CEREALS (DEFICIENCY PAYMENTS) ORDER, 1955 (Hansard, 30 June 1955)

EARL ST. ALDWYN
My Lords, the purpose of this Order is to bring under the legislative authority of Part I of the Agriculture Act, 1947, the administrative arrangements for providing the guarantee for home-grown cereals. Your Lordships will know that since last year's harvest this guarantee has taken the form of deficiency payments. Hitherto, these arrangements have been operated under temporary powers. We now propose to put them on a permanent footing under the Agriculture Act. I beg to move.

§ THE EARL OF LISTOWEL
My Lords, I have given the noble Earl notice that I should wish to make a brief comment on this Order, and to draw attention to the very high cost of the deficiency payments which are now being made on cereals, and particularly on wheat. I welcome, of course, the change in machinery. It is clearly desirable to work this scheme under permanent legislation, instead of under war-time Emergency Powers, but the cost of the subsidy on wheat is a matter of considerable anxiety at the present time. We have paid £22 million this year, and next year I believe, from the Estimate, there is likely to be a further increase in these payments. These, of course, will add to the total bill for agricultural subsidies, and will have to be met at the next Annual Agricultural Price Review. Your Lordships will remember that last year the Chancellor of the Exchequer 397 said that subsidies were too high, and talked about quantitative limitation. But this year, in spite of the warning, the subsidies went up again, increasing by about £50 million. If all the subsidies that have been paid to agriculture at the present time were divided equally between all the tenant farmers and owner-occupiers in this country, each farmer would get about £1,000 a year. I cannot help wondering what will happen next year, which, of course, will not be an Election year, if there is a further rise in the farmers' bill. What I am sure we all want, noble Lords on both sides of this House and all well-wishers of agriculture, is to avoid a situation in which the Government find themselves unable to afford the huge and growing cost of their pledges to the farming community. I therefore hope very much that the Government will see whether there is any possible way of keeping down the subsidy on wheat, which is one of the most costly of the subsidies being paid at the present time.
The difficulty of all deficiency payments is that they are an unlimited liability. If the price of wheat in the world market does not improve, it may be necessary (I have no doubt that the noble Earl and his right honourable friend the Minister have this point in mind) to consider limiting the quantity of wheat on which the subsidy is paid. I hope that no such drastic measure will be required. However that may be, I certainly think the Government should look into allegations which have been made and which, if true, mean that the present deficiency payments are wasteful and unnecessary. Of course, I do not know the facts, and I am merely inquiring about them. One of these allegations that the middlemen, millers and manufacturers, are profiteering and making unreasonable profits at the expense of the taxpayer. I should like to ask the noble Earl whether he is satisfied that the profit margin of the middlemen is reasonable, and if no inquiry has been made into this matter I hope that he and his Department will look into it.
Another allegation heard is that large quantities of French wheat are being imported at a price considerably below the cost to the producer. Again, I do not know the facts of the situation, but I should like to ask the noble Earl whether that is the case and, if so, what action 398 the Government will take to stop what is obviously an unfair trade practice. We have no objection at all to this Order—I should like to make that absolutely clear—but we do want to take the opportunity of expressing our very grave concern at the high cost of the deficiency payments on wheat, and the hope that the Government will watch the position extremely carefully.

EARL ST. ALDWYN
May I just touch on the question of the deficiency payments to which the noble Earl has referred? These are paid direct to the growers, so there is no question of the middleman taking any share on the way to the farmer.

§ THE EARL OF LISTOWEL
May I explain what I meant, because perhaps I did not make myself clear. The allegation is that the middleman is paying a much lower price than he would pay if there were no deficiency payment—that is to say, that he, and not the farmer, is getting the benefit of a high deficiency payment.

EARL ST. ALDWYN
In practice, the prices of home-grown cereals very largely follow the world prices, so I cannot see that it is fair to say that the middleman is getting it more cheaply than the world price.
The noble Earl also raised the question of subsidised French wheat, and asked whether anything could be done to stop its import. Frankly, I do not think that that would be wise. The farmer has his protection in the form of these deficiency payments, which are deliberately paid to him to give him stability in the face of competition from overseas. Quite a number of countries besides France subsidise their exports of wheat, and the total which we import is nearly double the amount produced in this country. For example, we estimate that deficiency payments will be paid out on about 2.23 million tons of wheat of the 1954 crop, whereas in the crop year 1954–55 about 4.6 million tons of wheat will be imported at a cost of about £ll0 million, of which about 70 per cent. will be in dollars. So the lower the world price of wheat, the smaller is the cost to this country of by far the greater part of the total supply of wheat. Therefore, I think there can be no doubt that it is in the country's best interests that the price of imported wheat 399 should fall and that we should be prepared to face any additional cost to the Exchequer which this might involve in order to maintain the guarantee to growers in this country.