FATSTOCK (GUARANTEE PAYMENTS) (AMENDMENT No. 2) ORDER, 1956

HL Deb 31 October 1956 vol 199 cc1232-9

2.41 p.m.

THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (EARL ST. ALDWYN)

My Lords, the purpose of this amending Order is to permit supplementary payments to be made to beef producers whose cattle have been certified for guarantee payments during the present fatstock year which ends on March 24, 1957. I should like to state briefly what these supplementary payments are. I would first stress that the), are in no sense of the word a bonus to the industry; they are payments which become necessary in order to enable the Government to implement their price guarantees which were given after the last Annual Review.

Last February, producers were told that there was still a need for more good quality beef, and to encourage this the standard price was raised by 12s. 4d. per cwt. to 151s. per cwt. This is an average level for the whole year, and the supplementary payment of about 11s. per cwt. which was announced last Thursday is designed to approximate producers' returns to that standard price. How close we shall get to it will, of course, depend on the course of market prices, but the producers' representatives agree that this payment is based on the best estimate that can be achieved. As I say, the supplementary payment of 11s. is an average for the whole year. In agreement with the National Farmers' Union, we decided to graduate this payment to secure a fair distribution of the total sum. The supplementary payments will be highest in the earlier part of the year when the guarantees under the rolling average system were lowest, and they will be lowest in the final periods of the year when the ordinary payments will be highest. I gave full details of these payments in a reply to my noble friend Lord Bridgeman on the 25th of this month, so I do not feel that I need go into any more details here. I would emphasise that these graduated payments which are, as I say, agreed with the National Farmers' Unions, do no more than remedy the defects in the present system by bringing the guarantee payments more in line with what they would have been if the system had in fact reflected price movements more quickly.

I should like to say a word about the present system. The guarantee payment is the difference between the standard price agreed at the Annual Review and the average realisation price over the preceding fifty-two weeks. This system has been in force since decontrol in 1954 and, by and large, it has not worked at all badly. In fact, for sheep and pigs it has worked extremely well this year. It has been found, however, that it does not respond sufficiently quickly to abnormally sharp and sustained movements in market prices. This year the trend has been downwards, and because the high prices of last year, which were an aftermath of decontrol, were still in the 52-week calculation, the rates of guarantee in the early months of this livestock year were very low in relation to the market prices. Because market prices have continued to fall the guarantees, although rising substantially each month, were just not able to catch up with them and, as a result, as the year progressed, there was a substantial shortfall of the standard price. The short-fall would not have been anything like so striking but for the very substantial increase in the standard price. Also, in due course the present system would have made good the short-fall but it would have taken a long time. This briefly explains what these supplementary payments are and why they are made.

I should like to say a word about the new system Which will make supplementary payments unnecessary in future. We and the farmers' unions, with whom we have been having helpful and amicable discussions, have thought up a large number of possible new schemes. Most of them we together have found necessary to discard for one reason or another. I will not bother the House with them now. My right honourable friend was determined to find a simple scheme so that everybody had a good chance of understanding it. I am sure the House will welcome that. It has become clear that, to be satisfactory, an alternative scheme must provide, just as hitherto, that the guarantee payments for each period are known in advance and also that payments are made weekly. Another requirement is that the period taken into account in determining the deficiency must be a shorter period than the fifty-two weeks which we have been using up to now. Our present intention, therefore, is to base these payments on an accounting period of four weeks. We think that the safeguard introduced this year of fixing stabilising limits each side of the standard price so as to ensure that average weekly returns do not fluctuate violently is a good one. In the circumstances of this year, however, the present range has proved too wide, and for the future we shall fix a narrower range. If we do this we shall have seasonal scales for cattle and sheep.

These, then, are the principles of a new system for which we have the full backing of the producers' representatives. They believe, as we do, that a system based on these principles will be the most reasonable that can be devised in the light of our experience of two and a half years since decontrol. It will come into force for the next livestock year which begins on March 25 next year. We are now working out details of the scheme and will be able to publish them very shortly. The precise figures for the standard prices, the stabilising limits and the seasonal scales will, of course, be determined, as hitherto, after the next Annual Review. My right honourable friend has already undertaken that next year's standard price for cattle will not be less than the present one of 151s. This is a further proof of our determination to encourage the industry. Together with the promise of a new guarantee scheme and of the supplementary payments, it affords concrete evidence of the Government's faith in the future of the livestock industry. The numbers are rising steadily and we confidently expect them to go on rising to provide a still larger share of the increasing meat requirements of this country. I beg to move that this Order be now approved.

Moved, That the Fatstock (Guarantee Payments) (Amendment No. 2) Order, 1956, reported from the Special Orders Committee yesterday, be approved.— (Earl St. Aldwyn.)

2.48 p.m.

THE EARL OF HALIFAX

My Lords, it would perhaps be right that a word should be said on behalf of those principally concerned with the operation of this Order before the noble and learned Viscount formally puts it from the Woolsack. I happen to be one of those who, on an earlier occasion in this House when a new Order which was to supersede the old one was under discussion, ventured to tell my noble friend that I had been unable to understand it and that I did not think that my situation in that regard was at all peculiar. My noble friend exhibited sympathy, but at that stage was unable to give me any greater comfort or guidance. Therefore, it was with particular pleasure to-day that I heard him say that he and his right honourable friend for whom he speaks felt that one of the most important things was to produce an Order which the average person would be able to understand. I am quite sure that the average farmer who is concerned in this business of producing beef will be extremely happy if he is able to understand the Order to which my noble friend referred.

The thanks of the agricultural beef producers are due to my right honourable friend in another place and to the noble Earl here for their ready recognition that the undertakings and the pledges given a year or two ago had not been, though not through any fault of their own, fully fulfilled, and for their readiness, with those who are able to speak for the agricultural interests, to devise and consider further plans. I conclude by expressing the hope that the new proposals which my noble friend will in due course lay before us will not only be, as he has said, simply conceived, but will also achieve the purpose that he. and I have no doubt, the vast majority of your Lordships' House, have in view. I thank him very much.

2.50 p.m.

LORD WISE

My Lords, we on this side of the House can welcome this Order. It was welcomed almost unanimously yesterday in another place. I think it is right that we should pay tribute to the Government for having introduced this Order and this particular amount of compensation. With regard to what was said by the noble Earl who has just sat down, it is true that the original Order was clumsy and not very well understood by anybody. I think that is borne out by the fact that, for this particular stage of the year, the payments between October 8 and November 4 will necessitate the sending of no fewer than four individual cheques for one beast to the farmer.

There is, first of all, the auctioneer's cheque for the sale of the beast at auction; there is then a cheque, or rather a payment, according to the ruling average; there is also a stabilising adjustment payment, and there is an additional payment per hundredweight for the particular beast. So, in effect, at this particular moment, by reason of the original Order and the new Order which we expect to pass to-day, the farmer can receive four cheques for one beast. An operation such as that is just ludicrous, and I am glad that the Government have decided upon the introduction of a new system. I hope that the system which is under consideration will be announced before the February Price Review comes about.

EARL ST. ALDWYN

Yes, it will be.

LORD WISE

That will enable the farmer to decide what his methods should be in regard to fatstock in the future; it will also enable him to decide whether or not it would be more beneficial to him to put his stores into the store market or to retain them, and therefore it will be to the advantage of everybody.

I conclude that the new procedure will include pigs and sheep. In regard to sheep, I should like the Minister to tell us whether he envisages any additional payment, more or less on the lines of the payment under the present Order, in regard to pigs and sheep, or whether the Ministry are satisfied that during this year those two classes of stock have received fair treatment in the existing circumstances. Certainly, pigs have gone up and down in price. I think sheep have been more stabilised, but some other payment may possibly have to be made, in order that the return to the pig farmers and sheep farmers shall be in line with the standard prices under the original Order.

There is not much that I want to say on the question of the old Order; it is coming to an end, and I have no doubt that the Ministry will be very pleased when March next year comes and they can introduce something fresh. I think, too, that farmers as a whole will say "Thank you" to the Ministry for the additional payment which is about to be made. When that payment will be received by the farmer seems to be a little uncertain. I. see that in another place it was suggested that the first payment should be made for the March sales, under Stage I. On the calculation that £11 million will he the amount of money to be received, and on the calculation of an average of 11s. per hundredweight equalling possibly on an average beast about £5 a beast, it looks to me as if 2 million cattle will have gone through the operations of the Ministry this year and that approximately 1½ million new cheques and new calculations will have to be immediately dealt with by the officers of the Ministry. Obviously, that is an administrative task of some importance and magnitude, and I am wondering when the Ministry will be able to reach Stage 8, at which we are. at the present moment, and when they will be able to reach the payment to the farmers for Stages 1 to 8.

There is one question that I should like to put to the Minister in regard to imported cattle. Will imported cattle attract the same payment as the cattle of home producers? I gather that imported cattle are at the moment subject to a small payment of 3s. 6d. per hundredweight. In regard to the additional payments, will the owners of imported cattle which have been certified and gone through the market receive the same payment under the new system as home producers?

There is one point about the last stage which I should like to bring to the notice of your Lordships and of the Minister. According to what has been said in another place, the eighth stage is based on an average market price of 100s. per hundredweight with the benefit of additional payments of 37s., making 137s. in all per hundredweight of the beast. Stage 13 receives the benefit of total guaranteed payments of 38s., and it appears to me, therefore, that that 38s. is based on an average market price of the beast of 90s. per hundredweight at March next year. As the Minister will agree, 90s. per hundredweight for fat cattle is a very low figure. Are the Ministry prepared to agree that the next standard figure should be at the same rate of 151s. per hundredweight? If the livestock market is so low at that time as only to realise 90s. per hundredweight for fat cattle, then the payments which the Ministry would have to make next year will be very high indeed. I wonder therefore, whether it is the view of the Minister that the price of fat cattle next March will be low, or whether it will be more or less on the same lines as it is at this particular time.

EARL ST.ALDWYN

Which particular time?

LORD WISE

March of this year. The point I wish to make is: are we to expect at the end of this particular year—that is, in March, 1957—that the price of fat cattle will have depreciated to a considerable extent?

I want now to come for a moment to the position of the consumer in these operations, and I hope that it may be possible, when the Minister brings in a new scheme next year, for some safeguard for the benefit of the consumers to he introduced. The price of fat cattle has Varied very considerably during the year. There has been a decline throughout the months. If any noble Lord were to look at the receipt side of a farmer's accounts at this moment, and then go month by month through sales of fat cattle, he would find that there has been a decline in the farmer's receipts for fat cattle and an increase n the deficiency payment. I am not at all certain that, as the prices of fat cattle have been reduced in the markets, we, as consumers, have received the benefit of lower prices for British fat cattle—the best beef in the world, the beef which, as a nation, we ought to be eating. I am wondering, therefore, whether, in any new scheme which the Minister envisages bringing into effect in 1957, some consideration can be given to the consumer. That is all I wish to say on this Order. I hope that it will go through and, to return to where I started, may I say that I believe that it will meet with thanks from the farmers: they will find what I hope will be a substantial Christmas present from the Minister very acceptable.

3.3 p.m.

EARL ST. ALDWYN

My Lords, I should like to thank noble Lords for the welcome they have given this Order. The noble Lord, Lord Wise, thinks that there will be four cheques going to individual farmers, but in fact there will be only three, as the stabilising adjustment does not mean a separate cheque.

LORD WISE

There will be four payments.

EARL ST. ALDWYN

The noble Lord actually mentioned "four cheques" and I was only pointing out that there will, in fact, be three cheques, not four. The new scheme will definitely be out before the end of the next Annual Review. We hope that these supplementary payments will be completed by the end of this fatstock year—that is, at March 24 next—which means that we shall start payments as soon as we can; but as the noble Lord pointed out, administratively it is a big problem. We are fairly confident, however, that we shall be able to complete the operation by the end of the fatstock year.

There will be no supplementary payment for either sheep or pigs. Arrangements for both of these have worked extremely well and there will be no justification for supplementary payments. The noble Lord, Lord Wise, also raised the question of payments on imported cattle. In the first period it will be 6d. per cwt. less than the others but after that it will be the same. The noble Lord asked me to forecast the price of cattle next March. I am by nature a timid man, and I should hesitate to put a firm figure on it, but I should have thought it would be fair to say that it would not be very far distant from the figure at which it stood at the corresponding period of this year. If it should vary, however, I hope that the noble Lord will not hold me to that.

On Question, Motion agreed to.

House adjourned during pleasure.

House resumed.