§ 3.50 p.m.
§ LORD CHESHAMMy Lords, with the permission of the House, I should like to make a statement on behalf of my noble friend Lord St. Aldwyn, who is unfortunately ill. It is on the statutory Annual Review of the economic condition and prospects of the agricultural industry which has just been concluded. The Government have now determined the guarantees to agriculture for the coming year. They have done this in the light of the review and of the long-term assurances provided for in the Agriculture Act, 1957. The details are set out in a White Paper which is now available.
The industry's position has been improving. Net output in 1957–58 is forecast at 63 per cent. above pre-war. This compares with a revised figure of 61 per cent. for last year. It is another record that reflects the strength of the industry. I am sure your Lordships will wish to give credit to all sections of the industry. At the same time, I must remind your Lordships of the warnings that have already been given by my right honourable friend and his predecessor about the upward trends in output of milk, pigs and eggs.
The actual net income of the industry shows a satisfactory level and a rising trend. It is forecast at £360 million in 1957–58. This compares with a revised figure of £314 million for 1956–57. When adjusted for normal weather conditions, the figures are £361½ million for 1957–58 as compared with £333½ million for 1956–57. So on both the accepted bases—the actual basis and the normal weather basis—the net income is far higher than ever recorded before. Costs have gone up by about £11 million in a full year on review commodities. This is the lowest annual increase for some time. Efficiency continues to improve. Together with the increases in the price guarantees and production grants determined by the Government over the last three years, this has more than offset the effects of cost increases.
Her Majesty's Government have taken full account of the needs of the national 335 economy and of our international trading position, especially in relation to the Commonwealth. The fight against inflation continues. The protection afforded to the farmer by the guarantees has involved an increasing Exchequer burden from £206 million in 1955–56 to an estimated £290 million in 1957–58. The long-term assurances will go on protecting him against sharp fluctuations. The value of them at a time of falling world food prices is obvious. Her Majesty's Government have considered the guidance that needs to be given to production of the various commodities; and given most careful thought to the position of the small farmer. Their conclusion, on reviewing all the factors, is that it would be fair and reasonable to reduce the total of the guarantees. The maximum assured by the Agriculture Act. 1957, at this review is £1,257 million. They are satisfied that the reduction can be made without detriment to the industry's underlying strength and should enable the industry to maintain the improvement already achieved. The guarantees are to be reduced by about £19 million. This will leave them some £2 million above the assured minimum.
The determinations now made are for livestock products for the year April, 1958, to March, 1959, and for crops of the 1958 harvest. The general production policy continues to be to foster economic production. The most important aims of the determinations for individual commodities are to discourage the highest cost production of milk, pigs and eggs. The guaranteed price for milk is to be reduced by Id. a gallon, that for pigs by 2s. a score and that for hen eggs by 1¾d. a dozen. On milk the necessary reduction has been limited out of regard for the small farmer. On pigs the existing rates of the quality premium for bacon pigs are being increased by 6d. per score. The guarantee for wheat is also to be reduced by 6d. a cwt. The guaranteed price for fat cattle is to be increased by Is. a cwt., to be used for further encouragement of quality production.
The nitrogen subsidy is to be increased by £1½ million. The guaranteed prices for fat sheep, wool, barley, oats, rye, potatoes and sugar beet remain unchanged, except for a small increase in 336 the support price for potatoes to compensate for an increase in the size of the riddle for guarantee purposes. The support price system for potatoes has been under consideration. This is to remain unchanged for the 1958 crop, but arrangements for altering the system for the 1959 crop will be announced by July 1, 1958.
Possible revision of the Marginal Production Scheme will be discussed with the Farmers' Unions. Her Majesty's Government intend also to start discussions about proposals which they are preparing for additional provisions designed to give further assistance to the small full-time farmer. The determinations now made meet the requirements of national policies and will enable the industry to maintain a fair and reasonable level of remuneration.
§ 3.58 p.m.
§ LORD SILKINMy Lords, we are grateful to the noble Lord for stepping into the breach caused by the regretted illness of his noble friend. It would have been much better if his noble friend had been able to give this bad news to the House personally, instead of through the noble Lord. This statement will be read with great despondency by every member of the farming community and particularly by the small farmers, whom it hits harder than any other section.
Of course, it is impossible to digest all the figures which the noble Lord has read out, or to attempt to have a full discussion, and the noble Lord will not be surprised if I say that at the earliest opportunity we should like a discussion on this matter. In the meantime, may I ask him one or two questions, which I think he will be able to answer? The first is: has this Review been agreed to by the farmers' unions or is it imposed upon them? Secondly, is it a fact that the justification, if any, for this reduction in subsidy is based upon a comparison between an estimate of the net income for 1957–58, a year which has not yet come to an end, with the actual income for 1956–57? Is the noble Lord in a position to say what the net income will be for a year which has not yet finished and to justify a reduction in subsidy on those figures?
I have also a small point—I do not know whether the noble Lord can answer 337 this—on the pig subsidy. The noble Lord refers to an increase of 6d. in the premium for high-grade pigs: is that to come out of the 2s. reduction? In other words, will the reduction be more than 2s., to compensate for the 6d. premium, or is the 6d. premium a sort of additional advantage to farmers who are able to secure this difficult achievement of getting a Grade A pig? I think that is all I want to ask at the moment, but the noble Lord can rest assured that he will be hearing more about this subject.
§ THE EARL OF DUNDEEMy Lords, could my noble friend explain what is meant by saying that the reduction in the price of milk has been limited out of regard to the small farmer? Does that mean that there is some discrimination in favour of the small farmer, or does it mean that the price of milk would have been reduced still further if there had not been so many small farmers producing it?
§ LORD CHESHAMMy Lords, I am grateful to the noble Lord, Lord Silkin, for his kind words. He will not be surprised to know that I, too, regret the absence of my noble friend. Perhaps he will also not be surprised to hear that I had hoped he would not regard this as quite such bad news to all and sundry, and particularly to small farmers. I should like to remind your Lordships that there is a battle against inflation going on which comes into every aspect of our national life; and the fact is that this has been an extremely careful deter-ruination, as might be expected, and not simply a wholesale cutting of what could have been reduced to the maximum. I had hoped that, even if the noble Lord were right, small farmers might have drawn some consolation from the fact that we have announced the consideration of schemes to help. However, perhaps that will be for another day when a little more is known.
I regret to say that the farmers' unions did not feel it possible to agree with the determination, although they have been taking their full part in examination of the general economic conditions and prospects of the industry. It may be as well for me to add that all the figures of income, output and so on were agreed, as they usually are. The noble Lord then asked me if the figure of £360 338 million had been taken as a basis for this determination. I think it is correct to say that it was. Sufficient information is available, although no forecast can be completely accurate. To be quite honest with the noble Lord, I do not at the moment know the answer to the question about the pig subsidy, but I will find it out and let him know as quickly as possible.
§ LORD SILKINIt is certainly not clear from the statement.
§ LORD CHESHAMI will endeavour to see that sufficient clarifying information is provided as quickly as possible. My noble friend Lord Dundee asked about the limitation on the reduction of the price of milk. What I intended to convey was that because milk is such an important product to the small farmer, the reduction was limited and not taken to what it could have been under the long-term assurances, and possibly economically should have been, which is a figure of a fraction under 1¾d.