§ 2.52 p.m.
§ LORD WISE rose to draw attention to the state of agriculture; and to move for Papers. The noble Lord said: My Lords, in moving the Motion standing in my name on the Order Paper may I make one short apology to those Members of your Lordships' House who are interested in agriculture for the fact that my Motion appeared on the Order Paper only a few days ago and is being dealt with to-day. That short space of time may have made it difficult for Members of your Lordships' House to attend, but it was for the convenience of many that the Motion was brought forward to this afternoon.
According to the report of the National Farmers' Union Jubilee dinner held a few days ago a speech was made in which it was said that the position of agriculture is impregnable. I wish I could think that that was the fact. Strange things are sometimes said in after-dinner speeches. I can only assume that there was a desire to please and satisfy an already well-dined farming audience. I personally can find little in the agricultural position to suggest that there is much realism in the impression that our industry at present is impregnable. Rather would I suggest that it is vulnerable, and that the immediate future, after many recent setbacks, might be described as being precarious. This view is also borne out by a speech by the President of the National Farmers' Union at Oswestry, at another Jubilee dinner, in which he is reported as saying—I quote:
The National Farmers' Union is fighting a rearguard action. Its present task is not necessarily to make things better but to stop them from getting worse.
§ There we have two conflicting views. The President of the National Farmers' 777 Union, with his day-to-day knowledge of the industry and his long, practical experience in it, is probably right. None of us is anxious that there shall be any setback in agriculture which would still further lower the standard of living of those in any way engaged in it. The President of the Union, also at the Jubilee dinner in London, is reported to have called for consultation and working arrangements with other Governments. Again, I think he was right. British farmers alone cannot solve our difficulties. There is a call for international and Commonwealth action. I hope that the Government will take note of that call. What I have to say at a later stage will suggest a lead in his direction. Agriculture seems to have passed its post-war peak of prosperity. The responsibility for this does not lie with the producers, be they farmers or farm workers; their efforts in recent years have been magnificent. The increased production rate is well-known, but those engaged in the industry are not masters of their own fate; it is in the hands of the Government.
§ We have just had the most trying harvest of recent years and it followed the harvest of the previous year, which, equally, gave us very little satisfaction. We shall feel the effects not only in this new year of agricultural planning and activity, but possibly far beyond that period. Our crop yields in general have been lower than usual, and our costs of production and harvesting have probably reached the highest level ever. The prices received under the prevailing systems have not been commensurate with the higher costs incurred, and in some cases our products have been sold at figures which, if careful and accurate costings were carried out, would bring, all round, not a profit for our labours and outlay but an appreciable loss. The receipt of Government subsidies and deficiency payments have materially helped to keep farmers solvent and in business, but the increase in farming retirements and consequential Michaelmas farm stock sales may not be without significance. I admit that the reverse might be suggested, but there does not seem to me to be anything here to be enthusiastic about, and certainly no semblance of impregnability.
§ The lessening of farmers' incomes by successive Price Review arrangements 778 and the call for greater and even greater efficiency when there is a financial strain provide no solution. The overall efficiency of the industry is higher now than at any time. It is so easy to call for improvement, but so difficult to accomplish in an industry which is made up of small and widely scattered units and in which, for that reason, employment is of small average, taking farm by farm. Manpower in the industry has declined from 700,000 in June, 1956, to 685,000 in June, 1958; and, unfortunately, unemployment in the industry is rising. The figures for September last, a few months ago, show 9,800 agricultural workers unemployed at that time; and in my own County of Norfolk I think that the percentage may be an even higher percentage. These losses in manpower cannot all be the result of the greater use of mechanical equipment and the fuller application of science to farming; undoubtedly, they show that many skilled men have sought, and probably found, employment in other industries. We cannot afford to lose men of talent and skill; we must endeavour to retain them and to pay them well.
§ I have often spoken of the disadvantageous system under which we sell our mature livestock. This afternoon I wish to call your Lordships' attention mainly to the position in relation to the costs of production and the sale of cereal crops. First of all, let me deal with costs. As a general rule, we farmers cannot buy services, items of necessary equipment and commodities for production—excluding, of course, livestock and second-hand machinery and implements—except at the price which has been fixed by the individual or group of retailers, merchants or manufacturers. Our own selling prices are not fixed by ourselves but, for the most part, are settled in advance, week by week, by the consultations and operations of buyers, dealers, merchants and big processing concerns. In these operations the consideration is not the interests of the producers, but the eventual gain and profit of those in consultation—a pretty one-sided affair, with the dice loaded against the producer.
§ LORD WISE
My Lords, my noble friend remarks "And the consumer", which is perfectly true. With the exclusion I have just mentioned, the farmer has no 779 power to control the price of what he wishes to buy. According to his financial means he may be able to affect the demand for a particular requirement, or receive a discount; but he cannot fix the initial price of the article, and if his needs are great and immediate he has to pay what he is asked. Very little bargaining enters into an emergency transaction when the farmer is in the market to buy something.
By the operation of the purchase tax Her Majesty's Government exercise some percentage measure of control upon the price of certain articles, but I wish they would be more concerned about rising costs in agriculture, and possibly other industries, and take such steps as must be open to them to investigate and endeavour to stabilise such costs. They play a significant part in trying to steady labour costs in industry generally, but I should not think unkindly of them if they were to tackle the problem of trying to curb the costs of manufacturers, merchants, distributing agencies and others which are thrown upon the goods sold by them to farmers and country people.
In many instances intermediate costs could be entirely eliminated. They only add to the farmers' burdens. I know of the Government's opposition to control generally, but that is not a valid reason why they should be reluctant to exercise some measure of control in matters which deeply affect the well-being of those engaged in a large national industry. We meet Government control in all kinds of ways throughout our lives. The level of costs must play an important part in the efficient running of a farm, and the financial means left at the disposal of a farmer affect in no small measure his ability to increase or lessen his food production. It affects his own livelihood and that of his workers.
There is a great desire (and this was mentioned in a Jubilee speech a few nights ago) that young men should be encouraged to enter and remain in our industry, but the cost level makes it almost prohibitive for a young man working in agriculture either to improve his position or obtain a farm on his own. There are, of course, other factors which may govern this matter, but the cost of stocking, equipping and running a farm lessens his prospects of success. I could take your Lordships through the whole range of costs, from seed-time to harvest, 780 but I do not want to do so for they are known to your Lordships; but the appreciable increase during the last few years would no doubt convince your Lordships that something should now be done by Her Majesty's Government to stop the hole in the farmer's purse.
I shall probably be told that we can be reimbursed our additional costs in the February Review, but that does not always work out in practice; and the industry has already been called upon to find many millions from its own resources. I want to impress upon Her Majesty's Government the need for sincere consideration of what I have said regarding rising costs incurred by farmers in the course of their business. It is not beyond the wit of man to devise some acceptable and reasonable system of regulating costs, prices and profits and I commend the agricultural industry as a fitting one for the operation. This would indeed be a suitable holiday task for the Minister and his Under-Secretaries in the Christmas Recess of good will and good cheer, and I hope that they will tackle it.
I want now to deal for a few minutes with the present methods of sale and purchase of our cereal crops, and wheat in particular. By the courtesy of the noble Earl, Lord Waldegrave, who will reply, I am able to give your Lordships some figures of deficiency payments made by Her Majesty's Government over the last four years. Personally I do not like that word" deficiency "for it is too near to the suggestion that the payment makes good a loss. I feel that we could find a happier expression. Here are the figures of the deficiency payments. In 1954–55 they amounted to £24,300,000; in 1955–56, to £17,600,000; in 1956–57, to £19,160,000; and in 1957–58 (that is, last year) they mounted to £22,040,000. That shows the amount which the taxpayers had to pay to make up the difference between the standard price laid down by the Government and the amount at which home-grown wheat was sold by farmers to purchasers during those years.
If, in the view of Her Majesty's Government, home-grown wheat is worth a certain standard price according to the period of its sale, then I suggest that the merchants and millers should pay to the 781 grower a price, according to quality, equal to or closely approximating that standard price. The standard price for wheat for this month is 26s. 11d. per cwt. The average price for England and Wales for the week ended November 8 was 21s. 4d. per cwt.—a difference of 5s. per cwt. That means, in effect, that the British taxpayer will be called upon to pay a deficiency payment for that wheat of probably about £5 per ton for that particular period. I believe that the figure of just over £5 per ton was the deficiency payment which has been made during the last few days, or is about to be made, for the first period of this agricultural year.
Wheat buyers are getting our wheat too cheaply, and too heavy a levy is being made upon the taxpayer. Possibly I shall be told outside your Lordships' House that English wheats this year are not suitable for certain uses and that foreign wheats have had to take their place but the margin of difference between the ceiling and the standard price has always been too great, as has been shown by the figures of deficiency payments which I have just quoted. When our wheats have been dressed, and come back to us for seed purposes, the price charged to us bears very small resemblance to the price which we obtained for our best samples. It is much above the standard price. There is generally a very handsome profit on seed dressing, with its comparatively small use of manual-labour and machinery. But who among us can say there is a reasonable profit, if any, to the farmer for his year-long labour of growing the product at present prices?
I want to suggest an alternative, tried in some respects with success in the past, during the period of the war and the peace afterwards, in the interests of the nation. This alternative will assure to the farmer a fair price for his products, fair payment by the purchaser and a minimum assistance contribution, if any, by the State. The consumer would not suffer in any way. Again, I may be told that if we adopt a method of increasing the price of home-grown wheat, then imported, foreign, or Commonwealth wheats will be purchased by merchants and millers in preference. That can easily be prevented. May I again remind your Lordships that the President of the National Farmers' Union spoke of inter- 782 national co-opersation in our efforts to feed the world? I want to see international co-operation at Government level in the purchase of our imported wheat supplies. It is essential for our national needs and welfare.
Instead of paying growers deficiency payments of over £20 million a year, I would suggest the appointment of a wheat purchasing commission or board, charged with the duty of purchasing, on behalf of the nation, the whole of our home-grown wheat and, by bulk purchase, our requirements of imported wheat. Many national commodity-purchasing boards are already operating with marked success and benefit to the producers. They purchase from us at settled quality prices. I think it is estimated that our farmers can supply about a quarter of our wheat requirements, the rest being imported. That basis will do for my particular purpose this afternoon. Under such a system as I suggest the whole of our needs in home-grown and imported wheat would he bought by the board. The price could he averaged out according to the period of the year and the tonnage of each purchase. The farmer would be paid for his wheat, according to quality, on that average figure. The sale by the board to the merchant, miller or processer, would be made at a figure to reimburse the board accordingly and to cover administrative expenses. There would be no deficiency payment or subsidy involved in these transactions, and much of the uncertainty of prices and gambling in markets would be obliterated.
In endeavouring to suggest (and here I make an apology to the House) a system whereby we can control at essential points the price, importation and sales, I am not unmindful of the fact that action upon these lines was advocated in another place in another emergency period by a very near relative of my own who may be remembered by several of your Lordships who were his contemporaries. That was nearly thirty years ago, but the same troubles prevail now as prevailed then. But I do so even again, as I feel that if we still have to continue to pay our farmers heavy deficiency payments for their products, when they should receive fair prices from the initial purchasers, we perpetuate a system which may in the long run be harmful to our industry. The need for an expanding 783 agriculture is as great now as it was in the days I mentioned a moment ago. We want to encourage expansion and prosperity. We cannot take our minds from future possibilities and eventualities. We must look ahead and take steps to safeguard our agricultural industry and the interests of the nation.
I have only sketched an outline, so far as wheat is concerned. Barley presents much the same problem, and was subject to an acreage payment from the Exchequer last year of £21,360,000. It could be dealt with on more or less similar lines and the home-sales price increased to the purchasers. British barleys are best. A sound agriculture is an economic and social necessity. We must assure to all our food producers a stable, secure and satisfying livelihood, and to all consumers an opportunity of obtaining high-quality, wholesome British-produced food in ever-increasing quantities and at prices which bear relationship to their ability to buy. That is all I want. That is what I ask the Government to assure. In my view, these needs are not met under existing conditions, and the future appears to be insufficiently provided for. My Lords, I beg to move for Papers.
§ House adjourned during pleasure, and resumed by the Lord Chancellor.
§ 3.17 p.m.
§ LORD AMHERST OF HACKNEY
My Lords, I am sure that we all welcome the Motion which the noble Lord, Lord Wise, has put down this afternoon; and I am sure that we shall all agree with him that a sound agriculture is a vital necessity for the economy of this country. But I think that perhaps he took a rather gloomy view of the present situation. It may be true, as he said, that Sir James Turner, in a speech made the other day, said the farmers were "fighting a rearguard action". All one can say is that perhaps they are fighting a very effective rearguard action. When dealing with the general situation of agriculture I think that one has to a certain extent to ignore the present difficult and expensive harvest, although, as the noble Lord said, it will have its repercussions for some time to come.
If one applies a few tests to the present situation of agriculture I am not certain 784 that one comes to quite the same conclusions as did the noble Lord, Lord Wise. One might apply tests of production, incomes, investment and demand for farms. If one looks at production, as the noble Lord suggested, one finds that present production is about 63 per cent. above the pre-war figure. In 1950–51, it was 45 per cent. above the pre-war figure. The point we ought to note is on how wide a front that increase in production has taken place. The arable acreage, for instance, is slightly up in 1958 as against 1957; the wheat acreage is up, and the barley acreage is also up, although the acreage of oats is slightly down. Then if we take cattle we find that the present figure of over 11 million is a record. I think the figure is up in almost every category of cattle except that between two and three years old—presumably due to the fact that to-day people like eating the meat from younger cattle, so that the majority of cattle are now killed at two years old, whereas previously they were killed when they were about three. There has, of course, been a fall in milk production, but not a very large one. There has been a fall of 8 million gallons: but I do not think that that alone is a thing that we should regret, because, after all, a short time ago our main difficulty was to dispose of the milk that we were producing. So I do not think one can say that the position, so far as cattle are concerned, is unsatisfactory.
Then we come to pigs. Many are the tears that have been shed in this House over the fate of pigs and the way in which the price has been continuously reduced. Yet the fact is that the number of pigs stands at the moment at 6,578,000, which is an all-time record. It seems odd that, if the pig producers are not doing reasonably well out of their pigs, they should have increased their herds to this very large extent—because, after all, pigs are a class of animals which fluctuate most quickly, and numbers can go down very rapidly indeed if things are not satisfactory. So I feel that we can be satisfied that production is on a very wide front, and also that this production has been achieved with a much smaller labour force. Whether at the moment the labour force is too small or not, I do not know. One would have expected it to fall, of course, owing to the amount of machinery which is now being used in the industry, and it has in fact fallen, between 1951 785 and 1958, by 128,000 men all told. That is a very large figure. Whether it is too large, whether there are shortages of labour in agriculture, I do not know. I do not think there are many at the moment, but obviously we want to keep a good supply of skilled men in the industry, and to pay them well. That is the essential factor if the industry is to expand.
If we take investment, we find, as the noble Earl, Lord Waldegrave, said the other day, that there have been some 65,000 schemes under the 1957 Act alone; and one has to remember that, although the Government pay for one-third of those schemes, two thirds of the cost has to be found by the industry. That does not show much signs of a reluctance to invest, at least in the fixed equipment of the industry. Let us look now at agricultural machinery. If one takes the second quarter of this year, which is the last period for which figures are given in the Digest of Statistics, we see that there was a production to the value of £39 million, of which £20 million worth was exported. That leaves a fairly reasonable balance for our own farms.
My Lords, I should have thought those facts showed that, both on the capital equipment side and on the machinery side, there is very little reluctance on the part of farmers to invest in their industry. After all, you do not invest in something if you are worried about it. If you think that it is going down, you draw in your horns: you do not invest your capital. Further, I do not think anybody could say that there is not a very large demand for farms at the moment, or that the prices of farms show any signs of falling. As the noble Lord, Lord Wise, said the other day, there are thousands of men who are waiting for smallholdings. One cannot imagine all those thousands of men wishing to enter an industry if they have little confidence of the future. For that reason, I do not think that even on that side we can say there is a great deal to worry about.
We must, of course, pay tribute to the National Agricultural Advisory Service and to the research stations, which have done so much to improve yields, to help farmers in their methods of husbandry, and to help them in the breeding of cattle. That has all played a great part in enabling farmers to produce more efficiently and to produce larger yields; 786 and that, in turn, has been reflected in the efficiency of the industry, from which the country as a whole has benefited.
There is one other point on which I should like to say a word. It came in the speech made by the noble Lord, Lord Wise, the other day—and he has spoken on the same lines again to-day. One cannot help feeling that there is a sort of nostalgia—a desire to go back to the days of fixed prices; that is, I think, what he was arguing for to-day in the case of cereals. I do not think that any of your Lordships who are farmers would in the least mind selling at fixed prices, provided that those prices were high enough: and I think that that, broadly speaking, applies to anybody who wants to sell any commodity, whether it is corn, an animal, a motor car, tin or copper, or whatever you like. But the test really is: what is that animal worth?
In his speech in the debate on the humble Address the noble Lord said [OFFICIAL REPORT, Vol. 212, col. 70]:But I am certain that what the industry would prefer is to know that our commodities can be sold at stable prices and for what they are worth.What exactly are they worth? Are they worth the cost of production and a reasonable living for the farmer? If we take, say, a bullock which the noble Lord, Lord Wise, has produced, is the test of its value to be the cost to him or has the person who is going to purchase it any say in the matter? What is the value of a picture? Is it the cost of production or is it the quarter of a million pounds for which some pictures have recently been sold?
I think that the noble Lord has in mind the cost of production plus a reasonable profit for the farmer. Yet is the farmer alone to feel none of the effects of supply and demand? Is he to be completely immune? If he can at any time sell what he produces at a fixed price, regardless of the market, what is going to happen to the purchaser? He has only moved it on one stage. It seems to me that unless we control the whole market, the home and imported markets, and everything connected with them—and I think the noble Lord was prepared to do this—then the person who buys, whether the merchant or the Government, is going to stand the risk. It seems to me much better, particularly 787 in the case of animals, to have the position as it is. If prices are low, the farmer is encouraged to keep his animals on the farm a little longer before taking them to the market. Under the noble Lord's scheme, if he takes them to market at a time when there is a surplus it means they will be bought by the Government, who will then have to build expensive cold stores to keep these wretched animals in until they are produced on the market later, when they are less valuable.
To a certain extent, the same thing applies to wheat. Why should not the farmer, like any other producer, be able to sell his product at any time he likes? Under the noble Lord's scheme, he would come along and say he wanted to sell his wheat and it would be up to somebody else to find storage. Why should not the farmer have to do some of that? I feel that, provided the farmer sells at a reasonable average price, the present scheme makes up the difference between the selling price and the standard price, thereby ensuring that he gets a reasonable price for his products. There is not much wrong with the present system, which has worked reasonably satisfactorily. I think that most producers are fairly satisfied with it. Of course, there are disputes about what the standard price for a commodity should be, but that would happen in exactly the same way in buying at fixed prices.
I have tried to show your Lordships that in my opinion the rather gloomy view which the noble Lord, Lord Wise, took of the precarious state of agriculture does not appear to be borne out by the facts, and that the present marketing system, although it is by no means perfect, is probably, if we take both the consumers and the producers into consideration, a better one than the fixed price system, and, moreover, it is one which it is possible to operate at times of abundance.
§ 3.35 p.m.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
My Lords, first I should like to say how grateful I am to my noble friend Lord Wise for having put down this Motion and for introducing it in such a comprehensive and satisfactory way. He takes a great interest in the agricultural industry, and it did not do any harm for him to remind us of his late brother 788 and his extraordinary ability in and studies of agricultural marketing and the connections between agriculture in other countries and in our own. I hope that at another time we shall have an expansion of that theme from my noble friend.
The noble Lord, Lord Amherst of Hackney, is popular with Members of the House on all sides, and, if I may say so, he has made this afternoon a very nice speech which is calculated to cheer the hearts of Tory candidates in the coming election. I am sure that the noble Lord will be in great demand in county constituencies then. What he is trying to say is that everything is not so bad as we think. He almost got to saying, "Everything on the farm is lovely under the present system," whereas in fact although the farmers have been very loyal in the last six or seven years and have done their best to meet the situation, especially the situation arising from actions of the Government, a large number of farmers are feeling a general concern about the whole position of agriculture$not about particular commodities, which have often been discussed in your Lordships' House and from which varying experiences have emerged.
The optimistic assessment of the farmers' position which the noble Lord has just put forward is not one which is held by farmers in general. The farmers are up against certain hard facts. The first is that the Government, for good or for ill, have reversed the practice of the Labour Government. While continuing a certain part of the system of guaranteed prices, the Government nevertheless see to it that the marketing of these commodities is done through the free market, either through merchants or, in the case of cattle, through free markets, where rings have already appeared. In these circumstances, any reductions of prices which are received by the farmers are in no sense passed on to the consumers. That is illustrated by what is happening in the case of one or two commodities, such as imported butter. The general fall in prices received by the farmers in the last few years has not been passed on to the consumers.
On the other hand, the farmers begin to size things up for themselves. Since the war the Governments of both Parties have always had one principle in view—that was, to aid the industry, which once again had proved its exceeding importance 789 to the country during the war, in order to stimulate its efficiency and expand its output. We find that efficiency has increased enormously in the farming industry to-day. The average assessment of what the increased margin of efficiency must provide by way of relief to the taxpayer in subsidies varies from year to year, and last year it was assessed at something like £33 million. But what the farmer is saying, as he looks around, is: "I am not receiving the benefit of my improved efficiency." It is all very well for the noble Lord, Lord Amherst of Hackney, to say: "But look how keen he is to invest and reinvest in the industry". Why, in the main, is he keen to reinvest in the industry? It is because the Government are pressing him to invest to try to get himself out of the messes he has been getting into. He says to himself: "Here is a chance of a grant of one third of the sum required to be invested. For what? So that I may be successful in what I have been failing in because of the existing system". That is a very different point of view from that which has been put forward by the noble Lord, Lord Amherst of Hackney.
Take what has happened for almost the last thirty years in the growth in this country of the home-produced milk industry, which has been such a standby to the farmer. He has begun to think in the milk industry once, twice and thrice how far he can go on. I do not know whether the noble Earl who is to reply has yet seen this month's publication of the Milk Marketing Board.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
It is an extremely interesting document on this point. I have had it for some days and, in passing, I may say that the Parliamentary Secretary ought to have a staff which can let him have it in time. As to efficiency, they give a comparison of figures on the basis of output per cow for the month of September, 1958. They give four weeks. As I tot the figures up (if I am wrong, perhaps the Parliamentary Secretary will correct me later) it looks as though every cow engaged in supplying milk to the Milk Marketing Board has contributed, on the average, an additional two gallons per week this year compared to the amount it produced last year. That is 790 not a bad improvement in efficiency. If one takes the position of the industry as a whole, one is bound to say that the farmer has to an astonishing degree managed somehow, by improved efficiency, to absorb the increasing costs, which still go on rising against him.
Before the noble Viscount leaves that matter, may I say that I do not quite know what point he is trying to establish on these Milk Marketing Board's figures. While I may not have seen the publication to which he has referred, I see that the prices which the Milk Marketing Board are going to pay the farmers this month are 3d. more than they anticipated. Perhaps the farmer is getting some return for this increased productivity of his cow.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
He is certainly getting a little more, if he has cows. But some farmers have tired of the game and left it, and that is because of the drop in price in the last few years. The real fact is that, while the 3d. per gallon has been added to what was the estimated price to be paid in this particular month of the milk year, in fact the farmer will receive more than £1 million less for his October milk this year than he received for it in October of last year.
Surely that is because less milk is being produced. The rate per gallon is higher, and the Milk Marketing Board have been able to pay an increased amount above the estimate. It goes right back to August. Every month there has been rather more on milk for the farmer than he thought he would get.
VISCOUNT ALEXANDER. OF HILLSBOROUGH
It goes back to August, certainly; I think he had something for July, August and September. But I am reading the Milk Marketing Board's document, and they say that the milk farmers will have received for milk for the seven months from April to the end of October something like £7½ million less this year than they received last year.
I was going on to say, when I gave way to the noble Earl, that no doubt this is explained to some degree by the change in the incidence of milk production. In some cases it is less, but it is not so all the way through. If you look at the milk production in May 791 and June, you will find that it was higher by over 3½ per cent. for those months as compared to the production in the same period last year. Therefore, if you take the average of the month of the milk year, and still find the farmers are £7½ million down, it is not much use to argue that on the whole they were getting lower production in October and September. You have to take the whole output for the whole period. Because of the high cost of feeding required in winter months, farmers gradually awakened to the position and they have been relying more on summer production.
This, to me, is a most significant situation. I thought just now that the noble Lord, Lord Amherst of Hackney, was going to tell us, in his first summary of reasons for being complacent, about the income of the farmer. But we did not hear very much from the noble Lord about the income of the farmer. I have seen no accurate summary, and I have not yet met any farmer who admits that he is getting an income per acre of the farm equal to that which he was getting six or seven years ago.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
It is easy to say that they never do. In these days they are all subject to income tax, and it is a very different position. I remember the days when they could get away with a Schedule B assessment; but that is not so now. Proper accounts have to be kept and a proper assessment made by the people who look after the income tax. The general feeling now in the industry is that farm incomes for the farmers have gone down. If you take the general income of the farm and see how it is expended on rising labour costs, increased costs of fuel—and a good deal of the increase in costs is due to Government action overseas from which we have not yet recovered—the rising costs of farm machinery and of the farmers' food, you results of the reduced incomes of the farmer, as a farmer, has not increased, but has decreased.
And he is saying, as he gets that decreased income: "What on earth is the use of my working and slaving, and even now investing, with a little Govern- 792 ment aid, for more production and more efficiency, when I cannot get a better standard of life out of it?" That is what is being said by the farmer; and I think he is right. Therefore, we have to look to other means than the present system of the Government for getting improvements.
I do not want to depart from the principle adopted of getting efficiency in relation to the public aid which is given; that is the right principle. That is the basis on which it is assessed. But do not over-assess it. No doubt later on, when the Bill comes here from the other place, we shall have a debate on the proposed new scheme for small farm grants. If we are to get efficiency, then we should see that the man responsible for achieving it receives at least as good a standard of life as he has been getting, if not a better one. I think that is reasonable; but that is not happening. However unpleasant it may be to the views of the noble Lord, Lord Amherst of Hackney, I look with great hope to a return to a form of control which will stabilise prices, and stabilise them at the right level. I know that that is quite outside the views of noble Lords opposite, but if rising costs are to be absorbed it will have to be done, unless there is to be a much bigger charge upon the public funds, through prices. That is what is going to happen; and the Government should not shut their eyes to the facts.
I do not think that the analysis of the noble Lord, Lord Amherst of Hackney, of these control arrangements would bear much examination on the actual experiences of the past, so far as the Government, at any rate, are concerned. We had no difficulty in getting a proper control by the public purchase of imported and of all home-produced commodities, and by fixing a fair average price for them. We had no difficulty about arranging a fair price to the consumer, but under the present system the results of the reduced incomes of the farmers are not being passed on to the consumer.
§ LORD AMHERST OF HACKNEY
My Lords, would the noble Viscount agree that at the period when he was working these controls—he has criticised me for not mentioning them—the home price he was paying was a long way below 793 what the farmer would have got on a free market, and also below the world price?
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
If you are looking at that, you ought to look at two periods. First, the actual war period itself. If you think you can go to war and leave everybody else to get—
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
Then let us go on to the post-war period. There you had controls which were more fair, effective and reasonable, than merely increasing the bank rate when your reserves are getting a bit low. You had controls from 1945 when we took over a bankrupt State—
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
Well, practically bankrupt anyway. At any rate, we were able to get fair prices for the farmers and fair prices for the consumers in relation to our needs. I have no doubt at all that if that were done again the farmers and citizens would be better off than they are at present. The farmer is saying to-day, "What is the use? Are we going to be recouped in the market, or by other means, for our increased costs?" The general charge that the industry is inefficient, which comes from people in politics, is hardly borne out by the facts.
The noble Lord referred to the reduction in the labour force in the industry. I think he was quite right to draw attention to that, but the fact is that with that reduction (although some of it has been at the same time as an increase in machinery) there has been a production of 60 per cent. above pre-war in volume. That is a most remarkable increase when we consider what agriculture is, and how long we have to wait for some of the results of agricultural production—sometimes two, three or four years. Here we are now in 1958, with agreement that there is more than 60 per cent. increase of production and with a much smaller labour force than there was in 1945.
The farmer has a case, and I think that the broadening of the outlook that was requested by Sir James Turner at the 794 Jubilee dinner the other night is worth looking at. I do not think the National Farmers' Union would go so far as should with regard to controls, but certainly the general case which Sir James Turner put for dealing with the world food problem as a whole, on the basis of known and recognised international co-operation, is one which requires a great deal of further consideration and examination. There might well emerge from such an examination something which would be helpful to the whole industry.
I do not propose to keep your Lordships any longer this afternoon. I feel that I am in a much better armed position with regard to agriculture on these Benches with my noble friend Lord Wise and my noble friend Lord Stonham here. I remember the days when I used to go and speak for my noble friend Lord Stonham in the Taunton Division, when he was more agriculturally employed than he was in Shoreditch and Finsbury. He is going to wind us for me this afternoon, and I am grateful to him. When the Parliamentary Secretary is winding up this afternoon I beg him to tell us something which is of hope to the farmers about intended Government action in the next few months. What is the real result of the harvest? Of the increased cost of collection put by my noble friend there is not the slightest doubt—some of the farmers are still at it. I hope the Government will take that into account, and also the serious loss of income from the deteriorated crops, especially in certain areas, some of which the noble Earl has himself visited, I believe. I know that it is difficult at the review of prices to deal with purely weather conditions, but when the Government come to the Price Review and see the task they are going to lay upon the industry for increased efficiency next year, as assessed by the guaranteed prices they offer, I beg them also to take into account the other things that I have mentioned: the increased costs, the improved efficiency already achieved and the real need to give the farmer who has achieved it something better than he has yet had for his own standard of life and that of his family. I do not think it is good enough, and I think it ought to be put right.
§ 3.58 p.m.
§ LORD BOOTHBY
My Lords, I must apologise for a temporary absence from your Lordships' House for a few minutes—it was in order to gratify a natural desire to see my successor introduced to another place—but I have listened to this debate initiated by the noble Lord, Lord Wise, with the greatest interest, and I now rise with the greatest trepidation. It is a terrible thing to have to make a maiden speech as an old and faded politician with an experience of public life which seems to have lasted for at least a century. My first maiden speech was made about thirty-five years ago, and I shall never forget it. Mr. Lloyd George was then at the zenith of his power. I followed him. I was practically unconscious when I got up, and I think I must have been practically unconscious throughout my speech, because when I read it again yesterday I could not understand a single word of it. It was about economics, and I think perhaps the most charitable explanation is that I was much cleverer then than I am to-day.
There are two reasons why I have ventured to rise to address your Lordships this afternoon and to bring this agony of suspense to an end. I should like to make an occasional chirrup from these Benches without this awful sinking feeling; and that, after this afternoon, will be removed. Secondly, I have represented for thirty-four years in another place one of the great beef-producing areas of the world—not only of this country but of the world. My Lords, it takes nearly half the earnings of our exporting industries to pay for our imports of food and drink alone. At a time when our balance of payments is in intermittent jeopardy—I would put it that way—I think this is scarcely good enough. We must produce more of the kind of foodstuffs that we can produce best, and import less of them. About eighteen months ago the Parliamentary Secretary to the Ministry of Agriculture estimated that a 10 per cent. saving on our consumption of imported feedingstuffs alone would add 25 per cent. to our total trading surplus as a nation. That is a pretty formidable figure when you come to think of it. I want to stress once again the urgent necessity of producing more, and more efficiently, the kind of food pro-dues that we in this country are perhaps 796 better fitted to produce than any other country in the world.
My Lords, on the whole our system of support prices, established with the approval of all Parties by the Agriculture Act, 1947, has worked well; but there are two difficulties about it. They are very real difficulties, and nobody, I think, is particularly to blame for them. I am speaking in broad, rough figures. First of all, only a quarter of the existing subsidies goes to the production of what we now need most, and nearly three-quarters goes to the production of milk, pigs, and eggs. The second difficulty is that too large a proportion of the subsidies inevitably goes to the top farmers, the big farmers in the top income group. You cannot avoid that, of course, if you give subsidies in relation to production; obviously the biggest farmers get the most. But it has become recently, I think, terribly lopsided. In my belief only about one-third of the producers receive nearly two-thirds of the subsidies on wheat, milk, pigs and eggs; and of the remaining subsidies the highest income group—that is to say, the income group averaging about £2,000 a year—receives more than half. In short, I think your Lordships will agree that too much public money is being spent in agriculture on those who need it least and not on those who need it most.
There is no easy way out of this predicament, but I believe the Minister intends to try to bring about a better balance in the forthcoming legislation designed to assist the small farmers, and that he intends to use some of the subsidies now given to the biggest and richest farmers for this purpose. I hope that that will prove to be the case. Certainly if it does it will have my warm approval. There is a warning note I should like to strike here. It is really no good giving subsidies to farms on marginal land which can never make a profit. I have never been an advocate of mountaineering in search of food. There are limits to that process, and I think it should be regarded with caution and that we should not squander money on farms that can never be made profitable in any circumstances.
But, on the other hand, there are a lot of small farms in this country which I believe could be made profitable on 797 one condition. That condition is effective co-operation, which I believe to be essential to modern agriculture, and practically non-existent in this country. Any of your Lordships who care to visit Denmark will see what can be done in the way of co-operative enterprise, both in production and in marketing. I said just now that it was almost non-existent in this country but it is not quite.
In my late constituency of Buchan we have during the last five years embarked upon a series of tremendous enterprises in co-operative production and marketing, of poultry, of eggs, and, above all, of meat. There is in existence an organisation called the Buchan Meat Producers. They practically own two slaughterhouses of their own. They have made their own transport arrangements with the British Railways. They are in direct contact with the wholesalers at Smithfield. They sell their meat more cheaply than almost anybody else; and (though I do not want to boast in any way) it goes without saying that it is the best beef in the world. At the end of the day that enterprise has paid enormous dividends. I want to suggest this afternoon—it is almost the only constructive suggestion I have to make—that the Minister should seriously consider making it a condition, in appropriate cases, for the granting of these special payments to the small farmers that there should be some form of effective cooperation between them, because I do believe that it is absolutely vital for the agricultural industry in this country at the present time.
My Lords, in conclusion I would only say this. I believe that our agricultural policy must be related to the maximum use of our own national resources and to the optimum economic balance between direct and indirect methods of feeding this country. The key to the whole problem lies in the lock of ley-farming. While the production of liquid milk must be maintained at a level sufficient to meet all our requirements, the main emphasis in home production must surely now be switched to meat, fodder crops and horticulture, which we are so well-qualified and fitted to produce.
Despite the fact that grass management has now become almost an exact science, we still carry millions of acres 798 of poor grazing on potentially good land; and I regret to say that your English Lordships are much more to blame in this matter than your Scottish Lordships. We have a much better record in this respect; we have far fewer acres of bad grazing land in Scotland than there are in England. The answer, surely, is to improve the quality of permanent pasture by the application of modern scientific methods, where this can be done, and to bring the rest of our land under the corrective influence of the plough. We have a great phrase in Scotland," Take the plough round the farm ". That has never done any harm to anybody. I am myself in favour of the gradual but progressive replacement of direct price subsidies by production grants designed to improve the capital equipment of our farms, the quality of our herds and the fertility of our soil; and thus to increase the efficiency and lower the costs of production. I am very glad that Her Majesty's Government have already embarked, in a rather tentative way, upon this course.
I am also in favour in certain cases—and I should have liked to say this to the noble Viscount, Lord Alexander of Hillsborough—of international commodity schemes. This is an enormous subject which impinges upon the whole question of Commonwealth economic policy and also the projected European Free Trade Area. I am certainly not going to embark upon that matter this afternoon, but I should like to give your Lordships one example; and that is butter. Here the case for a comprehensive, international marketing scheme seems to me to be quite overwhelming. The world demand for exports is almost equally met by Australia and New Zealand, on the one hand, and by Holland and Denmark, on the other, while we are the main importers. In this commodity price fluctuations during the last few years have been more severe than in any other. Surely it is in the interests of all concerned to participate in arrangements designed to stabilise the price of butter, and therefore to regulate supplies to the London market from everywhere. If we could get the countries I have mentioned—after all, there are only four of them—represented around a table, in order to work out a price stabilisation scheme, it would 799 surely be in the interests both of the producers and, in the long run, of the consumers of butter all over the world.
My Lords, I should not have ventured to address these remarks to your Lordships had I not submitted them some time ago to perhaps the greatest expert on agriculture that we have had in this country in this century, the late Lord Bledisloe. I received for them his full approbation. That, at least, is a justification and a consolation to me. It remains only for me to thank your Lordships for the indulgence you have shown to me on this terrifying occasion.
§ 4.12 p.m.
My Lords, it is my happy lot to be the first speaker after the noble Lord, Lord Boothby, and it gives me extreme pleasure, for several reasons, to congratulate him on his maiden speech. We have been more or less neighbours for most of the thirty-four years that he has been interested in farming, during which he has become one of the greatest authorities on farming in the North, and we have also been associated in European ventures when we were colleagues on the Council of Europe. When Lord Boothby has to rely for his congratulations on an inarticulate sort of person such as myself, it is rather bad luck. There are so many noble Lords who could do to Lord Boothby justice such as I am incapable of doing. I can only offer him my humblest apologies for the "hash" I have made of congratulating him on his maiden speech. I hope that he will not hold it against me: he knows me well, and I do not think he will.
I was sorry to be unable to be in my place on Thursday, November 6, when the noble Earl, Lord Waldegrave, replied on the previous day's remarks concerning agriculture. I have carefully read in Hansard what he said and I should like to say here and now that I thank him very warmly for the kind way he treated my obstreperous remarks. He was also kind enough to say that he realised that I am not "agin the Government." I should like to stress that point again to-day. It has always been a privilege in your Lordships' House that, if one feels that one is unhappy about aspects of Government policy, one is allowed to criticise.I hope that any criticism 800 that I may have made or will make will be considered as helpful and sincere. Of course, any Government always have the facts and figures available to them, and we who make speeches on these subjects have not. Nevertheless, I feel that we are entitled to examine in detail such figures as Her Majesty's Government produce.
The aspect of the agricultural policy about which I am not quite happy is that of the "thriving and healthy position" which, it is said, agriculture holds to-day. There are two opinions of the degree of health and prosperity. I understood from the remarks of the noble Earl, Lord Waldegrave, if I may paraphrase them, that the fact that agriculture was running at a record level of net output, 60 per cent. above post war, and with a record net income of £360 million, was evidence that agriculture was thriving and not merely struggling along. He also laid stress on the fact that Her Majesty's Government had already had 65,000 applications for grants under the Farm Improvements Scheme. If I have misrepresented him, I hope the noble Earl will correct me. Because I am rather anxious on this subject, and for no other reason, I want to challenge the noble Earl on these points.
I would start off by referring to the figures produced in the British Fanner of May 10, 1958. Published in that document is a table showing the trend of farming income. This covers the ten years from 1947–48 to 1957–58. There is no argument, so far as I know, on the first column, which shows what is called the" actual net farming income."If one sticks to the terms of the next column, which is" real net farming income", I think the figures are also admitted. If that is not so, I shall be corrected. Then the third column shows the index of real net farming income, which is really expressing it on a percentage basis. Again, if one sticks to the headings as they are set out, I do not think the figures are disputed. Taking the year 1948 as the basis year, with an index of 100, the table shows a real net farming income in 1957–58 of £225 million and a corresponding index figure of only 95.
My friends have calculated the corresponding indices covered by this table for the net output in volume for agricultural produce over the same period. By that, I mean the gross value of the 801 sales from farms, less the farm purchases of feeding-stuffs, fertilisers and imported seeds and store animals, all corrected to a constant price and for monetary fluctuations. Again, taking the year 1948 as having an index of 100, the 1957–58 index is approximately 122. This means, in terms of real money, and after values have been adjusted, that in the year 1957–58 the farmers received 5 per cent. less in cash or in value for an increased output in volume of 22 per cent. That, to the best of my belief, is a true overall picture of what has happened—I stress "overall"; it is not in detail.
My Lords, most of these figures have been produced and discussed, and Her Majesty's Government have manœuvred the figures to express the matter in a different way. I do not mean "manœuvred" in a bad sense. Anybody is entitled cannot say "twist", because that is wrong: it is difficult to know how to put it. Anyway, they produced a different set of figures showing a better state of affairs. They are perfectly entitled to do that, and I do not challenge the accuracy, the honesty or anything else of those figures at all. What I do want to say is that I think these figures are based on a fallacy. The figures of which I am speaking are set out in Hansard of another place for March 21, 1058 [OFFICIAL REPORT, Commons, Vol. 584, col. 173] and I want to call attention to these points.
The concepts of actual net farming income and real net farming income are used by Her Majesty's Government and the unions when they have a consultation for the Price Review; and, just as in any normal business, net profit is arrived at before any provision is made for reinvestment. Farm income as defined for purposes of the Price Review, I believe I am right in saying (no doubt I shall be corrected if I am wrong), is the income available to meet taxation, living expenses and reinvestment. I cannot see why this concept of real net farming income should be put to one side and another concept, which is called "real spendable income," should be dragged in; but in any case that has been done, and I will give your Lordships the headings of the Tables in the OFFICIAL REPORT of another place to which I have referred.
The first column starts with the same agreed "Actual net farming income" for the same period, 1947 to 1957—a ten-year 802 period—1948 again being the agreed base year. In the next column, Her Majesty's Government have "Net increment of occupiers' capital" and as a third column, called "Spendable Income", they have a figure arrived at by subtracting the figure in column 2 from that in column 1; and the last column is the index which results from this, given as a percentage.
This presentation of affairs shows that for the year 1957–58, with an actual net income of £360 million the spendable income is brought out at £315.5 million. The index of spendable income is roughly 120. All this is corrected to real values. Even if one considers that reasoning valid, it is still true to say that for a 22 per cent. increase in volume of production the farmer is rewarded by a reduction of 2 per cent. in spendable income. That is putting the best side of it, if we accept that type of figure.
I believe there is a basic fallacy or flaw in the reasoning which produces those figures, and I would call your Lordships attention to the second column headed "Net increment of occupiers' capital." In the first two or three years of the series credit was easy and, reflecting the farmers' response to the expansion programme of Her Majesty's Government, the rate of increase of borrowing was high. To bear that out, one finds that from the banks alone the rate of farm borrowings rose by approximately £22 million between 1948 and 1949, and again by about £26 million between 1949 and 1950. At the other end of the scale, for the years 1955 and 1956, during the credit squeeze, the rate of borrowing from the banks fell by £8 million. The banks are not the only source of credit, of course, but I believe that that is really an indication. It seems to me that the method adopted by Her Majesty's Government is to treat the net increment of occupiers' capital, irrespective of whether it has all come out of actual farming income or has been borrowed as in their base year 1948, when a large proportion of the capital really was borrowed, as if none of it had been borrowed. Therefore their spendable income base is completely incorrect; and unless they correct the whole column to cut out the effect of borrowing, I cannot accept it as being accurate.
In the early part of the series, actual farm income was not, of course, the only 803 source of increment of investment, but at the end of the series, over the last two or three years, it virtually has been, with the exception of grants. I believe even a glance at the Table indicates this. The net increment figures in 1948–49 were in the £80 millions and in the years 1956–58 they are in the £40 millions; which I believe bears out my argument, up to a point.
If one allows for borrowing, there was clearly a far higher spendable income in the early years of the series, when capital was obtained by borrowing, than at the end of the series when capital was not borrowed because of the credit squeeze. For that reason, I cannot, without some explanation, accept the figure as being a really true picture. Whatever the merits of my argument may be, however, the fundamental overall picture is still not altered, and the fact is that for a 22 per cent. higher real volumetric yield or output from the farmers, they have received 5 per cent. less real cash. It does not matter how they dispose of it. That is the overall picture as I see it, though of course I may be entirely wrong.
Another measure of agricultural prosperity must be the amount of money which is being invested in buildings and works, and this fact was underlined, of course, by my noble friend when he referred to the 65,000 applications under the Farm Improvements Scheme. I should like to say a few words on this subject. My basic figures here come from the Government Blue Book on National Income and Expenditure for 1958. Your Lordships can construct a little table showing gross capital formations by agriculture in buildings and works, and I will take four years only over that period—the last years.
The first column I would call "Current Cost": that is, the amount of money actually invested for that purpose. The next column would be "Cost Index", which expresses the whole thing as a percentage; and then "Cost at 1954 Prices "—that is, reduced to the same price which I have taken as being the 1954 building prices. The 1948 figure was £21 million (we will call that Index 100) and the cost at 1954 prices was £26 million. The 1954 figure was £24, the Index was 92 (I may have these figures the wrong way round but it makes no difference).The next figure, for 804 1956, was £28 million with an Index of 96 and a cost at 1954 prices of £25 million; and in 1957 the investment was £27 million, with an Index of 90 and a cost at 1954 prices of £23½ million. Therefore, in real terms, that means that investment in agricultural buildings has fallen by nearly 10 per cent. between 1948 and 1957, after adjusting for inflation, increased building costs and so on.
My Lords, I do not wish to interrupt the noble Viscount, but I have not had these figures given before and I was not quite clear from which publication he was quoting. I should very much like to check these figures. Could the noble Viscount tell me the figures he is using?
My Lords, may I give the noble Earl these figures afterwards? I have sprung this upon him, though I should not have done, and I do not expect an answer now. The figures I am quoting are derived from the Blue Book on National Income and Expenditure for 1958. I will give these figures to the noble Earl so that his experts may check them.
My Lords, as a matter of comparison it is interesting to see how industry has fared on the same basis over the same period with the figures taken from the same source, again taking 1948 as the base year, the base index being 100. For agriculture the 1957 index was 90; for the manufacturing industries as a whole the index figure for 1957 is 188, and for coal-mining, the other basic industry, the index figure for 1957 is 492. That gives a comparison of the general prosperity or of the amount invested in permanent buildings and equipment of the various industries. I consider that when the position is viewed against that general background, I have grounds for a little disquiet. I hope that when the noble Earl has had time to look at it he will prove that I am quite wrong (I do not expect him to do so now, because I know he cannot) or will undertake to look into the position.
I next refer to the fate of the 65,000 applications under the Farm Improvement Scheme—I am quoting from a document from the noble Earl's Department. Unfortunately, I have only the English 805 figures. The total number of applications in September was 44,683. Fifty per cent. have been approved; 14 per cent. are awaiting approval; 13 per cent. have been rejected, and 9 per cent. have been withdrawn. Fifty-seven per cent. of the applications have come from owner-occupiers and 20 per cent. from tenants. The total amount paid out by the Government in grant, at September 30, 1958, was just short of £1 million, leaving about £2 million to be borrowed. However, it may be fair to assume that not all of this would be chargeable against actual farm income, because 21 per cent.—in numbers, but not in value—of the applications came from landlords and other people without a farming income to set against it directly. I am sorry for having sprung all these points on my noble friend, but I heard of this debate only at yesterday lunch time, and it did not give me much time.
I had the impression from the noble Earl's former speech—probably wrongly—that he was a little complacent about the state of agriculture at the moment. I may be entirely wrong, but that was my impression. May I remind him from the Price Review figures that the under-recoupment figure, which the farmers have had to make good as best they can, now totals £195¾ million. That figure conies from the British Farmer of April 26, 1958.
Before I sit down I should like to add a word about a wrong impression which I myself gave the last time that I spoke in your Lordships' House on agricultural matters. I was charmingly "ticked off" about it the next day by my noble friend. I should like to try to put this matter straight, if I may. I used the word "brilliant" in connection with our research institutes. I must assure noble Lords that when I said "brilliant" I meant nothing but "brilliant"; and I still say "brilliant", again meaning nothing other than "brilliant". To explain a little more, I do not think that any of our work study answers are ridiculous, but I think that it is possible to apply them when the governing conditions of the whole problem are those of the size of the holding and the amount of labour which must be employed. One cannot consider less than one indivisible man. It may be that the holding is of such a size that other enterprises are impossible, and to try to solve the problem by producing answers from work study can lead 806 to a wrong answer. I do not wish to say that this happens frequently—as I do not think it does; but it has happened. Possibly I should not have drawn attention to a case which I believe occurred; but I did so and I was properly, and deservedly, "ticked off" for it. I hope, however, that your Lordships will accept the explanation I have given.
My Lords, this rather critical speech of mine does not alter the fact that I personally think that Her Majesty's Government's policy is completely right. All I want to ensure is that the magnificent effort of our farming industry is recognised; and I believe that the atmosphere which the union representatives and the farming industry representatives have created is a key point. A rather more generous attitude in the Price Review and, above all, a more generous and flexible approach in discussing aid to agriculture—in particular I would refer to the small farming scheme which I spoke about on the last occasion—are necessary. That is the sole criticism, if it is a criticism, which I have to make.
§ 4.36 p.m.
THE MARQUESS OF AILSA
My Lords, I should like to add my congratulations to those already given by my noble friend Lord Stonehaven to the noble Lord, Lord Boothby, on the occasion of his maiden speech. I know that we all look forward to hearing from him again.
I have a question which I should like to pose: what is the object and aim we are trying to achieve within our agricultural industry? So far, during the twelve years or so since the war, every Government has expressed the desire to see the agricultural industry placed on a firm and secure footing, and has passed a great deal of legislation intended to further that end. Yet the industry itself still does not know exactly what is required of it. A great deal has been done, but there is no point in it. We ourselves in this country live by trade. Unfortunately, we have to buy from abroad a great many of the raw materials with which to manufacture the articles in which we trade. We have also to buy a great deal of the food which we eat. The manufactured articles which we sell are required to pay for both these items: the raw materials and the food. It is not a very pleasant position for us to be in. We saw what happened two years ago at the time of the Suez crisis, when the oil 807 pipe got turned off. It was not very comfortable. It would be very easy for someone in these times to turn off the food line, or part of it, and the situation then would, in my opinion, be far worse.
I feel that a great deal should be done to stress, not only to the industry but also to the general public, the part which the agricultural industry has to play in our national economy. It is not just a way of life which we want to preserve; it is something that must be there. That point has somehow been missed up to now. I remember (the noble Lords opposite will possibly correct me) that after the passing of the 1947 Act a challenge was issued. The farming community were asked to increase their output by 60 per cent. over the 1939 output level. Eleven years have now passed since that time. On an overall basis, the 60 per cent. increase has been achieved, but in many other industries the increase has gone far ahead of that. So far as the farmer is concerned, no one seems to want his goods. We have the subsidy prices, it is true; but the country as a whole does not seem to appreciate what he has done. Therefore he wonders, "Has it been worth all this effort?" We have heard of the struggles and of the money that has gone into them, but has all this effort been worth while? There has been no indication from the Government or from the general public that that is the case.
The example I should like to give on this point is that in 1956 the poultry industry raised its output to such a level that it not only satisfied home demand but, I believe, allowed surplus eggs to be exported (I shall be corrected if I am wrong), to Western Germany. The attitude of the Government was that this was causing the Government great embarrassment, and that if the industry did not do something about it it would be squeezed out of existence. There was no recognition of what the industry had achieved. I do not deny that having a surplus of eggs was possibly embarrassing, but for a while we had got ourselves virtually self-supporting in that one commodity. Prices may have been high and it may be that a great deal should have been done to reduce them. But no recognition was given of the industry's achievement. I read many reports of comments made. Most of them said that they must try to do things more cheaply, and that if they 808 went on like that a bit more of the subsidy would be removed. That was all the appreciation they got. I think, personally, that if a different line had been taken the poultry producers would have taken a slightly different attitude towards their work.
My Lords, I wonder whether it is possible to produce for the agricultural industry a sort of chart showing what is required of them to meet our needs: say, that dairy products (certainly of liquid milk) should be 100 per cent. of our requirements; poultry products, say, 80 per cent.; meat products, possibly 40 per cent., and so on—these to be produced on the home market, the balance to be made up from imports. If that were done, whether the person was a milk producer, a poultry farmer or a pig farmer, he would know the national target; and if the figures reached were published annually, he would have a guide as to which line would be more advantageous for him to follow. If one figure is being nearly reached, then naturally there would be a bit of difficulty on that side, but there are other markets to follow. It would give them a better guide of what is required of them.
I do not quite know how to explain the last thing I want to suggest. As has already been mentioned to-day, we have had criticism, sometimes unjustified, that much of the public money which is expended by way of grants and subsidies is wasted: that it goes to farms (though it is not the fault of those particular farmers) which cannot benefit from it, and that, no matter how much money they are given, they could not make the best use of it. Would it be possible to operate a scheme rather like the Forestry Commission's Dedication Scheme? It need not necessarily be so complicated, but could be a scheme under which, in order to qualify for a great many of the grants—not every grant, but a great many of them—the farmer would have to establish that his was a comparatively growing concern. I do not think the small farming scheme which is being discussed in another place, is enough: a wider coverage is required. I am suggesting that only as a line to follow, and not that any scheme should be precisely the same as the forestry Dedication Scheme. It may be that somebody else may have a better 809 suggestion. My Lords, all I have to say—and I again stress it—is that I feel that the industry must be given an objective and not just kept alive, because we may have to depend on it to keep us going.
§ 4.4 p.m.
§ LORD STONHAM
My Lords, despite the affliction of a raging tooth, which causes some trouble to my comfort but I hope will not affect my diction, this is an extremely happy occasion for me this afternoon, because, first of all, I have the unexpected pleasure of congratulating my former colleague, Lord Boothby, on his maiden speech—and I am sure I am doing so for all the noble Lords on this side of your Lordships' House. It seems an extraordinary thing that, after thirty-five years, as he has pointed out, he still produces what are to me original ideas, and yet, at the same time, shows himself faithful to ideas about agriculture which I cherish very firmly indeed. He has said—and he would recognise it as fulsome of me to deny it—that this afternoon's speech was, as he has described it himself, a "chirrup". Indeed, it was a chirrup compared with many of the full-throated, wise, and independent orations which I have had the privilege of hearing in another place. However, I am quite sure that the noble Lord will nor always chirrup but that he will again delight us all with his wisdom, his full song and his independence, which we all cherish. I should like to thank him in particular for taking the plough (at least in imagination) round the farm. I am delighted that this occasion of his maiden speech should be an agricultural one, and I hope that together we shall sometimes be able to take the plough round the House for the benefit of agriculture.
The second occasion for my pleasure is that we have had the opportunity this afternoon, through my noble friend, Lord Wise, for a full-scale agricultural debate. Such occasions are, in my view, all too infrequent, in view of the major importance of this industry. Not only did I feel that my noble friend (the first few minutes of whose speech I unfortunately missed through being in Committee upstairs), put his case in a reasoned manner, but I fully support his plea, despite what has been said by other noble Lords on this subject, in particular for a wheat commission and for a return to a guaranteed price in some products. I am quite sure that it would 810 be much better for the farmer, much cheaper for the taxpayer, and infinitely cheaper for the consumer.
Another extremely pleasant thing about this afternoon is that it has given me the opportunity to renew with the noble Earl, Lord Waldegrave, a friendship formed during happy post-war years in Somerset, when he was Chairman of the county agricultural executive committee. Disagreeing, as I do, with so many of the Government's decisions, I feel that I must congratulate the Prime Minister on the wisdom of his choice of Joint Parliamentary Secretary. The noble Earl is utterly devoted to the cause of British agriculture, and it was largely due to his enthusiasm that the provisions of the 1947 Act were implemented with such great success in Somerset. If he will allow me to say so, I find it rather more difficult to talk to him across the Chamber than I did when we used to sit at one table trying to hammer out decisions for the benefit of agriculture.
At that time, of course, he was not unaware of my political opinions, but I was completely unaware of whether the noble Earl had any political opinions at all, because in his position, having to implement the provisions of the 1947 Act, if he had any reservations at all about that Act he very properly kept them to himself—although I now realise that he must have had reservations, because the present Government's policy is quite different. In my view, the Government have virtually destroyed that Act, which was once regarded by both Parliament and the farming community as "a charter for the land". Guaranteed prices and assured markets, the cornerstone of British agriculture, have been abolished. The farmers' security of tenure has been seriously impaired; and, despite many cases of bad husbandry and bad estate management, Part II of the Act has gone and the implied guarantee to the taxpayer that his money would not be used to bolster up the inefficient farmer has thus, in a manner, been dishonoured. I believe that the Government has created, or certainly is creating, doubt, bitterness, and even cynicism amongst farmers as they note the effects of what I regard as a foolish policy which, if persisted in, can bring only disaster to their industry.
I feel that this afternoon's debate has somewhat reinforced what I am saying 811 because it has been almost wholly critical, apart from the speech of the noble Lord, Lord Amherst of Hackney. Unfortunately, the noble Lord is not here and I will not comment on his speech, except to say that it created the impression in my mind that he failed to convince himself of his own argument, just as he failed to convince me.
I would quote in support of what I say about the state of mind of the farming community Mr. Lawrence Easterbrook, a Liberal journalist and farmer, a real lover of the land. He said recently:No one any longer cares what happens to the land of Britain—no one in authority, that is.I do not agree with that. The noble Earl cares and so does his right honourable friend the Minister of Agriculture. The trouble is that they are wrongheaded, not wrong-hearted. Unfortunately, the result is just the same. I shall try to prove this by quoting a few extracts from the speech which the noble Earl made on November 6. I will give against each extract what I regard as the facts. If he can prove that I am wrong, I shall be delighted; if not, I hope he will promise to reform.
The first quotation from the noble Earl's speech is from the OFFICIAL REPORT, Vol. 212, column 293. He said:… the whole basis of our policy is that our farmers do get guaranteed prices for their main crops.This is just not true. The only crops sold at guaranteed prices are milk, wool and sugar. For the rest there are neither fixed prices nor minimum prices. I know that the noble Lord, Lord Amherst of Hackney, found it difficult to understand how my noble friend Lord Wise could think that we could have a fixed or guaranteed price, but seemed to have no difficulty at arriving at a support price. I should have thought that both were calculated to ensure a fair return to farmers.
My Lords, I do not want to interrupt, but I think we must be clear on the difference between fixed and guaranteed prices, if the noble Lord is going into that point in detail. Of course, only the three commodities he mentions have fixed prices, though I will challenge him on milk, which I think is a guaranteed price. All the others have 812 guaranteed prices. I should like to hear the noble Lord's argument backing up his statement.
§ LORD STONHAM
My Lords, I am obliged to the noble Earl. I am sure that when I have finished my argument he will be under no dubiety about what I mean by guaranteed prices and that they exist only for these three commodities. I will put it this way. Under the Labour Government's charter for the land, a farmer, when he put his plough into the field, knew just what price per ton he was going to get for the grain he eventually harvested. To-day prices are dependent on a wide variety of circumstances entirely beyond his control. For instance, this year on my small farm we were able to snatch up our barley early because a storm at one end of the village missed my farm. We got 100s. a quarter (£25 a ton), but my immediate neighbours—good farmers—were not lucky and they got 70s. a quarter (£17 10s. a ton). We shall all receive the same acreage subsidy. Their final figures will be well below the support price; mine will be well above. They will make a serious loss; I shall make a substantial profit—a difference of 30 per cent., not because of efficiency and not because of quality, but because of mere chance. That is not an agricultural policy; it is a lottery. And it is one to which we should not subscribe.
I would point out about this lottery that even if there is a good weather harvest, the small man is bound to be the harder hit, because he needs the money. Everybody has his barley and wheat crops at the same time and the small farmer is obliged to sell at once because he needs the money, even if the market is glutted. On November 6, the noble Earl himself pointed out that between September and November the price of feed barley had gone up. But farmers have enough trouble to produce their crops without having to "play" the markets, like produce brokers. Why handicap the small farmers, whom the Government are genuinely anxious to assist in other directions?
It is the same with wheat as it is with barley. My noble friend Lord Wise quoted prices per ton, but, in my submission, the important thing is not so much the average price per ton at every 813 given period or the margin between that and the support price, which the taxpayer has to make up, large as it may be; the important thing is the difference between the lowest price and the highest being paid in any one week.
§ LORD FRASER OF LONSDALE
My Lords, will the noble Lord allow a question? Surely it is clear in the case which he gave of his own farm and his neighbour's that under the Labour Party's proposals both would have got the minimum, whereas in the present position one got the minimum of 70s. and the other 100s. Is it not now true that there is a fixed price that is guaranteed, below which the farmer will not drop, and as things are he may be better? Is that not advantageous?
§ LORD STONHAM
My Lords, unhappily the noble Lord, Lord Fraser of Lonsdale, has not got it quite right. I am glad that he raised this point because I know that many people think it is true that the farmer receives prices below which he cannot drop. The support price means this. Let us assume, for the sake of argument, the simple figure that the support price for wheat is £25 a ton. Assuming the quality is all right the farmer sells his wheat on the open market for £20—and this through no fault of his own. The actual support price per ton will be presented by the difference between the average price over the whole sales of wheat and the support price, so that in a year when the average price is considerably below the support price, the farmer who receives only £20 per ton eventually gets an acreage subsidy of £20 to £21 a ton when the support price is £25. The level of prices he gets depends on circumstances quite beyond the farmer's control. The Ministry's own figures of the average prices for wheat for the week ended November 8 varied between £19 6s. 8d. and £24 11s. 8d., a difference of 25 per cent. in the same week. The noble Earl might like to know that in a county near his own the figure was £20 a ton in Dorchester and £24 11s. 8d. in Salisbury, so it is not a question of cartage and carriage or differences in local conditions. It is the same with barley, which varied in the same week from £20 6s. 8d. to £25 1s. 8d. a ton. This covers the point made by the noble Lord, Lord Fraser of Lonsdale.
I will deal with the other commodities later, but I hope that I have already said 814 enough to prove my point that the Minister is quite wrong to claim that farmers get guaranteed prices, in the sense that they get a fixed minimum price for a certain quality and quantity of produce. That was the guarantee the Labour Party gave under the 1947 Act. That is the guarantee that has now been abolished, and I think it is true to say that no farmer knows, when he plants and harvests his crops, the price he is finally going to get for them or whether the price he is going to get will equal the support price or be above it. I think that that is established beyond dispute, and I hope, if he accepts my definition, that the noble Earl, Lord Waldegrave, will not again make the claim that farmers get guaranteed prices, even though its abandonment means, in the noble Earl's own words, thatthe whole basis of the Government's agricultural policy collapses.Is there any wonder that farmers are bitter about these undeserved losses, and also apprehensive as to what the taxpayer is going to say when he learns that his money has been squandered to no useful purpose?
The other day the noble Earl, Lord Waldegrave, quoted with pride last year's record figure of £360 million for farmers' net incomes. I know that the noble Viscount, Lord Stonehaven, has rather covered this ground, and in somewhat more detail than I intend to do. I adopt the practice of taking official figures and then applying my own arithmetic to them, and I think the noble Viscount will find that, particularly in the earlier ones, I have reached the same conclusion as he has in the figures he quoted. As I say, the noble Earl, Lord Waldegrave, quoted with pride last year's record figure of £360 million for farmers' net incomes. But the year before it was only £314 million; and unhappily—and I think we are all agreed on this—it seems certain that this year it will be well under £300 million. Farmers are always prepared to take the rough with the smooth in regard to the weather, and I do not place too much emphasis on this one bad year: I mention it because I hope the noble Earl will accept an average of £320 million as the net income of farmers over the last three years—and I think I am on the generous side there.
But if we assume 320 million paper pounds as the farmers' net income over 815 the last three years, we must compare that with the income in 1951, when it was the same number of paper pounds, and realise that in terms of 1951 he can to-day buy only 15s. 6d. worth of goods with a 1951 pound note. Therefore—and this is the important figure which I hope the noble Earl will deal with—if you adjust £320 million to-day in terms of 1951, you get only £248 million, which is a similar figure to that quoted by the noble Viscount, Lord Stonehaven. In other words—and this is the crux of the matter—since the Government took office in 1951 the farmers' real income and living standards have been reduced by 22½ per cent., and this despite very fine earnings through increased efficiency. They have increased their efficiency year after year, only to find that in real terms their income and their living standards are 22½ per cent. below what they were in 1951. Does the Parliamentary Secretary suggest that that is what he called "a healthy and thriving condition"?—a point made also by the noble Viscount. Can the noble Earl mention a single other industry—it does not matter about the rest of industry being twice as well off as agriculture—where the producers have suffered as severely in the last seven years as the farmers have? I suggest that if a Labour Government had done this to farmers, they would have come up from Somerset and staged a demonstration which would have made the Monmouth Rebellion look like a vicarage garden party. I submit that it is useless to point to the 60 per cent. increase above pre-war production. This arose because of the 1947 Act and the impetus which carried from that Act and which, in my view, is now largely dissipated.
But it is not only the farmers; unfortunately, the taxpayers and consumers suffer severely under the support price system. The noble Earl, Lord Waldegrave, said, in the same speech to which I have referred, that most of the rise in food prices has been because of inflationary conditions.
And then he said—and this is a beauty [col. 294]:Our system is to provide a safety net of guaranteed prices for the producer, with freedom for the consumer to buy at the market price. This keeps down the cost of living….816 Does it? I would ask your Lordships to consider some remarkable figures published only last week. They reveal that, whereas in 1951 consumers' total expenditure on food was less than £3,000 million, last year it was over £4,500 million, an increase in total expenditure of more than £1,500 million, or over 50 per cent.
My Lords, the noble Lord will not mind my reminding him that the consumer subsidies might have had something to do with that.
§ LORD STONHAM
I am perfectly well aware of that, and I will deal with the consumer subsidies and draw a comparative balance sheet. All I am saying at the moment is that consumers paid £1,500 million more for food last year than they did when the Government took office. It might be said that they must be eating a lot more food.
I think we must keep these figures more or less on all fours. Are we going to convert these figures to real value figures? I gather that that is what we have been doing with the farmers' income.
§ LORD STONHAM
I do not think that will be necessary. I am ready to concede—in fact, it is my case—that prices have advanced normally. In fact, out of this £1,500 million increase in food consumption—that is, in the cost of food—no less than £1,437 million is attributable to increased prices. That concedes the point which the noble Earl was making. But that hardly supports the claim that the new system keeps down the cost of living, because it has gone up by £1,437 million; and since 1951 (I hope I am not boring the noble Earl) imported food prices have dropped no less than 12 per cent. Since we import between 40 and 50 per cent. of our food, that 12 per cent. must be worth something like a £250 million drop in the price of the food we import in a full year. It seems to me, therefore, that the whole of this £1,400 million-odd of increased expenditure on food is entirely attributable to a rise in the prices of home grown food. It cannot be the imported food, because that has cost less. If the noble Earl wants to dispute that, I will give way. However, we know that imported food prices have gone down by 12 per cent.; therefore, if the cost of food has 817 gone up by £1,437 million it cannot be because of the cost of imported food, but must be because of the cost of home grown food. And I say that that increase arises directly from the Government's free market support price policy.
My Lords, perhaps I may interrupt the noble Lord again. It is not due entirely to the cost of home-grown food. All food has to be handled, distributed, shipped and dealt with, and the costs of those handlings, whether in regard to imported or homegrown food, have gone up with the inflation that we all deplore.
§ LORD STONHAM
I am Obliged to the noble Earl. He made that point in his speech on November 6. He mentioned the better presentation and the better quality; and I think his words were:It is worth doing something for that.I am not disputing that.
§ LORD STONHAM
I am sorry, but I am not disputing that. What I am saying is this—and it is as well, because it is basically important that we should not attempt to get away from it: that because of increased prices alone we are paying £1,437 million more for food than we in 1951. This is not all presentation; it is not all quality. As the noble Earl has said, it is very greatly inflation. What I am pointing out is that it is not inflation arising from the prices of imported food, because they have gone down, but that it arises entirely from inflation of the prices of home-grown food. I do not think that that can be denied. And, as I say, I think it arises entirely from this free market support price policy. Just look at the comparative balance sheet, which I think is appalling. On the credit side it is true, as the noble Earl has said, that the taxpayer is no longer paying £410 million in consumer subsidies as he did in 1951. But he is paying nearly £300 million in support price subsidies. So he is £110 million better off as a taxpayer, and £1,437 million worse off as a consumer. The farmer, as I have already proved, is 22½ per cent. worse off, despite this £300 million in support prices. So we have a situation which the Government have contrived in 818 which everybody is worse off. I would suggest that it is an exercise in mis-management which 'borders on the miraculous.
I will give only two examples to show where I think this money goes. First of all, pigs. I keep pigs for what I regard as the only reason that anybody keeps them to-day—because they are clean, friendly, intelligent and humorous animals, without being cynical. Nobody keeps them to-day to make money. Until about 1954, if you bred the right kind of pig, fed him properly, weighed him regularly and sent him to the bacon factory at twenty-eight weeks old, you got three A's and £23 for him. The wholesale and retail bacon prices were steady and reasonable. But now, despite the valiant efforts of the Fatstock Marketing Corporation, that has all changed. A Grade A pig (45s. 6d. a score)—and I am not cheating; that is this week's price—makes not £23 but from £14 15s. 0d. to £19 18s. 0d. Both the pig and I have to be much cleverer than we used to be to get Grade A. So we do not go to the bacon factory.
The miracle is that the farmer is worse off, and bacon prices are higher. I do not know if noble Lords look at the weekly trade paper, the Grocer. I look at it every week and examine the prices. It is a fact that last year the wholesale price of best English bacon was 290s. per cwt. Last week it was 362s. per cwt. and it went up 10s. per cwt. last week, not because retail trade was good but because the wholesalers were a little afraid that they might be a bit short before Christmas. But the farmer is getting less, and the housewife has the privilege of paying 4s. 10d. a lb. for prime back bacon, as compared with 3s. 1d. per lb. in 1951, when we had guaranteed prices. Whoever is getting the benefit, it is certainly not the farmer, the taxpayer or the housewife. I do not think it is necessary to offer any prizes for the answer.
Of course we have to do something with our pigs if we do not send them to the bacon factory. Here I must give the Government credit: they have provided a solution by creating a shortage of beef. This has been done largely by lowering to 8½ cwt. the weight at which the subsidy is paid, and so now you have to kill three steers to get the same amount of beef that you could formerly get from 819 two steers. The right honourable gentleman the Minister of Agriculture has also helped by advising housewives to refuse to buy beef if they find the price too high. So they buy pork, and I do not have to worry about my friend's diet or weight any more. I just keep him for twenty-two weeks, sell him for pork at just under seven score and get £16 for him, which is £1 or so more than if I had kept him six weeks longer and sent him for bacon. I can assure your Lordships that neither the pig nor I think it is funny. We think it is just too stupid for words. All my neighbours are doing the same. On Friday morning I telephoned my manager and asked him what the current grading experience was locally. He said: "I cannot tell you. No one round here can afford to send pigs for bacon."
I shall be glad if the noble Earl, when he comes to reply, will say whether he considers this is a good example of his safety net which, whilst giving a guaranteed price to the producer and freedom for the consumer, also keeps down the cost of living. If not, I do most earnestly plead with him to represent to the Minister the urgent necessity, in the types of food of which I have spoken, to revert to the former system of guaranteed prices.
I would also plead, even at this eleventh hour, for some revision of the proposed new arrangements for potatoes. In this, I am making no criticism whatever of the Potato Marketing Board. They are doing a first-class job, and a measure of this is the fact that for the twelve months ended last June they succeeded, despite higher prices, in increasing consumption by 100,000 tons over the previous year. It is obvious, reading between the lines of the Annual Report, that both the Board and the National Farmers' Union are strongly opposed to the new marketing arrangements. The Report states that they both pressed strongly for the retention of the present system, with its individual guarantee and well-understood principles. They add—and here is an exact quotation—experience may show the need for amending the present marketing system.That gives some indication of what they think.
To me, however, the most disturbing feature of all is the statement that the subsidy paid to the Board to cover the 820 difference between the standard price and the average market price may be used by the Board to support the market by the purchase of surplus potatoes. The Board has emphasised this in a special circular to members, from which I quote:The Board has retained the facility to use any Government guarantee payments in the purchase of potatoes if market prices are weak. The Board is now giving detailed consideration to methods of best carrying out this important function when surplus conditions arise under the new arrangements.Surely this is a scandalous and unprecedented misuse of the taxpayer's money. In effect, it means that money willingly furnished by the taxpayer as a means towards a prosperous agriculture is to be used to force prices up against him. In effect, it seems that his pocket is being picked twice, once willingly and once unwillingly. I cannot believe that Her Majesty's Government can have foreseen this possibility when they devised these new arrangements. I ask them to think again, and also to review the question of supplies.
Throughout the life of the Board—they are getting towards the end of their fourth year—there have been, in successive years, a bare sufficiency, a glut, a shortage and now a severe shortage, resulting in prices previously unheard of at this time of year. Only in the glut year was the taxpayer called upon to pay a subsidy of some £13 million. But that year, as a consumer, he bought his potatoes for from £33 million to £38 million less. at an average retail price of 3d. per 1b. This month prices have been as high as 6d. per 1b., and are now running from 4½ to 5d. We shall be fortunate if we get away with an average of 4½d. per lb. throughout the year. That will mean an extra bill for the housewife of some £70 million. That is equal to a whole point in the cost of living index, with all its implications of demands for higher wages and particular hardship to poorer people. It could all be avoided under the old arrangements, which in four years cost only £13 million in subsidies. The Board, in order to protect its members, has fixed quotas totalling 700,000 acres. This would supply normal demand in a normal year if the yield is average and every acre is planted. But producers will be fined if they exceed their quotas, so there must be a shortfall, and there is certain to be an artificially created shortage.
821 I therefore urge the Government to think again, to revert to the previous arrangements and to ask the Board to plan a larger acreage, in the certain knowledge that a surplus of half a million tons will save the taxpayer, the consumer, at least £25 million. There I am actually quoting the Board's Report. I should like to think of the taxpayers as debenture holders for the land. They buy their debenture at the rate of £300 million a year, and they ask no interest. But they are entitled to the dividends of a sufficient supply of good-quality potatoes at a reasonable price. The Board will provide the good quality and the reasonable price, but only the Government can ensure a sufficient supply.
May I finally, ask the noble Earl questions on two subsidiary points to which I have reason to hope he may be able to provide the answers. The first concerns horticulture, which I was very glad to hear mentioned by the noble Lord, Lord Boothby. Horticulture has struggled on, completely neglected by every Government since 1945. I despair of ever hearing from anybody of a sensible comprehensive plan. But can the noble Earl say anything about the Government's intentions regarding tariff changes, on which the industry has been pressing continuously since the beginning of last year?
The two most urgent items are broccoli, where the acreage has dropped from over 16,000 in 1949 to 5,000 now, and tomatoes. As he is probably aware, the British glasshouse industry, formerly prosperous, is now at a low ebb, not because of inefficiency, but because of dumping from Holland. This year Dutch growers, finding their other European markets partially or totally closed, flooded our market and accepted as little as 2d. per 1b. for tomatoes which cost 1s. a 1b. to produce. The glasshouse acreage is declining and the younger men are leaving the industry. Horticulture is not subsidised: tariffs are its only protection. I hope that the noble Earl will be able to give an assurance either that the Government will shortly be announcing plans regarding an increase in the tariffs or some other action to stop the unfair competition of the kind that I have described.
My last question concerns the National Agricultural Advisory Service. I understand that the 330 district advisory officers will be responsible for the consideration and approval of schemes submitted under 822 the Small Farmers Bill. In England and Wales it is estimated that some 15,000 schemes will be in operation in the first twelve months, an average of 45 per officer—quite a full-time job. But according to the Report of the Committee on Grassland Utilisation, these officers al. ready have some 1,100 holdings to look after. If they are to be transferred entirely to the small farmers scheme, who is going to do their present work, or is it "going to pot"? Is it not absolutely imperative that, both by upgrading and recruiting, the Service should be augmented? The noble Earl is aware from correspondence in The Times and elsewhere that there is serious concern over this subject. The National Agricultural Advisory Service is an immensely successful one, with the highest standards and reputation. It would he disastrous if either the small farmers scheme or any other scheme or section of the industry were to suffer through deliberate overloading of the Advisory Service. I hope that the noble Earl will be able to give us some assurance of the Government's intentions on that point.
My Lords, I apologise for the fact that my speech has been longer than I intended, although I have answered one or two questions of noble Lords during the course of it, when apparently the points I was making were not sufficiently understood. But, like you, I am convinced that a healthy, prosperous and progressive agriculture is an indispensable part of the national wellbeing. The Government's good intentions may not be in doubt, but I think I have proved that their methods are dangerously wrong and may lead us to disaster. I hope that to-night we shall receive an answer on these points which are causing serious concern throughout the countryside.
§ 5.25 p.m.
My Lords, before I attempt to reply to this extremely interesting debate I must add my word of most sincere congratulations to our thirty-five-year-old maiden. It was a wonderful speech, such as we expected, and we hope that we shall hear from him very frequently in the future.
There have been a great many figures quoted this afternoon and there have been a great many Scotsmen talking; and I am informed that it was a Scotsman who originally said that politicians 823 use statistics as a drunk man uses a lamp post, for support rather than illumination. I am not sure that I can follow all these figures that we have had to-day or that it would be at all proper for me to attempt to do so in detail at this late hour, especially as I had no prior notice of a great many of the figures. But I say at once, even after the speech of the noble Lord, Lord Stonham, that I feel quite unrepentant about our policy, and I am afraid that I am going to ask him to come on this side of the House, if he wants us to sit at the same table, rather than that I should go to his side. I am going to stick to the figures which I gave before, and I hope that I shall be able to convince him when I come to his points.
My Lords, your Lordships' House has heard my predecessor on more than one occasion state that our main objective is to keep this industry healthy and thriving. That was reaffirmed in the gracious Speech, and we spoke of it on the Amendment the other day. What really is being questioned by noble Lords opposite, and, I regret to say, by some of the noble Lords on this side of the House, is the extent to which we are achieving this aim and whether we are allowing agriculture to run down. I gave facts and figures when I spoke last which I think point to a very different conclusion from the conclusion which the noble Lord, Lord Wise, and other noble Lords have come to, and I think we ought to turn for a moment or two to the White Paper on this subject. There have been a great many other papers and journals quoted to-day, but this one is available to your Lordships from the Table of the House and is well known. It is the Annual Review and Determination of Guarantees for 1958 (Command Paper 390).
This Annual Review is carried out on the basis of statistics agreed with the unions, and I must remind the House of the main points which this White Paper records. The industry's net output—and we cannot get away from that: it is in paragraph 2 on page 3—has risen and the forecast for this year was that it would be 63 per cent. above the pre-war level, which is a record high figure. I am quite unrepentant about this figure. The net income is forecast at £360 million, compared with the revised figure of £314 824 million for the previous year. This increase in earnings confirms the Government's view that the industry's efficiency is continuing to increase at least on the scale at which it had been assessed previously, which is some £25 million a year for Review commodities. It is extremely confusing if one converts some figures into what are called real values and others not, but if we stick to these figures which are on all fours, one simply cannot say that an industry is not increasing, both in productivity and net income, if its net income has reached a record level and its production has gone up to 63 per cent. over pre-war days.
The industry, as we all know, had achieved an increased production of 50 per cent. over pre-war figures when the Labour Government left office. That was a very big rise, even though there had been the tremendous spur of war-time conditions. People are entitled to have their views, and noble Lords on the other side of the House did not believe that that increase in productivity and that increase in income would go on when this Government took over. They said so; but they have been proved wrong. Production has increased from that 50 per cent. to 63 per cent., and the net income has gone up until last year it was at a record level.
§ LORD STONHAM
Of course, the noble Earl has himself indicated that the productivity has gone up only from 50 per cent. to 63 per cent. in eight years. Whilst I accept that £360 million was a somewhat exceptional net farming income, and that productivity has increased, will the noble Earl now deal with the point which was raised by several noble Lords, and particularly his noble friend, Lord Stonehaven, that the position of agriculture in real terms relative to the rest of industry is represented by the figures of 90 for agriculture and 188 for the rest of industry?
My Lords, I will come to that point in the course of my reply to the remarks. We are now approaching the next Annual Review. Noble Lords have asked: what is the situation that is developing? What is the situation with the harvest? The noble Viscount the Leader of the Opposition actually asked me again to say what we were going to do at the next 825 Price Review. It would be wholly improper for me to do that, and I cannot say what will be the outcome of the discussions with the unions.
I want now to consider what has been the Government's part since the last Review. There have been two major contributions to our agricultural policy. There has been, first, the Agriculture Act, 1958, which was a decisive measure necessary to enable the landlord to play his full part in the development of agriculture, and now we are introducing the Small Farmers Bill. This is on its way through Parliament and will shortly reach this House. These two measures, both of which are designed to increase the industry's efficiency, are major elements in the consistent and coherent development of he Government's long-term policy for agriculture. Last year we had the 1957 Act, which embodied the long-term assurances to the industry.
I find it difficult to understand what noble Lords on the other side of the House are saying about all this. The noble Viscount, Lord Alexander of Hillsborough (who told me that he would have to leave your Lordships' House early to-day), is constantly saying that these long-term assurances are a denigration of agriculture—he is most disparaging of them, if I may put it that way. I wonder whether we have been hearing some new policy, because I see that his Party's policy document on agriculture, at page 26, does not take that view. It says that Labour accepts and will continue these assurances, including the limitations on downward price changes contained in the Agriculture Act, 1957. In the conclusions, which are reached at page 39, we find it reaffirmed that Labour will retain the Price Review procedure and will also accept the limitation on downward price changes contained in the 1957 Agriculture Act. So I am not particularly clear about what is said in regard to this piece of legislation, and whether what is said in this authoritative document, as I take it to be, will be accepted and continued by noble Lords on the other side.
The point I want to emphasise now is that the 1957 Act provided the necessary basis for additional investment. For the first time there was introduced the farm improvements scheme of grants. For the first time since agriculture had been revived in 1939 was there any suggestion of 826 Government aid direct in regard to the fixed equipment of the industry. That is a great advance, and the 1958 Agriculture Act made the whole situation easier. It has eased the difficulties in the landlord and tenant system which had become apparent and it has done away with unnecessary restriction on the freedom of farmers. We have all to admit the difficult problems of the small farmer, and now, for the first time—it is a courageous thing to do—we are introducing legislation specifically designed to help the small farmer in his difficulties.
So much for our measures. Let us consider for a moment what has been happening on the farms. The trend of agricultural output, as we see it in the September 4 returns, indicates, as I have already mentioned on a previous occasion, that the industry is moving forward confidently for the future and broadly in the direction in which we want it to go. Noble Lords know perfectly well that it is much more important that the industry should increase its meat production than that it should increase its milk production at this moment, and we are pleased to see that these September 4 returns show that that is the direction in which the farmer is moving. I am sure that is broadly in the right direction. On the other side of the account, before we come to the next Price Review, we shall have to take into account the dreadful weather that we have had for this harvest. As the farmers themselves and the unions recognise, it has never been the policy that Her Majesty's Government should insure the farmer against the calamities of the weather.
I must now endeavour to return to some of the specific points that have been raised. First of all, I will deal with them as points and try to remember which noble Lords have raised them. I was glad to have the support of the noble Lord, Lord Boothby, for our small farmers scheme. I found him to be a generous and strong supporter. He asked, in regard to the small farmers scheme, that we should be quite sure that we were not going to subsidise "climbing up the mountain to look for food," or some such phrase as that—presumably he is not interested in blackfaced sheep. What he meant was that he wanted us to ensure that we should support the viable small units. That is absolutely 827 basic to the small farmers scheme. We shall be criticised for that because, if we accept that doctrine, we shall have to cut out people whom we think are not viable. I can assure the noble Lord, Lord Boothby, that we certainly shall not scatter this money about unwisely. We shall consider co-operation from the small farmers, and we feel that it may be the case that a farmer who might be too small to qualify for the small farmers scheme will be able to qualify if he co-operates and joins with a neighbour. I agree entirely with the noble Lord's remarks on the importance of grassland.
He too, I was glad to see, stressed the point about production grants. In the whole debate these have been rather overlooked. We have focused our attention so much on the difference between the fixed and the guaranteed prices, to which I shall return in a moment, that we have overlooked the immense importance of the system of production grants which has been greatly developed by this Government since they have been in power. It is of the first importance.
I do not think I need say anything more about the small farmers scheme, other than to take up a point that was made, I think, by the noble Lord, Lord Stonham, in regard to the question of the National Agricultural Advisory Service. One of the reasons why we are going to limit this small farmers scheme is so that we do not overburden the machine; so that we do not bite off more than we can chew; so that we do not have a tremendous blockage in the administrative departments and in the technical services which must look after the scheme. We have given this matter a great deal of thought, and we believe that the resources that we have in the National Agricultural Advisory Service are capable of dealing with this scheme. It has been said that surely this will finally break their back because they are already administering the farm improvements scheme. I think that that is a misconception. Noble Lords will remember that it is the other branch of the advisory services, the Agricultural Land Service, which deals with the farm improvements scheme. It is the N.A.A.S. which will deal with the small farmers scheme. We do not think that this is going to be the last straw that will break their back.
828 Now I should like to say a word about the Farm Improvement Scheme, because the noble Viscount, Lord Stonehaven, who is certainly fond of figures, made some comments about it. The noble Viscount gave figures for September, I believe (I have later ones), and perhaps there was some confusion between what I had said in a previous debate about 65,000 applications under the scheme and the 40,000 applications which he mentioned. The figure of 47,400 applications, which I should like to give your Lordships, is the number of applications from England and Wales. The broad figure of applications which I gave in the previous debate—65,000—was from the United Kingdom, including Northern Ireland and Scotland. Of these 47,400 applications—which is a formidable total—nearly 25,000, or over 52 per cent. of all those received, have already been approved, at an estimated value of £17½ million, which represents about £6 million in grants. That is £6 million of new Government money going into the industry—£17½ million in all—on those 25,000 accepted applications. That is being spent by the farmer and Her Majesty's Government on the equipment of the industry. That is an extraordinarily good show. One does not find people spending so much of their own money on something in which they have no confidence for the future.
My Lords, would the noble Earl allow me to interrupt? I am sorry I did not make myself clear. I thought he was speaking of England and Wales. The point I wish to make is that although these extra grants have been approved, the actual cash handed out, and therefore the actual amount of cash that had been borrowed as at September 8, was limited to a little under £1 million.
My Lords, I am afraid I have not the figures at my finger tips, although I am sure I could find them and discuss with the noble Viscount the actual amount of grants disbursed; but we must stick to the actual amount approved. There is sometimes a little delay in Government Departments, although there is very little in my own Department; but of course some time must elapse between the time the form is dealt with and the time the money goes out—even from St. Andrew's 829 House, Edinburgh. I should prefer to deal with accepted applications.
I am sure that this is an excellent story which reflects credit on everyone. Particular praise must go to the members of the Agricultural Land Service who have often worked hours far beyond what they would normally expect to do. I have already made the point that I do not think that this will be a case of overburdening the National Agricultural Advisory Service, because the Farm Improvement Scheme is largely being handled by the Agricultural Land Service.
Before I come to the main point of fixed prices, I must say a word or two about horticulture, because the noble Lord. Lord Stonham, raised it and he is entitled to hear the reply which I shall try to give. It is true, of course, that a great many of the things we have done for agriculture have not served to help horticulture. Horticulture, on the other hand, receives tariff protection to an extent not enjoyed by the rest of agriculture; and it has always been accepted on all sides of the industry that horticulture has its own special problems and that these could not be dealt with by measures that were appropriate for agriculture generally. The reason for this is that its products are too varied and too dependent on seasonal influences. These include the weather, which has caused special difficulties this year.
For some sections of horticulture, and perhaps for the glasshouse industry in particular, 1958, has not been as good as 1957. There have been heavy crops of some vegetables and fruit, particularly carrots and apples, which have resulted in low prices. In horticulture, bumper crops are not always unmixed blessings. Horticulture is an industry which is bound to experience fluctuations of fortune. As every grower knows, it is a type of production which by its nature is never likely to experience complete stability. It is not that kind of venture. It will always have that kind of risk which appeals to the enterprising, energetic person who is willing to back his individual judgment and (to put his produce on the market at a time and in a way he feels his customers will want.
What Her Majesty's Government can do with an industry such as this is to try to provide such stability as is practicable 830 and to give efficient producers a fair chance of earning a worthwhile return for their efforts. It is sometimes forgotten that in 1953–54 Her Majesty's Government increased horticultural tariffs to roughly double their previous level. These tariffs give growers substantial protection and, taking one year with another, the industry as a whole has had a reasonable measure of stability in recent years. We feel that most of the special problems of horticulture are in the field of marketing. Recognising this, Her Majesty's Government appointed a Committee under the chairmanship of the noble Viscount, Lord Runciman, and arising from the Committee's report we have set up the Horticultural Marketing Advisory Council. This Council is proving a most valuable body. It has, for the first time, brought together for constructive work representatives from all sections of horticultural production and distribution, who are pooling their knowledge and experience in the common interest. The Council is actively at work and I look forward particularly to receiving most valuable advice on this work as it goes forward.
I want to stress that in any such field as this what is called for is joint effort from producers and traders, and Her Majesty's Government will continue to keep the special problems of horticulture under review. We cannot go further than that. The noble Lord, Lord Stonham, asked a specific question on broccoli and tomatoes. Probably he is a member of the National Farmers' Union, or if not he may well be a grower of these crops; and he will know very well that tariff applications are under consideration at the present time. I cannot possibly say what will be the outcome of them.
§ LORD STONHAM
My Lords, before the noble Earl leaves that point, can he give any idea not of what the decision will be but of when the decision about tariffs will be announced? Can he also say whether the particular matter of dumping, or apparent dumping, from Holland is not contrary to G.A.T.T.; and whether that could not be prohibited and dealt with? I quite agree with what he has said about fair competition, cooperation and so on, but that is not fair competition. How can it be dealt with?
My Lords, I am afraid I cannot go further than that. I cannot say when a decision will be 831 given on these applications which are before the Government. The noble Lord knows as well as I do that there is antidumping legislation in existence and that if a case can be proved that legislation is put into operation and will be used as required. A case was proved last spring regarding foreign butter coming from certain countries.
I must get on to the main points that were raised by the noble Lord, Lord Wise, and most other noble Lords on the opposite side of the House, on the question of the difference between guaranteed and fixed prices. We have had a great deal of advice from noble Lords this afternoon and I should like to try to consider what we can do about it. I believe it is quite clear that noble Lords opposite are in favour of a return to fixed prices, but I think it is also quite clear that they have forgotten (or so it would seem to me) that conditions in this country and in the world have completely changed from the time when those fixed prices were in operation. At that time there was a grave shortage of food all over the world and the effect of the fixed prices was, very largely, that the farmer got less than he would have had in the world market. Now the situation is completely reversed. The price of raw materials, foodstuffs not excepted, has been falling throughout the world and a system has had to be devised whereby in those circumstances we could give reasonable support to the farmer within the whole framework of the national economy.
There has been talk about nostalgia—the noble Lord, Lord Amherst of Hackney, used the word. There seems to be nostalgia in some people's minds. But it is too simple for us just to go back. I do not believe that greater stability and less cost upon the Exchequer could come about merely by doing that. Cost there will always be, under any system, whether we conceal it or not. It is perfectly clearly set out in this pamphlet called Prosper the Plough, which I was looking at only last night. It says:As to the method of achieving a given policy, the ' cost ' of this could be concealed by controlling imports and averaging the prices of imported and home-produced goods. In other words, the visible cost of support is related to the method by which the support is channelled and not necessarily to the ' value ' of support from the farmers' standpoint.832 It continues:Conversely, the apparent cost can be low or even non-existent … with farmers receiving very high prices in consequence at the consumer's expense.The noble Lord, Lord Stonham, and several other noble Lords, made much of the point that the prices which the farmer was receiving were lower; the prices the consumer was paying were more; the prices the Government were paying were more—where was it all going? Was it going to this old bogy, the middleman? I do not think that we can justify the suggestion that all this money, this £300 million of subsidies, is not finding its way into the farmer's pocket and is not finding its way into the consumer's pocket, and that it must therefore be going into the middleman's pocket. We have heard that sort of suggestion before, and it really does not work out like that. All the costs of distribution and processing have gone up, as have wages, rents, rates, transport costs, fuel and almost everything; and the trader needs a higher net margin to give him the same standard he had before. There is a much bigger variety of food and more choice and higher quality. These are important items, but they all cost money, and they make increases in retail prices look bigger than they really have been.
The real safeguard against excessive margins in the food processing and distributive trades is not some arbitrary system of controls but competition. Over most of the field there is freedom of entry into the trade, and that is best guaranteed by competition. Considering one foodstuff and another, I think your Lordships will agree that competition is working well. Our food prices are lower than those in most other countries in the world; and that being so, I really cannot see that there is anything in our arrangements which deserves the sort of criticisms that have been uttered to-day.
I do not understand how, in the changed circumstances, noble Lords opposite would propose to reintroduce fixed prices without burdening us with the controls that we had before. I think they admit that we should have to have these controls. Presumably we should have to have, as I said before, the men in my Department in Whitehall trying to guess all the quantities and qualities the market was likely to want, and what price it was likely to pay. I suppose that noble 833 Lords opposite envisage purchase by the Government of all the produce which the farmers were unable to sell in the market at more than the guaranteed fixed price. If not, how is the farmer to get his promised return? We should have to have import controls again, and would this not really harm the interests of the consumer?
I am unrepentant about the Government's "safety net" philosophy. The farm producer sells his commodity in the market at the market price. The way some noble Lords deal with the market price if they do not like freedom is to refer to the "so-called free market". I do not ever know what that means. I do not refer to my noble friends on the other side of the House as being in the "so-called Labour Party". It is in fact a free market, and the compounders and millers can buy barley from Iraq or North America or France or England or anywhere else they like. That is the operation of the free market. That is the first price the farmer gets. The noble Lord, Lord Stonham, quoted the case of his barley and his neighbour's. I did not quite catch why the neighbour got such a low price, but I believe it was due to storm damage. There is no system under fixed prices of controls that can ensure that that particular farm, which has suffered from a thunderstorm so that the barley is not marketable—
§ LORD STONHAM
My Lords, I thought I made the point clear. The barley was got up from the soil in August, when there was almost none available, and it got a good price.
Well, that is the whole point of our system. By wise marketing someone can take the opportunities of the market and beat the average. That provides an incentive to market when the produce is most wanted. The price was higher in this particular case, presumably, because there was a shortage. The farmer produced it and made a good return—and why should he not do so? There is an incentive for an intelligent operation in the market. I know there is a feeling that no one should be intelligent enough to make another half-crown on his barley because the market wants it, but I find that difficult to understand.
There is also the idea that this money is going into the hands of the grain mer- 834 chants. It is all too easy to criticise middlemen and to make accusations of that sort. There are a large number of them—there are some 2,000 or 3,000 individual grain merchants, most of whom are small businessmen and most of whom are doing a two-way trade with the farmer not only buying his crops but selling him back his seeds and fertilisers. I find it extremely difficult to believe that these 2,000 or 3,000 small merchants are getting together artificially to lower the price and to "twist" the farmer in this way. That seems completely to ignore the fact, for example—as barley was mentioned I will speak about it—that there is sitting all the time a trade working party on feed barley. That body sits all the time: the farmers and compounders are represented, and the prices are published. I simply do not believe that the sort of situation that has been hinted at is in being in present circumstances.
Many other points were raised, but time will not allow me to mention more than one or two. The noble Lord, Lord Wise, said, I believe, that one thing I personally might do at Christmas time would be to have a holiday task and work out a new agricultural policy. I certainly shall spend a great deal of time then thinking about agricultural policy, and I am pretty certain that I shall come up with the policy we have now, very much for the reason which the Prime Minister gave in his speech to the National Farmers' Union on the occasion of their Jubilee the other evening. Perhaps I might remind noble Lords of what he said. He pointed out—and this is basic to the whole story—that the prosperity of British agriculture depends upon the prosperity of industrial Britain, and this, in turn, depends upon continually expanding international trade. He added that our system of guaranteed prices and production grants on the one hand, and a liberal trade policy on the other hand, is the one best suited to our particular circumstances and enables home agriculture to play its full part in the national economy.
I should like finally to remind noble Lords of the independent Report, the Haberler Report, issued by the G.A.T.T. and drawn up, I believe, under the Food and Agriculture Organisation's auspices. A most gratifying and surprising matter (surprising to some people and gratifying to all of us) is this: the Report strongly 835 urged that all countries should take very good note of the price-support system as used in this country and should gradually turn towards it and away from the more protectionist and restrictionist systems which have been used before and which are used in so many other countries. Further than that, my Lords, I think I can only say that I will willingly go later into the points that noble Lords have raised, but I do not think I should delay your Lordships by going into them in detail to-night.
§ 6.1 p.m.
§ LORD WISE
My Lords, I thank the noble Earl for his reply to the debate. I think that the Motion put down to-day has served a purpose, and I thank those noble Lords who have joined in our discussion. I am afraid, however, that I have to say to the noble Earl that, although he may complete his holiday task at Christmas, we are still unrepentant and, whatever he produces at Christmas, we may be able to criticise it and hope to improve it in the New Year. I beg leave to withdraw my Motion.
§ Motion for Papers, by leave, withdrawn.