§ 3.32 p.m.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH rose to call attention to the present uncertainty and anxiety in the agricultural industry; and to move for Papers. The noble Viscount said: My Lords, I rise to move the Motion standing in my name on the Order Paper. I am glad that the debate to-day has excited the attention of a considerable number of your Lordships and that we are likely to have a good discussion. I notice that one name is missing from the list of speakers, namely, that of an old friend of us all, Lord Bledisloe, who has written to me to say how sorry he is that he cannot be here owing to the death of his wife, who was devoted to him. But, in the midst of his sorrow, the noble Viscount has written me a long and interesting letter containing his views of what ought to be done for agriculture at the present moment. I wish he had been here to put those views himself, because he is a lifelong friend and inspirer of the agricultural co-operative movement.
§ There is no doubt that the feeling of uncertainty and anxiety to which I refer in my Motion exists. It can be proved by the speeches of farmers from all over the country, assembled at the annual meetings of the National Farmers' Union, and by the unanimous resolutions for adequate recoupment—in themselves reflecting the farmers' present financial anxiety—and for a long-term policy (a point they have long pressed and which they press again on this occasion) to restore stability and confidence. Not only is that evidence of the existing feeling, but if one looks at the case of the organised workers in the industry, presented by their secretary, Mr. Collison, one finds they are equally anxious. In the agricultural Press from time to time there is considerable expression of feeling by farmers, and even by some landowners, that the remuneration of farmworkers in this country is still below what it ought to be; and the unions themselves are concerned lest there may be a retreat from the Government's policy under the Act of 1947 because of the circumstances facing the country to-day, thus presenting a further threat to the prospects and hopes of the organised workers in the industry.
980§ As to farming finance, let there be no mistake about the cause of the farmers' discontent. At about this time last year the farmers were prepared at their 1955 Annual Conference to pass a resolution of no confidence in the Government, but were turned aside from that course upon which they were set at the first day's debate by the honeyed words of Mr. Butler, speaking at their dinner that day. In his statement to them last year Mr. Butler actually justified the use of subsidies in the agricultural industry and for agricultural products and development, although I thought at the time in careful and anxious language. However, he certainly made it clear that he believed in it as an alternative to any general policy of protection of the industry by tariff, such as is enjoyed by so many other industries in the country. Since then, however, the financial position and prospects of farmers have considerably worsened through steeply rising costs of labour and of machinery—and when I speak of costs of machinery in the farming industry, those of us who sometimes have to put our hands in our pockets know that it is not merely the purchase price of machinery that is so high, but also the cost of maintenance and repair of machinery on the farm. Fuel, overheads and fertilisers are all up and out of proportion to any change that there may have been—in the case of a few isolated commodities only—in the prices which farmers receive for their products.
§ All this was summarised for me the other day in a letter from a friend of mine to whom I wrote. He is the manager of a large farm of about 5,000 acres, and he has been a sort of farming mentor to me. I wrote to him early in January of this year and said: "Would you kindly be helpful to me once more and tell me what you think of the prospects in the farming industry at the present time?" He replied that in spite of all the Press campaign that had gone on about the wonderful harvest of 1955, and the huge sum of money that was to be saved to the farmers by the elimination of rabbits by myxomatosis, 1955 was the most anxious financial year for the farming industry that he had known for twenty years—and I am sure he meant what he said.
§ The farmer has to face an extraordinary inflationary situation with little, if 981 any, means of coping with it unless he gets better treatment in prices for his expanding product. Any other industry, in the present circumstances, could, within reasonable market limits at any rate, constantly increase its prices to the purchaser in relation to rising costs. Not so the farmer. He has to go along to the Price Review Committee and his general overall national income is from time to time, as often as not, reduced instead of increased. The representatives of the Farmers' Conference showed dissatisfaction—and I am using a comparatively mild term to describe the sort of feeling in the Conference—with their returns for milk, eggs, beef, cattle, sheep and pigs, in varying degree; and there was by no means complete satisfaction with regard to the present state in the grain section of the industry.
§ After the bad days of agricultural depression, bankruptcies and land out of cultivation between the wars, milk had become a stand-by for farmers in most areas, with stability secured by a long-term policy of the Milk Marketing Board—the Board set up under the legislation of 1931, introduced by the late Lord Addison, and amended by the main amending Act introduced by Mr. Walter Elliot. Since then, milk has always been a stand-by for farmers. Output in that industry has increased up to now, and with it liquid milk consumption, with a proved beneficial effect upon the health of the people and especially of the children.
§
I have been reading recently the agricultural supplement for the year 1956 of the Financial Times. I read a most interesting and fair article in that paper by Mr. J. L. Davies, the chief officer of the Milk Marketing Board. In the course of that article he says:
Many dairy farmers are devoting more attention to livestock farming and it is wrong to assume supplies will expand rapidly. Feeding stuffs are expensive and the problem of suitable labour on dairy farms is very real…The seven day week is a great handicap in getting labour and it would be wrong to assume that these services will be continued unless the rewards in the industry generally are improved.
He is referring to the milk industry. He points firmly to the danger to the milk industry of the future in regard to the supply of suitable labour, and I am sure that the Minister himself will agree that the milk industry is being badly handi-
982
capped. That point is mentioned by Mr. Davies in his article, in which he says:
When hardly any young men wish to train for the milk industry at the dairy colleges, then the position is very serious indeed.
My own experience, short as it is, proves to me how much more difficult it is now than it was five years ago to get men to work on a farm on the dairy side. They do not like giving up their seventh day, although there is a high rate of overtime paid for working on Sundays, and they do not like being tied on other days of the week compared with other sections of the industry. Mr. Davies also refers in that article to the continuing difficulty on many dairy farms where there is still a lack of piped water, and in some areas no electricity available off the grid. What does he conclude from that? He concludes that there is a great need for a bold approach to the problem of how the industry stands in this inflationary period, and for a national farming policy of the kind which led to the Agriculture Act, 1947, about which I shall have a word or two to say later.
§
Mr. Davies' warnings are pinpointed in my mind by a report I saw in the Farmer's Weekly of a speech by Mr. Towers, of Ulverston, at the National Farmers' Union Conference. He said that two points showed the red light with regard to milk production in his area—he carne from Lancashire. He said:
In the north-western region of the Milk Marketing Beard 400 milk producers have gone out of production in the last twelve months.
That is 400 in one area. He also said that 40 per cent. of the animals inseminated in his area in the last year were inseminated from beef bulls, showing the general trend of feeling in this vastly important section of the agricultural industry. Nor is there by any means satisfaction in the beef, store and fatstock trade, although some parts of the country do better than others. During the last twelve months I have watched closely the fluctuations in the return to the free market in beef cattle. I have heard a great many expressions of dissatisfaction among farmers. They have been forced back on to a policy of market deficiency instead of being given some reasonable hope of getting a fair price for what they produce.
§ I would commend to the Minister, if he has not yet read his copy, the issue of the Farmers' Weekly for February 3—I know 983 Ministers are busy. Perhaps he will let me know whether he has already read it. The article is under the heading, "Is Beef Bad Business?" I am not in a position of experience myself to say whether it is or is not. I have heard expressions of dissatisfaction from other farmers anxious to get out of other sections of the industry. What the writer of the article says seems to show a conviction that farmers rarely, if ever, except in special seasons, get back the actual cost of keeping an animal for the beef market for two and a half to three years. I am judging that on the figures mentioned in that article. Nor do I see quite clearly, in the light of the figures we are getting, where the future of the beef business is going to be. Production in Britain for the last twelve months has gone up—I am speaking from memory—by a very large figure; I am not sure whether it is 10,000 tons or 100,000 tons. But we are also seeing, for the first time for some while, an increase in the importation of beef from the Argentine and certain Empire countries.
§ All these things should be borne in mind when we consider the farmers' reiterated demand for a long-term policy, and especially for targets to aim at, so that they may be given some idea of what is going to help not only the farmer but also the Government and the nation at large. Certainly the muddle in the beef business as a result of the short notice given of freedom to trade in beef, has not helped. I should like to repeat my tribute to the Fatstock Marketing Corporation, the corporation set up to deal with the matter, for many of their achievements, although they have not been as successful in some fields as in others.
§ I do not know enough about sheep to make much comment upon them, but the Farmers' Conference seemed to have divided views. Certainly not all farmers are satisfied. Pigs have been referred to before in your Lordships' House and I must say a word about that subject. Here is a story which to me is almost unbelievable, and yet it is true. First, there was the request of the Government—and I am glad to see the noble Lord, Lord Carrington, present because I think he knows about this request—that farmers should produce an additional million pigs. The noble Lord has not the responsibility now for answering questions on how those 984 pigs were dealt with. The farmers know that when the 1 million pigs were produced they could not find a proper market for them, and for a long period pigs had to be kept because they could not be taken into the bacon factories; and they had to be got rid of to the pork industry at prices which often meant either a loss to the farmer or an increase in the deficiency payment guarantees from the Government.
§ The Economist is a newspaper which I read with mixed feelings from time to time. I started reading it as a young man and I have read it regularly, but in these days it does not seem quite so impartial as I used to think it was when I was learning more about economics in my youth. I think it was the Economist which said the other day that it doubted whether there were more than three men in the whole of Europe who really understood the formula of the Pig Scheme for making guaranteed payments by way of market addition. It is about the most complicated thing I ever came across. Whilst I think I understand, on the whole, what is being sought after in the Ministry's formula, yet I can never be sure, when a pig goes off either to the Corporation or to market, quite apart from the grading of the pig, what I shall get for it, because the payments may differ by as much as 4d. per score to £1 per score from time to time on the weight of the pig. The most extraordinary stories come out about what is happening in individual cases. I expect my experience is the same as that of all pig farmers, that under the so-called "freedom from control" they have no idea what their average prices per pig will be.
§ One of the most illuminating things I have come across is a paragraph, which I hope the Minister has seen, in the "Editor's Diary" of the Farmer's Weekly of January 27. At the National Farmers' Union Conference, it was stated that a friend said to a farmer that his first-cross Landrace pigs were averaging about 11 score per pig of good bacon pigs. The noble Earl, Lord St. Aldwyn, knows that a first-cross Landrace pig is likely to make a good bacon pig—
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY of AGRICULTURE, FISHERIES AND FOOD (EARL ST. ALDWYN)Not all of them.
VISCOUNT ALEXANDER OF HILLS-BOROUGH—with reasonable feeding and care. It certainly would not be a cheap pig in process of development, coming from well-bred Landrace pigs. The market price for pigs of 11 score that week was 12s. per score. The man in question received an average of £6 10s. per pig for bacon weight pigs in the market. He received from the Government's guarantee scheme £11 10s. per pig. Therefore, he got about £18 for each of these pigs, which cost far more than that to produce. There was the cost of securing the sire, the sow, feeding the sow and then raising the pigs to that state. I will produce my castings in time and they will be as good as those of the noble Earl. There is no profit in it at £18. I hope that some farmers in the House to-day may be able to produce figures of the same kind.
The extraordinary thing is that the Government, in this day of inflation and rising costs of living, do not seem to be able to deal with the results of that situation. Those pigs were sold and went not as bacon pigs to the market but as cutters. They went to a butcher. He had paid 9d. per lb., live weight, that very week when I heard of three market occasions in Suffolk of pigs falling to 12s., or less, per score. I asked my wife what was the price of pork in the shops. She said: "It has been reduced this week from 4s. 2d. to 4s. per lb. for the best joints." Yet the butchers were buying the pigs at that time in these markets for 9d. per lb. live weight. As your Lordships know, there is practically no waste in a pig. Almost every part of it can be used, from the skin to every kind of offal, as well as the main joints. It is an iniquity that there should be such a scheme as that which is so confusing and unsatisfactory to farmers, putting that great difference between the two prices into the hands of the meat traders. Certainly the consumers never have that kind of reduction passed on to them.
I am interested in the noble Earl's reaction to the costs of raising these pigs. I shall be delighted to hear from him, in his reply, how the farmer can continue to raise good bacon-weight pigs, of an average of 11 score live weight, at a cost of less than £18, taking into account labour, food, the history of raising and everything else.
EARL ST. ALDWYNIf the noble Viscount is including pedigree prices, it is possible that his figures are correct.
VISCOUNT ALEXANDER OF HILLS-BOROUGHMy Lords, I am quite sure that I should not include pedigree prices with my small number of pigs. It is true that I started with two or three pedigree gilts, half-sisters to a prizewinner, but they were not expensive; they were £60, or something of that kind. That is not much to pay for a good pedigree in-pig gilt. I shall be glad to hear what the noble Earl has to say in general about these prices.
The F.M.C. have struggled hard in a desperate situation which has been created because the Government gave far too short a notice of removal in the case of pig controls. The equalisation fund, created out of deductions from prices to farmers, which have operated unfairly, had to be nearly exhausted in efforts to attract back to the bacon factories pigs from the pork trade. The bacon factories, instead of being too full, as they were in the beginning, were panting for pigs, and this emergency fund had to be distributed in that way until exhausted. Then down went I he price to the farmer producer of pigs sent to the bacon market. What is the remedy in this case? The Government seem to he considering a tariff on Danish bacon, Perhaps the noble Earl will be able to tell us about that to-day, and whether it is to be 10 or 15 per cent. from next October. If so, if that is to be the policy, will that be inflation? Every consumer and worker will think so. Mr. Butler and the Minister have both assured the farmers that they are entitled to assistance by subsidy. The farmer will suffer all the blame for any further measure of inflation caused by the imposition of a tariff upon such a feature of food production as bacon.
The position with wheat is yet another story. I have held the view all the way through—and I said so at the time—that the Government's decision not to adhere to the International Wheat Agreement has led to increasing anxiety in the farming industry. The experience in selling wheat in the last three years, at any rate, satisfies me that that is so. As regards the freedom of the miller now to buy how, where, and when he likes, I know that he is sometimes under pressure from 987 the Government to do this or that to oblige them. It is all to the good that so much more of the farmers' homegrown wheat should be taken from time to time. But the experience of the farmers, who must often, for financial and other reasons—such as climatic conditions—sell their wheat early, off the combines, is that when it gets to the miller it fetches anything from 17s. to a guinea per cwt.—good hybrid 46, the same as the French growers produce. They pay more for the French—as much as 6s., 7s., or 8s. according to the daily level of the British purchases. That wheat is actually subsidised by the French Government for export to this country, or, for that matter, to any other country. The French farmer is getting a higher price on average for his wheat than is the British grower, and it is allowed in under this so-called freedom, to injure the position of the British industry.
Consider the position which arises under the agreement in relation to what was said the other day by the Prime Minister and the Foreign Secretary when they came back to this country. What is the position of Canada in this matter? What sort of a market do we give Canada to-day, except the chance market of whatever the millers like to pay at a particular time? The injury to the Canadian and the Australian interests may be considerable, as a result of the movement away from their stability under the International Wheat Agreement. If so, it will react ultimately upon our export trade. I understood from the Prime Minister's report that there was a considerable gap between our imports from and our exports to Canada. I know for certain, from my long experience, that the Canadians are just waiting, watching and hoping for the time when the Government will sign the International Wheat Agreement. If my reading of the international Press is right, when this country drew out of the International Wheat Agreement it did so on the question of about 4d. to 4½d. a bushel. So far as I can gather, that was the difference in margin in the negotiations. You have thrown the whole of the grain trade into the old chaotic pre-war conditions, whereas you might have had stability, with good effects upon reciprocal trade.
From the wealth of information provided by his advisory service, can the 988 Minister tell us what is the considered view of the Government in regard to the financial position of the farmers? What is the position of the small farmer? As we know, two-thirds of our farms are of 100 acres or less; then there are many between 100 and 200 acres. A tenant farmer, speaking at the Conference in the last week of January, said that on a dairy farm of 137 acres in Rutland the return for himself for an 80 or 90-hour week is little more than what he pays the man he employs. Being an ex-officer, he was a good speaker; he was a lieutenant-colonel, retired. He may or may not have some other means. But what about the hundreds of farmers who have not? Can they meet the increasing and just demands of the workers, with all the other increasing and inflationary costs, on the decreasing guaranteed price? Can they to-day stand up to the new credit squeeze, let alone an increased bank rate? Whether or not the rate should be raised is the subject of daily paper controversy. There is talk of a special private meeting between the Chancellor of the Exchequer and the bank chairmen this week.
From the speech made by the Economic Secretary yesterday, in which he said that the position was getting so serious that any necessary step must be taken to stop the drain of gold, I should think that there is to be another squeeze: it all seems to fit in. Then there are the falls in the shares and stock market. Can the farmer stand up to them? I want the Government's view about this matter. Sir James Turner said that the reduction to farmers in the 1954 Price Review (that is the year before last) of £33 million in their guaranteed payment over all the industry was really a substantial contribution to the national income. Has any other industry made the same sort of contribution as was then imposed by the Price Review upon the farming industry?
§ VISCOUNT ALEXANDER OF HILLSBOROUGHWell, agreed in the usual way, by economic pressures which can be discussed.
VISCOUNT ALEXANDER OF HILLS-BOROUGHCertainly. It is not really a free market for the farmer, as you would have us think. The Government 989 have now promised a Special Review in regard to the recent wages increase award; but the Minister knows that there is already another application in being for a further increase, and the Agricultural Workers' Union are saying that now even a £7 a week minimum will probably not be sufficient. There is always a serious lag in the recoupment of the farmer of this and other increased costs. He often has this kind of cost increase nearly twelve months before it comes under review at the Annual Review. Is there going to be a lag now with regard to the next increase which undoubtedly is due to take place shortly?
The farmer gets Government assistance, but it seems to me that because he gets assistance automatically he is charged in the Press and in certain sections of trade comment with inefficiency. Whilst I agree that there is always room for improvement in any industry, I would point out that the farmer has been compelled in the last few years, through the Price Review, to make up millions of pounds of increased costs by what is termed absorption into increased efficiency. I doubt whether the figure that the farmer has saved to the country in that respect by absorption through increased efficiency is much less than £90 million to £100 million over the year. He has increased his output by 50 per cent. or more compared with pre-war, in spite of the drift of workers from the land. The 1955 returns show that yet another 30,000 male workers have died or left the land and could not be replaced in the last twelve months.
The Government, instead of boldly helping, have put up further handicaps, with the credit squeeze and such restrictions as will operate in rural areas under the new Housing Subsidies Bill. I want to emphasise to the Minister the grave difficulty which still exists in rural areas over the housing position, and how difficult it is for people in some rural areas who have old-fashioned cottages rented from either their owner-occupier farmer or their owner-landlord. There is a great need for bringing these cottages up to date to meet the demands of the workers; but whilst it is inherent in the original Act, it seems monstrous that in some parts of the country local authorities refuse to put the grants into operation. Therefore, hundreds of pounds have to be 990 spent per house in order to try and bring it up to date.
EARL ST. ALDWYNMay I interrupt for one moment? As I understand it, most of the councils which are refusing to operate this Act are largely those which are controlled by people of the same persuasion as the noble Viscount opposite.
§ VISCOUNT ALEXANDER OF HILLSBOROUGHThat may be so in the noble Earl's experience, but I speak from my own experience; I am controlled by a completely Tory interest, and I cannot get a grant in aid of my cottage expenditure; they simply will not adopt the Act. So I beg the noble Earl not to try to "ride off" the issue like that, because that is not the position.
With all this, I would point out that at the present moment, our gold and dollar reserves are lower by £270 million than in 1951. None of the Government measures to deal with the situation seems to have any full or lasting effect. In many ways, I feel sorry for Ministers faced with the grave problems that face them at the present. time. Nobody who has been in office wants to see individual men—men whom one likes—faced with these serious problems. But one cannot help being critical, looking at the way some of the decisions of the Government have helped to produce the situation. The good fortune that they had in improved international terms of trade in 1952–53 does not seem to have been used to full advantage in building up reserves. Sir Oliver Franks, speaking the other day as chairman of Lloyds Bank, said there had been many opportunities to build up the reserves. Doubtless this was in the mind of Sir James Turner also, when he said that his industry was not going to be selected for special attack in these matters. The cost of living is going up continuously. In his report as a bank chairman Lord Aldenham says that since the last adjustment in January, 1952, it has gone up by 20 per cent. while it is up by only about 2 per cent. in two other important countries and by 7 or 8 per cent. in others.
This extraordinary position has arisen in the last three or four years. Food prices have increased to such an extent that food which a short while ago cost £1 to-day costs 25s. Has the farmer been getting anything like that percentage in- 991 crease in prices? I should like some expression of view from the Government on this aspect, because the money is being expended elsewhere. The Financial Times general table of results of 2,838 industrial companies shows that in the full year 1955 the distribution of ordinary dividends to shareholders increased by 21 per cent.—over one-fifth—compared with 1954. Money is being made in this country, but are the farmers getting that same percentage increase? The farmers have a right to know whether there is any comparison between such increased prosperity and profit and what they have got, for they have had something to do with that prosperity. They have spent £600 million a year in promoting British industry, by having it supply them with their requirements. To-day, agriculture as a whole stands at the cross-roads in a highly inflationary situation which, as an industry, it is not in a position to meet; for agriculture has no real and final control over agricultural prices. When this Review comes we should know that Her Majesty's Government really intend to do something to help farmers. There is agitation in the Press, and elsewhere, and plenty of advice from the other side.
One comes back to the economists who say that taxation is far too high. The economists tell Mr. MacMillan that he should not allow special interests such as farmers (quoted as an industry) to stand in the way of a determined and early drive to reduce taxation, taxation on income, surtax and profits tax; but they admit that the only long-term way is to see that production is increased. They support the credit squeeze on the basis that it will reduce full employment to some extent, though how that will raise production I do not know.
In its attack on the Prime Minister recently, the Daily Telegraph, in a leading article, said:
the remaining food subsidies, agricultural subsidies and rent control still require reform "—by which, of course, is meant reduction. It said, finally and most urgently:Promises to cut Government expenditure still have to he redeemed. This is an outline for action—not a recipe for popularity.The end of the article brought back vivid memories to my mind, for, attacking the Prime Minister, they called for "an axe not a safety razor blade" in carrying out the operation. Farming is threatened 992 with the same kind of "axe" as it had in 1920 and 1921, which brought complete ruin upon it.I apologise to your Lordships for being so long, but I feel deeply about this subject. Yesterday I received a letter from a correspondent, who had seen that I was to speak, giving a broad interpretation of a new farming policy in Germany whereby, though their inflationary position is not so bad as ours, they are to give special attention and priority to increasing agricultural output as a factor to protect them from inflation. That is the Bundestag Act of September, 1955. Yugoslavia is suffering very badly through inflation, her imports being more than twice as much as her exports. She, too, is to redeem the position by increasing agricultural output. Sir James Turner says that since 1938 the increase in agricultural production alone has saved the country £400 million a year in imported food. I believe that his figures are accurate: I have had them checked in other quarters. He says that, with proper support, a much larger sum than that could be saved. If the Government are willing to do it, that is more likely to be a successful long-term policy. The Chairman of the Milk Marketing Board advocates such a policy.
I am sorry that the noble Lord, Lord Archibald, is not here to repeat what he said to me the other day—that the 1947 Act is an enabling Act. I agree that it does not say that the Government must do this or that; but the Government represented opposite made a pledge to the farming electorate that they would stick to that Act. What counts here is the spirit in which they administer the Act. I do not like that spirit. Though one does not see much of this in general Press, I saw in The Times that Sir James Turner's Council had been asking for a Special Review. Though Her Majesty's Government are to grant a Special Review on this occasion they say: "We must warn you that Special Reviews of this kind will, in future, have to be altered to conform to changing circumstances" whatever they may be. There is always the threat or the warning and, as a result, the Government are helping to destroy confidence in a great industry which could be of immense help in the salvation of our country from its present inflationary difficulties. My Lords, I beg to move for Papers.