WHEAT PRICES (Hansard, 28 March 1957)

§ LORD WISE
My Lords, I beg to ask the Question which stands in my name on the Order Paper.

THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (EARL ST. ALDWYN)
My Lords, Her Majesty's Government are aware of the recent downward trend in the price of home-grown wheat and, as the noble Lord, Lord Wise, has indicated, prices are now about 30 per cent. below the standard price for the current period. They approximate closely to those current at the same period in 1955. The deficiency payments, however, guarantee to producers the difference between the average price realised for all wheat and the standard price; and unquestionably these arrangements discharge the Government's obligations to producers under the Agriculture Act, 1947.
The suggestion that the price of wheat ex-farm should be stabilised at a level close to the standard price has been carefully considered. Such a step would mean, in effect, a return to fixed prices for growers, and this could not be carried out without reimposing comprehensive Government control of the wheat trade and the users of wheat. Growers would then be without any incentive to produce and market their wheat efficiently and the cost to the Exchequer would in all probability be increased.

§ LORD WISE
My Lords, I thank the noble Earl for the full Answer he has given to my Question, but does he not think it most unsatisfactory, from the farming point of view, that the Government should have fixed over certain periods standard prices but that the actual prices to the farmer should be so very much lower? Also, is it not a fact that, by reason of the very low prices which are prevailing at the present moment, the Government will be faced for this particular period with heavy deficiency payments, running into some hundreds of thousands of pounds, which could have been avoided if some procedure had been introduced enabling merchants and the 864 millers to buy British wheat at more or less the price fixed by the Government as the standard price?

EARL ST. ALDWYN
My Lords, may I say, first of all, that the farmer is not going to lose anything by this method. As the noble Lord knows very well, the standard price is graduated over the season to try to discourage the flooding of the market immediately after harvesting. That is its main object—to spread it over the year. I agree with the noble Lord that probably a fairly high deficiency payment will have to be made, but the farmer will not be the loser. Certainly there was nothing to prevent the millers from buying the wheat immediately after harvest, if they had so desired. Basically, I think the reason that a great deal was not sold then was that the storage capacity of the mills is limited. Once they have sufficient, they do not want to load themselves up with a great deal of unnecessary corn.

§ LORD WISE
My Lords, while appreciating the point the noble Earl has made—I realise that the farmers will not lose unduly by the heavy deficiency payments—some farmers certainly will not reach the standard price on their wheat. Is it not ironical, in view of what the noble Earl said, that damp wheat should be at a high price just after harvest and that, when we come to March and get a dry wheat, the price is so much lower? It seems to me perfectly absurd that we cannot organise our marketing arrangements so that the price is kept at a reasonable level for the farmer.

EARL ST. ALDWYN
My Lords, we believe most sincerely that the ordinary process of supply and demand should have free play and although prices vary, that is because the demand varies, as well as the supply.

§ VISCOUNT ALEXANDER OF HILLSBOROUGH
My Lords, is it not now becoming apparent that the Government's intention was clear five years ago when they refused to sign the International Wheat Agreement? All these fluctuations stem from that decision, and now, because of the situation and the statistical position of the world wheat market, instead of saving a good deal of money out of it the Government are mulcting the British taxpayer by giving a larger measure of subsidy.

EARL ST. ALDWYN
My Lords, I do not think we can go into the International Wheat Agreement at the moment, but my own reaction is that if we had joined the International Wheat Agreement we should be in a worse position than we are at present.