HL Deb 30 June 1959 vol 217 cc442-50

2.41 p.m.

THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (EARL WALDEGRAVE) rose to move, That the Potatoes (Guaranteed Prices) Order, 1959, be made in the form of the draft laid before this House on June 10. The noble Earl said: With your Lordships' permission, I would propose to deal with the two somewhat complicated Orders which stand in my name on the Order Paper at the same time. They relate to the whole of the United Kingdom. The first Order, the Potatoes (Guaranteed Prices) Order, 1959, gives effect to the changes which my right honourable friend announced in another place a year ago to-day, on June 30, 1958. Briefly, the new arrangements substitute for the purchase of surplus potatoes on Government account arrangements that assure a minimum return to the industry as a whole related to the requirements of potatoes for human consumption. A guaranteed price for such potatoes will be determined each year in the light of the conclusions reached from Reviews held under the Agriculture Act, 1947. The guaranteed price is determined this year at £12 14s. 0d. a ton. If in any year the average price received by producers for potatoes for human consumption is less than the guaranteed price, then the deficiency will be made good from Exchequer funds. In Great Britain the amount due will be paid to the Potato Marketing Board, and in Northern Ireland to the Ministry of Agriculture for Northern Ireland for the benefit of producers.

I feel sure that your Lordships will recognise the necessity for a change from the existing support price arrangements. The old arrangements derive from the war-time system of control. They were originally devised to meet conditions in which the Government wanted a surplus of potatoes as an insurance against shortages of other foods. Farmers were directed to grow potatoes in areas and on land where potato-growing would not normally be an economic proposition. It was a corollary of this system that the Government should undertake to buy any surplus for which the grower could not find a market.

The guarantee arrangements for many other commodities—for instance, livestock and cereals—have already been changed following decontrol to meet the changed conditions. But the basic features of the potato guarantee arrangements remained unaltered when the Potato Marketing Board was revived in 1955. The Government came to the conclusion last year that it must introduce a guarantee system for potatoes more suited to present-day conditions and the needs of a freer economy. These regulations implement that decision.

The main reasons for this decision are briefly these. The present system involves State trading in surplus potatoes which it is the Government's policy to bring to an end. Moreover, it leads to costly and often unnecessary movement of surplus potatoes, whereas in many cases the most economic outlet is to use them for stockfeed on the farms where grown—as was the general practice before the war. It is also a grave weakness of the support price system that it has led to fraud and other irregularities at the taxpayers' expense. We are convinced that this difficulty can be overcome only by fundamental changes in the arrangements.

We believe that the new deficiency system will eliminate these and other weaknesses. We are satisfied that it will greatly reduce the scope for fraud and other malpractices. But, more than that, we feel that the new system is justified on its own merits, for it has positive long-term advantages. It will, for instance, introduce greater flexibility in production and marketing, and will give growers more incentive to produce the type of potatoes demanded by the consumer and to improve grading and standards generally.

It is understandable that some growers were a little nervous about the cessation of the individual guarantee they received in the past. But I want to emphasise that the income of the industry as a whole will still be supported by the Government. It is true that surplus potatoes not required for human consumption will no longer be covered by the guarantee; but the Government have taken account of this by increasing the guaranteed price for potatoes for human consumption. The farmers' unions have agreed that the higher guaranteed price of £12 14s. 0d. per ton is equivalent to the lower price of £11 9s. 0d. per ton which is current now under the support price system. The new system for potatoes is similar in principle to those for fat-stock and cereals, but takes account of the existence of a producer Marketing Board for potatoes which there is not for the other two commodities I have mentioned. This Board has an important part to play in the operation of the guarantee.

I hope that I do not weary your Lordships in going through the scheme in some detail because it is a radical departure from the system which we are using at the moment. It may be helpful if, briefly, I go through the main features of the Order. Article 3 provides for the determination each year of a guaranteed price per ton for potatoes. As I have said, at this Price Review that has been determined at £12 14s. 0d. Article 4 is a very important matter. It deals with the estimation of the quantity of potatoes sold for human consumption in each year and the average price received by producers for such potatoes. The detailed arrangements for calculating what is referred to as the "annual quantity" and the average price have been worked out in consultation with the producers' representatives.

I should mention here that for the 1959 crop only, while the new machinery is running in, it has been agreed that the annual quantity will be estimated at 3,809,000 tons. This arrangement has been made following representations by the farmers' unions and the Potato Marketing Board and was announced in the White Paper, in paragraph 16 or 17, on the last Annual Review. Article 5 provides for the payment of any deficiency. As I said before, in Great Britain payment will be made to the Potato Marketing Board on behalf of producers, and in Northern Ireland payment will be made to the Ministry of Agriculture for Northern Ireland who will use it for the benefit of producers in that country. Article 6 enables the Minister to make a contribution towards the Potato Marketing Board's administrative expenses. This is to be limited to a maximum of not more than 50 per cent. of the administrative expenses, and to not more than £300,000 in the first two years. Article 7 allows advances to be made to the Board for deficiency payments and administrative expenses. Article 8 deals with the special arrangements necessary for Northern Ireland. I think I need not say any more on that Order.

The second Order is the Potatoes (Protection of Guarantees) Order, which comes into force on August 1, 1959. As its title suggests, it is intended to safeguard the new guarantee arrangements. It follows the general pattern of similar Orders for other commodities in making provision for records to be kept by traders and for other matters, so that Ministers may satisfy themselves and Parliament that public money has been properly expended. We have discussed these provisions with the trade associations concerned, and I should like to take this opportunity of thanking them for their co-operation.

I have endeavoured to give your Lordships some indication of the reasons why the Government have found it necessary to make these changes. The two Orders under discussion provide the machinery for giving effect to the Government's decision and I feel confident that they will meet with your Lordships' approval.

Moved, That the Potatoes (Guaranteed Prices) Order, 1959, be made in the form of the draft laid before this House on June 10.—(Earl Waldegrave.)

2.50 p.m.

LORD WISE

My Lords, there are just one or two things I should like to say about these Orders before they are passed through your Lordships' House. First of all, the Minister said there was some doubt as to whether this new arrangement will be acceptable to the producer and the trade, but I am glad to hear from him that consultation has taken place with the National Farmers' Union and others concerned and that they are agreed that this particular method of dealing with potatoes should at any rate have a trial. I feel that the Order should be read in conjunction with the February Review of Prices—the White Paper—as it was there suggested that these Orders should be made; and I also noticed that the Minister referred, as does the White Paper, to the industry as a whole.

I am rather concerned as to whether or not the producer who sells direct to the retailer, institutions or private consumers will benefit by these particular orders. For instance, in the White Paper (on page 20, at paragraph 16), as no doubt the noble Earl the Minister will note, there is a description of the various producers whose products will be taken note of in the amounts sold for human consumption. The description of "producers" in Section 4 (1) of Order No. 983 does not appear to tally with the description given in the White Paper. I am wondering, therefore, whether the producers to whom I have referred are included, and whether they have to come under any kind of licence from the Ministry.

In that particular section there is repeated reference to "licensed grower-salesmen" and "licensed merchants". I am wondering whether the ordinary producer who sells direct has to be licensed in any way, and whether, when deficiency payments are made by the Potato Marketing Board, not only will his products be considered but the deficiency payment, received by other producers, will be received by the direct seller. The noble Earl the Minister mentioned the basis on which deficiency payments would be arrived at on a tonnage of 3,809,000 acres——

EARL WALDEGRAVE

It is tons.

LORD WISE

Yes, on that tonnage. I notice that the estimate of production for the year just ending was given in the White Paper as 5,556,000 tons. That is a difference of 1,747,000 tons, which is about one-third of the whole of the potato production. It seems to me that even if we estimate the tonnage of potatoes used for feed, for stock-feed and for export, there is a big loss between the tonnage of potatoes produced and the amount consumed for food. I do not know whether that figure is right. According to the White Paper also, the area of potatoes last year was 822,000 acres and the average tonnage per acre, therefore, was roughly about 7.

I come now to the question of the amount of the deficiency payment. In the White Paper the amount of the price support to the potato industry is estimated this year at £6,900,000, which also includes some loss—described in the Paper as "a small trading loss"—by reason of the fact that the Government had to purchase surplus potatoes. I want to ask the noble Earl the Minister whether the estimate for the first year under this new system will be higher as a deficiency payment than the surplus payment last year. As a matter of interest I might break up that figure of £6,900,000. The tonnage of our potatoes was roughly 4 million for human consumption and the cost, admitting the slight trading loss, might be estimated at £6 million, which is £1 10s. per ton. In round figures, that means about £10 an acre, and I am wondering, therefore, whether the noble Earl has yet reached any conclusion in his calculations as to what the amount of deficiency payment per acre is likely to be this year. I notice that in the previous year, 1957, the deficiency payment was higher by just over £1 million than it will be for this year, and I am wondering whether next year it is likely to go up.

There is just one other point I should like to raise on these Orders. That is in regard to the Potato Marketing Board. The functions of the Board are not very thoroughly defined in the Orders, and I am hoping that one of the functions of the Board will be to protect the producer and the Government in regard to prices. The fact that the guaranteed price this year will be £12 14s., as against the support price last year of £11 9s., rather suggests that unless in some way or other, we control the price which the merchant pays to the producer, the Government may have to face a higher deficiency payment than was made last year. I am most anxious, therefore, not only that the producer should be safeguarded in regard to the price he obtains for his product but also that the consumer and the Government should have a fair deal at the hands of merchants who buy our potatoes.

3.0 p.m.

LORD DOUGLAS OF BARLOCH

My Lords, there is one question I should like to ask the noble Earl. He made a passing reference to giving the consumer what he wanted. I should like to ask him what there is in these Orders that will ensure for the consumer a better quality of potato than he has been having in the past. I hope that the noble Earl is aware that there is hardly any article of food in this country which causes more dissatisfaction to the consumer than the potatoes which are commonly obtainable in large towns and cities. They entirely lack flavour; they are frequently of very poor quality, requiring the housewife to pare large fractions off them before she can cook them, and they frequently turn black when they are cooked. We are apparently to continue to spend a considerable amount of money in subsidising the production of potatoes, but what guarantee is there that the consumer is going to get any better article?

EARL WALDEGRAVE

My Lords, with permission, I should like to reply briefly to the points that have been raised. The noble Lord, Lord Wise, asked about retail sales. I assure him there is no discrepancy between the White Paper and the Order which I have just moved. The point is that under Article 4 of the Order the producer who wants to sell direct has to obtain a licence from the Potato Marketing Board, and then he becomes a licensed grower-salesman; that is how he is described. Then his sales are taken into consideration in these calculations to arrive at the average price and quantities, and so on. The only persons who sell potatoes for human consumption whose transactions are not taken into consideration are the small wayside sellers who are not licensed, though really they ought to be, and who sell a few pounds of potatoes to passers-by. There would be no practical means of collecting statistics about such sales as those. I hope that covers the point.

As to the discrepancy, as there was stated to be, between the tonnage, the figures which the noble Lord, Lord Wise quoted were for the gross product and there is always a great difference between the gross and net figures. There are to be considered nearly one million tons of seed potatoes, to begin with; all the potatoes fed to farm livestock, and some used for industrial purposes and so on. I can assure noble Lords that the reason why we put in a figure this year, which is an agreed figure, for what we should be using as the agreed quantity was that the machinery might be a little creaky in its first year in getting the returns in, and we wanted to be quite certain that we were doing no injustice to anyone. That is an agreed figure, as a reasonable figure, on which this calculation should be made. It will remain fixed whether sales for human consumption turn out to be more or less than that, so it is a basis.

The noble Lord spoke of the deficiency payment under this scheme. Let us get clear that there is not going to be a deficiency payment to an individual producer under the old price support basis. The deficiency payment is paid in a lump sum to the Potato Marketing Board, or the Ministry in Northern Ireland. They will do what they like with it, and will deal with it in the interests of their own producers; and the Potato Marketing Board are the producers' Board, so they should know. As to the deficiency payment, I do not know whether there will be a deficiency payment at all.

That leads me to my next point: that the real function of the Board and of the purpose of this scheme, as the noble Lord, Lord Wise, said, is to use the riddle to market potatoes. That, again, leads me, to the point of the noble Lord, Lord Douglas of Barloch. I cannot agree with him that there is really great dissatisfaction with the quality of potatoes we buy now; but whether or not there is dissatisfaction the object of this exercise is to promote the better marketing of potatoes; to get people to grow and to use efforts to sell what the public want. By that means the growers will get a better price and the whole scheme will work. The system whereby all that was produced, of whatever quality, and wherever it was produced, was supported by a Government payment did not lead to that end, and that is why we so much believe that this new scheme will produce a better quality potato than we have had before.

On Question, Motion agreed to.