as to be too unwieldy for quick and satisfactory working. But I venture to 377 say that the Hops Scheme has up to now already been more successful than any other Scheme which has been put into operation, and this Amended Scheme is likely to go on being as successful. Not only has it had a far greater percentage of support from its own members, but it has been supported by the whole of the agricultural industry, and furthermore it has effected what I assume to be the purpose or all Schemes, which is to render the growing of an agricultural commodity reasonably profitable without unduly putting up the price to the consumer. It has done that, and the Amended Scheme is calculated to do it.
I listened with very great care to the speech of the noble Viscount in moving his Amendment. I have also read with great care his various articles, and letters, in sundry periodicals. I have done so because I have always been an admirer of the sincerity and capability of the noble Viscount, and I have tried to put into my own mind what exactly are the points he has against this Scheme as it is being amended. I think the first is general and the ethers are particular. I think his general objection is that he dislikes all forms of control; and anything in the nature of a quota is something in the nature of a red rag to a bull to him. He believes that British agriculture can be restored to reasonable prosperity by means of duties, and that behind a wall of duties it can be restored to its old-time prosperity.
Like some of the noble Lords opposite I was born of truly respectable Liberal stock, and I was brought up to believe that the two major achievements of the devil were the tenets of the High Church and the principles of Protection. With regard to the first I keep an open mind, but with regard to the second I am entirely convinced that Protection has come to stay, and that therefore whatever form of Government comes in, even a Liberal Government, these duties will still remain, for the reason that I believe they are the only method we have at present of keeping up the standard of living, which we all desire to see done. But duties alone are not always sufficient. They can be overcome by bounties and currency manipulation. I will give you two instances. One is the case of Ireland, where 40 per cent, duties proved entirely ineffective to reduce, or keep at the same level imports of beef, and the 378 other is in the very industry which we are now discussing, where English hop growers, although protected by a duty, were, without a quota, forced to go into voluntary liquidation because they could not make both ends meet.
Now I come to special objections put before us here. The first is that the Board exploited the consumer by charging £15 per cwt. for hops. It is admitted by the noble Viscount that they might have charged £20, but he does not think that that is sufficient excuse. For myself, I am astonished at their moderation, because I think if you take the whole of four years, three years previously and including the year when they got £15, there was no profit either way for any one in the industry all that time. The noble Viscount thinks differently to me and may be right, but we have another and impartial body who went into the question. There was a Statutory Committee about which we have not heard much to-day. Mr. Edward Shortt, K.C., was the Chairman, and the members were Sir Percy Greenaway, Mr. Palmour, chartered accountant, Sir A. Pugh, General Secretary to the Iron and Steel Trades Federation, and Mr. W. E. Scott, Professor of Political Economy. I venture to suggest that they were an impartial and complete Committee. They went into the question of the £15, and they decided against the noble Viscount. They said the Board was entirely right in the charge it made, and in the action it had taken.
The second objection is that a monopoly has been formed. We all know that "monopoly" is as sinister a word as "Mesopotamia" is blessed. I would ask noble Lords to remember this. Some considerable time ago we sent a deputation to Ottawa, at a time when Lord Lothian was a member of the Government. They went with a slogan accepted by the British Government, and that was that the British market should be first of all for the British producer, secondly for the Empire producer, and thirdly for the foreigner. That is to say, if the British producer could produce 100 per cent, of what the public wanted he was to have the whole monopoly of the market. Do we stick to that or do we not? I venture to hope, for I have seen no sign of the Government weakening, that that is still the policy to which the Gov- 379 ernment hold. The third criticism that I have noticed is that inefficient methods will be stabilised, and that there will be no incentive to improvement. I cannot see that. It is the quantity and not the quality of hops that is going to be subject to quota. There is every incentive to improve the quality and produce at less cost by improved methods of cultivation, and I suggest that we are more likely to get improved methods in an industry which is stabilised than in one which is threatened with bankruptcy every year.
The fourth criticism is that there is hardship to some of those who cut down their production when others did not. I know that some of your Lordships will have felt specially grieved at the plight of these people, and I am sure you will be happy to know that at the maximum there cannot have been more than fourteen, because only fourteen voted against this Amended Scheme. I suggest to your Lordships that, if human nature does not vary very much, at least some of these fourteen men cut down their acreage, not because they were told to by the Board, but because they thought they were going to lose money on a bigger acreage. Further, although there must be some cases of hardship there is a method by which the hardship can be relieved, and that is by an increase in the consumption of beer, because when that has gone up 10 per cent, there will be a further opening to bring them back, and I hope your Lordships, including the noble Viscount, will assist in this aim. I really suggest to your Lordships that this Amended Scheme will give reasonable prosperity during the space of the next five years to everybody employed in this industry, and that really those who vote against it—and I sincerely hope that nobody will—can only do so if they can say to themselves: "I know some better method than this of giving that prosperity to the industry." Otherwise I feel that we have no alternative but to, support this Amended Scheme.
§ LORD CORNWALLIS
My Lords, I do not think that any noble Lord who has spoken recently has been connected with the hop growing counties, except the noble Earl who moved this Motion, but as one who comes from a hop growing county I am sure that your Lordships' House will agree that this industry of 380 hop growing is worth preserving, and is worth some special efforts towards that end. An agricultural operation that requires an annual expenditure of £80 to £100 per acre, at a conservative estimate, is certainly of some importance, especially when that expenditure is largely upon wages and labour costs, and I say that unless steps are taken to stabilise the industry it cannot prosper in open competition. That is shown by the great reduction of acreage that has taken place during recent years. Whereas in 1880 there were 70,000 acres of hops grown in this country, to-day that figure is reduced to 17,000 only.
This Motion comes before the House after a year when profits have been high.—I may say, very high—but that is entirely owing to exceptional circumstances, and those profits have in no way made up for the heavy losses of the three previous years. A friend of mine, for whose accuracy I can vouch, has told me that on his two hop farms he had a very handsome profit last year of £2,900, but inasmuch as over several years previously he had lost £13,000 he is not throwing his hat up very high at the result of hop growing over a period. And of course we must remember that hop growers' losses are always very much obscured by the fact that the official figures of hop prices are drawn from those hops which are sold, and take no account of the hops that are unsold. Therefore in a lean year like 1931 the hops unsold through the ordinary channels, and therefore not counted in reckoning the official figures, are ultimately sold for as many shillings as the official figures give pounds as the price of hops for that year, and that loss has to fall upon somebody.
It must be an advantage to all concerned that production should be limited to within reasonable distance of consumption expectations. This method of doing so which is now before the House has secured the approval of the representatives of all concerned, and I know of no other method that commands their support. A moderate price of £8 5s. has been fixed to the grower, which is the price which commends itself to the noble Viscount who moved the Amendment, because two levies of ten shillings and five shillings have to come off and therefore the price to the grower is £8 5s. for two-thirds of the brewers' requirements. That price represents a 381 crap of something like an average of 15 cwts. to the acre over a period of five years, and I do not see that it is likely that any very excessive profit will accrue to the growers during that period. Nor is it correct to say that the inefficient and the efficient grower are on level terms. As the House knows, the quotas are not based on acreage but on hop values, and if a grower is so efficient that he can produce his quota on a reduced acreage he does so to his advantage. In any event everybody's growth is valued by competent people according to its quality, and priced accordingly within limits.
There is one factor that I hope may prove gradually and increasingly to be beneficial to the English grower. After many years of research a hop, or rather hops—for I believe that there are at least two new varieties of hop setts now available—have been produced which will bear hops comparable in quality to those of the foreign hops that brewers have always said they must use partly in their beer. That being so, I think we may look forward at no distant future to the time when brewers will be able to use an increasing proportion of English hops in the manufacture of their beer. That is to some extent, perhaps a small extent only, a relief to the feelings of those who fear that some monopoly is being created under this Scheme. It is difficult, I think, to see how under a scheme for restriction of output there can fail to be some preference for existing growers. In an industry where special buildings have to be built, where expensive wire work has to be erected, and so forth, and even then no crop is forthcoming for three years; in an industry where losses have been large in recent years, where a voluntary reduction of acreage has widely taken place and where the sale or the products is so strictly limited, there seems to be an overwhelming case for preference to existing growers. I need not say that I am not one myself.
Much hop land, too, is now planted with permanent fruit, and therefore can never revert to hops. The grievance, if there be one, is certainly not sufficiently serious to warrant the rejection of a Scheme approved in the first instance by 98 per cent. of those interested in the industry and subsequently, as amended, agreed to by representatives of both 382 growers and brewers. It was, moreover, afterwards confirmed by general meetings of both bodies, and it comes up for review in five years. If the Scheme works well it should stabilise the industry, and it should eventually lead to a greater consumption of English hops, and consequently to increased employment of labour both in the country and in London. There is, as many of your Lordships must know, a large exodus of people from London who pick the crop and get a few weeks country air, a holiday for them, and are able to scrape together a few pounds for boots and shoes. They are by no means a negligible consideration in this matter. I know the importance my county attaches to the passing of this scheme, and I hope your Lordships' House will give it at any rate a five years trial.
§ LORD RHAYADER
My Lords, I will not go over the ground which has been already covered, but this Scheme is so abhorrent, to the Free Trade principles in which I was brought up, and which I still hold, that I cannot allow it to go through without uttering a word. I find myself in a paradoxical position. I have spent much of my life in combating the efforts of brewers to increase the sale of beer. To-day I am a brewers' advocate. I might not find myself in that position if I thought that this Scheme would be the only one of its kind. I might have been content to let the, brewers be sacrificed, so far as they will be sacrificed, to the growers of hops. But the importance of this Scheme is far more in the fact that it is the first complete working out of the Agricultural Marketing Act of last year, and it shows us whither the country is going in regard to the control of agricultural operations.
In this particular case what is the justification put forward by the noble Earl who introduced the Scheme to-day? Practically only the fact that, whereas in 1900, I think he said, there were 50,000 acres under hops, last year there were only 17,000. Well, that is a very serious reduction, a very difficult position in which landowners and farmers who were growing hops were placed. But it came gradually, and the situation was met as it arose; and it arose from causes which are perfectly familiar to every member of your Lordships' House. It arose from 383 the fact of a steadily diminishing demand for beer. I have not the same regard for beer as a drink as the noble Lord, Lord Cranworth, has. I do not regard it as the best drink that anybody can have, and therefore I view the decline in the consumption of beer with pleasure rather than with pain. But in any case the remedy for it is not to grant a monopoly to the people who are growing hops which are necessary for the beer, but to increase, if they can, the consumption of beer. If the demand for the hops is there they would in due course be grown.
I can see no justification for this Scheme. The only justification that seems to me logical would be that the brewers, who are the only consumers of hops, had complained that under the old system they could not get the hops they wanted, or that the hops grown were of inferior quality, and that something must be done if they were to supply the public demand for beer. That would be a logical case for interference in regard to the growing of hops. But this is not a brewers' scheme. You would have had no Hop Scheme from the brewers. The noble Viscount, Lord Astor, who is greatly interested in this thing, suggests two alternative remedies. I must be allowed to suggest a third alternative to those put forward by the noble Viscount. I suggest we should return to the old system. That would be the perfect cure. Under the old system, under which incidentally, I am told, beer was better than it is to-day, you had no complaints from the brewers that they could not get their hops. They got them where they chose. If the British hops were not good they bought foreign hops, and the English beer was admired by the noble Lord (Lord Cranworth) and those who drank it. It was a satisfactory system, and there were no complaints from the brewers. The only justification for the Scheme would have been complaints that the brewers could not get the right hops for the purpose for which hops are used. Therefore I say the proper remedy is to go back to the old system. Let anyone grow hops who chooses to grow hops. Let brewers not make bargains with the hop growers but buy in the cheapest market and so achieve the purpose of the noble Lord, and then you will have no complaints from the brewers. Beer will be better, 384 and the only people who may have any difficulty at all will be those farmers who have committed themselves to growing more hops than the brewers are willing to buy.
The hop growers did try their voluntary scheme, and it broke down for reasons which are familiar to us all. Because the voluntary scheme broke down compulsion is now brought in and this Scheme is put forward. It gives a monopoly for five years, and practically in perpetuity. I wonder if any of your Lordships could stand up with a grave face and tell me that after five years of protection of this kind the industry concerned can go back to the old position. We have only to look at the sugar beet subsidy to see that this is impossible. These monopolies strengthen and cast their roots deep into the earth, and they cannot be got rid of in that easy way at the end of the period. The only way to get rid of them is not to begin them at all. The case for this Scheme is the flimsiest case ever put forward for protection. It is for a small section of the community who were not incapable of meeting their own difficulties, and incidentally when they were trying to work the voluntary scheme the more right-minded among them reduced their production and they are to be sacrificed. I know they are not many, but it seems to me a most ungrateful action on the part of those interesting themselves in the growing of hops that they should turn on the very people who tried to work the voluntary scheme and give a monopoly to those who made no reduction at all. I say that never has a Scheme been put forward with less justification for setting up a monopoly, and for that reason I must offer it my most complete and sincere opposition.
§ THE SECRETARY OF STATE FOR WAR (VISCOUNT HAILSHAM)
My Lords, the arguments which have been adduced in opposition to the Scheme seem to me to have been dealt with so completely and so convincingly, especially by the speeches of my noble friends Lord Cornwallis and Lord Cranworth, that it is only, because I might be suspected of lack of courtesy to my noble friend Lord Astor and other noble Lords who have spoken that I feel induced to say anything at all. I only propose to add a very few words to the discussion to which your Lordships have listened, and I would 385 like first of all, if I may, to formulate what I think is tie problem. It is quite true, as Lord Rhayader has said, that we could if we choose go back to the old system under which everybody grew as much as he liked and the brewers took as little as they chose, bought foreign hops instead of English hops, and brewed the best or the worst beer which suited their pockets, and ultimately the hop growers who had been so foolish as to grow hops at an unremunerative price went into the Bankruptcy Court.
That is the good old traditional Free Trade law of unrestricted supply and demand. You got everybody plunging into a trade which looked profitable. You got a glut of production; you got, not a proportionate reduction of price, but a wholly disproportionate reduction of price, because everyone who had something to sell was pressing it on a market which was not able to take it all, and everyone was determined that he should not be left with his particular packet of goods. The result was that the producer was forced to sell at any price, at a price which did not even begin to bring in the cost of production either to the man who, as Lord Rhayader said, unwisely went into she trade or to the man who was in the trade all along and who found himself ruined by the reduction in price owing to outsiders coming in. In course of time, no doubt, it is true that when you have driven down prices to impossible levels which do not begin to meet the cost of production, the weaker producers all go bankrupt and are driven out of business. Then there is a scarcity and those fortunate few who have survived reap a rich harvest at the expense of the consumer until once again high prices attract fresh adventurers into the field, and once again the same familiar cycle is gone through of reduction in price, bankruptcy, and once again a soaring price for the survivors.
§ VISCOUNT HAILSHAM
The consumers who are the brewers are willing to accept and work this Scheme. The trouble with my noble friend Lord Rhayader, if he will forgive my saying so, is, as he himself stated, that he believes that the only possible justification for ever interfering 386 with anything is that the consumer complains. He always ignores the other side of the equation. He does not recognise the existence of the producer except as a mere milch cow to be milked as best the consumer may. He said quite frankly that the only possible justification for interfering in any way would be that the consumers made a complaint.
§ VISCOUNT HAILSHAM
In this case. And I have never heard another in which the noble Lord took a different view. He has been eminently consistent; always advocating with great sincerity and force but, as I think, with complete misconception, the point of view of the old-fashioned laissez-faire Radical who thought that the play of supply and demand was a law of God with which it was almost profanity to interfere. That is not the view of this country, and it is not the view of this Government. We think that the producer has a right to reasonable protection at the hands of the community. We think the producer deserves at least as much consideration at the hands of the Government and of the people of this country as the consumer. We think that the right thing is to try and hold an even balance between the two. That being the ordinary problem, in the case of hops the cycle was even worse than in ordinary cases, for the reason that you cannot increase or reduce the production of hops in a hurry. Hops are a crop which, I think, takes three years to come into bearing. I am speaking of something of which the noble Lord, Lord Cornwallis, could speak with more authority than I can, but I am instructed that it takes three years for hops to come into full bearing, and that they then go on in full bearing for ten or twelve years.
Therefore when you plant hops you are giving hostages to fortune for some twelve or thirteen years ahead, and the result is that an overproduction, a glut, produces a much greater evil because it is much more difficult to check. You have to look forward more in estimating what the requirements are likely to be than in the cafe of any product which more quickly comes to maturity, and, since there is only one possible outlet for hops which human ingenuity has discovered, and that is the most excellent one of making beer, the 387 result is you cannot find an alternative use for your crops if, unhappily, there should be no sufficient consumption in its ordinary market. So it is that hops present the problem in a more acute form than perhaps any other agricultural commodity.
That being the problem, what is the solution? The solution which the Government have tried to attain is, by organised marketing, to ensure that there shall be no undue competition between the several hopgrowers, and now, under this Amendment, to secure that there shall be such a relation, such a co-ordination of the annual supply with the annual demand as to ensure relatively favourable prices, and to avoid those extreme fluctuations up and down which are ruinous to the producer and which are no real advantage in the long run to the consumer. It is not true to say that there is a monopoly created in the strict sense of the word. In the first place, the brewers can grow as many hops as they like for themselves. If the brewers prefer not to buy hops, there is nothing to prevent them growing them. Secondly, it is a fact that any one can grow hops who pleases after this Scheme comes into operation. All that this Scheme provides—and no doubt it is a very necessary and stringent provision—is that in the selling of hops, the so-called quota hops, the hops which are grown under the quota arrangements of the Scheme, shall have the first sale in the market.
The noble Viscount, Lord Astor, complains that there are people who are injured because they would like to come into this industry; that they have left it in the past or they are tempted by its prospects in the future, and that they have no compensation for the fact that they have not got as good a quota as other people. If you are going to regulate supply to match demand it necessarily follows that you must fix some kind of quota. It has been said that Professor Orwin, who wrote a letter to The Times, had put forward an alternative. If any of your Lordships were interested in following the controversy in the Press you will have seen that his letter was followed very shortly afterwards by an equally convincing letter by Lord Wolmer, in which he completely exposed the fallacy of the learned Professor's theory. To take one example only. The learned Professor, I think, 388 suggested we should follow the analogy of the Wheat Scheme—everybody to produce as much as he liked, have a levy on the quantity that went into consumption, and thereupon fix an average price which would be shared between the producers. There is no analogy between wheat and hops, as Lord Wolmer pointed out, because in the case of wheat there are alternative channels into which you can divert the wheat, whereas in the case of hops, unless you can sell them for beer, you cannot sell them at all, and there were millions of pounds worth of hops that had to be thrown away and used as manure because they could not be marketed during years of excessive supplies.
The noble Viscount, Lord Astor, suggests that we should make it a one year experiment. But what would be the sense—if he will forgive my using that perhaps discourteous expression, but I do not mean it in that way—of having an experiment for one year for a crop which takes three years before it reaches bearing? You must have a reasonable period in which to try your experiment. We have adopted five years. It is not an unreasonable time. Then my noble friend suggests an inquiry. We are going to have an inquiry. We are setting up a Committee which is to examine into the working of the Scheme. If, at the end of the five years, there are weaknesses in the Scheme—and he would be a rash man who would suggest that this Scheme has reached perfection—and if it should turn out that there are improvements which can be effected, that Committee will be charged with the duty of pointing out the defects and also pointing out the proper remedies. My noble friend suggested that there was no incentive to growing good hops under the Schema. Your Lordships heard what my noble friend Lord Cranworth said, and he so completely dealt with that argument I do not think I need take up time in dealing with it further.
We have here a Scheme which has this rare and unique credit, that it has been accepted almost universally by the industry with which it is concerned. There was actually a vote of over 98 per cent, in favour of this Scheme in the industry and that, when one remembers that the industry is an agricultural one, is indeed, I think, a very remarkable achievement. In addition to that the 389 National Farmers' Union, who are not all hop growers, have pronounced themselves in favour of it. The Central Landowners' Association, I understand, cordially approve of it. The brewers and the growers alike accepted it as a basis for reaching the Agreement which is set out in the White Paper. It is suggested that in some way this is preventing the use of foreign hops or the manufacture of good beer. I would remind your Lordships that there is nothing in the Scheme which regulates the importation of foreign hops. No doubt there are powers existing, and powers will be used, to regulate the importation of foreign hops, but where those hops are required in order to produce special kinds of beer, or where they are required because there is, unhappily, a failure of the home supply, there is nothing whatever to prevent the importation regulations being relaxed accordingly. Your Lord ships will realise that the Board of Trade is in no way bound by the provisions of the White Paper Agreement, which is, as my noble friend suggested, an agreement between the hop growers and the brewers. We have here, therefore, a Scheme which has met with almost universal approval. It has been criticised from the orthodox Free Trade stand point, which, incidentally, seems mainly to commend itself to-day to those who disbelieve in the use of alcohol, but, apart from that very small section of the community—
§ VISCOUNT HAILSHAM
We might say weak heads. But I will not embark on that discussion this evening. At any rate here is a Scheme that is carefully thought out, which has this to recommend it, that it is an Amendment of a Scheme which has had two years trial and has worked very successfully. It is a Scheme which has borne very careful examination not only by the Ministry of Agriculture but also by the Commission set up to examine as to the best way to make it work, and I cordially invite your Lordships to say that it is a Scheme which deserves a fair chance, and to send it from this House with our cordial approval and our hope for its complete success.
§ VISCOUNT ASTOR
My Lords, I think it would be discourteous not to make one or two brief observations in reply to this 390 debate. I am not convinced by the arguments used in opposition to the case which I tried to put forward, but looking round the House and counting those who are seated on one side and those who have been good enough to express support of my case I am wise enough to realise that there is no particular object in going to a Division. Just for the sake of accuracy I would venture to suggest that one of the figures stated by the noble Lord, Lord Cornwallis, was not strictly in keeping with the correct interpretation of the Agreement. I have ventured to confirm my interpretation with the noble Earl. The noble Lord said the grower would get only £8 5s. As I understand the Agreement, the brewers agree to pay an average of £9 for two-thirds of the crop, regardless of quality, and they will pay an additional levy of ten shillings which goes into the pool so that the growers are going to get £9 for two-thirds of the crop, and £9 for the other third if of good quality, or the market value of it is of inferior quality. That is to say the brewers pay not £9 but £9 10s. I think I am right in that.
§ LORD CORNWALLIS
I am sorry if I was inaccurate. I thought there was a levy of ten shillings and a second levy of five shillings.
§ VISCOUNT ASTOR
I speak as a Conservative, rather a progressive one as compared with some others, and I must confess that one thing that was said by the noble Lord, Lord Cranworth, amazed me. He seemed not to mind an injustice that applied only to a few.
§ LORD CRANWORTH
I must protest. I never said that. I said that the noble Viscount would be just as pleased as I to know that these unfortunate men did not exceed fourteen in number, because only fourteen voted against the Scheme. That is a very different thing.
§ VISCOUNT ASTOR
I am sorry I misunderstood the noble Lord. The noble Lord, Lord Marley, indicated that in his opinion also there were some cases where injustice would be done. I venture to suggest that in addition to the two alternatives suggested by Professor Orwin 391 there is another, that of a compensation scheme. I venture to hope that the Government will look into that and see whether growers who are going to have a period of prosperity could not be asked to contribute a levy which would go into a pool so that their less fortunate brethren might be compensated for having small quotas. The noble Viscount who leads the House, Lord Hailsham, rather challenged my statement that there was a monopoly. It is quite true that anybody can grow hops, but it is no use growing hops unless you can sell them. As I understand it existing growers have a complete monopoly of the market until present demand increases by 10 per cent.
§ VISCOUNT HAILSHAM
I do not think that is quite right, although I do not want to bandy words. It is true they have a preference on what is called the estimated market demand before the other hops come in, but if it should turn out that in any year the market demand was greater than the estimate extra hops would have their fair chance of being sold.
§ VISCOUNT ASTOR
Yes, if there is a ten per cent, increase, but if there is no increase in demand then the existing growers with their quota have a monopoly. I think that is right. With regard to the two schemes of Professor Orwin, the noble Viscount referred to the reply of the noble Lord, Lord Wolmer. But he only replied to the one based on the analogy of wheat. No reply was made to the other proposal of Professor Orwin that there should be a levy based on the analogy of the Potato Scheme. I venture to hope that that may receive consideration. I do not want to bother your Lordships with a Division, and I beg leave to withdraw my Amendment.
§ Amendment, by leave, withdrawn.
§ On Question, Motion agreed to.