§ 3.18 p.m.
§ EARL WALDEGRAVE rose to move to resolve, That this House approves the Annual Review and Determination of Guarantees, 1960 (Cmnd. 970), made under the Agriculture Acts, 1947 and 1957. The noble Earl said: My Lords, this is, I think, the first occasion when the Government have set down a Motion to approve the policy decisions in the White Paper which is published year by year to give the results of the annual review of agricultural subsidies. The Opposition have asked for this to be done, and, whatever their motives, I am glad that this procedure has been adopted. The Government consider that this year's decisions are fair, balanced and in the best interests of British agriculture. They are glad, therefore, to have this chance of commending them to the approval of this House.
§ There has been so much misunderstanding about this year's decisions that I fear I shall have to take up some time in speaking about the decisions for most of the main subsidised farm products. I see no escape from this if there is to be a proper understanding of the Government's policy. Before I start on this, however, may I make one or two general points about the price review? First, it is most important to remember that these decisions, taken year by year for many years now, are the decisions of the Government of the day. They are not, and were never intended to be, joint decisions of the Government and the National Farmers' Unions. Of course it is right that those decisions should be taken after the fullest consultations with the unions. That has always been done, and it has been this year as thoroughly and as conscientiously as on any previous occasion; but it is not surprising if, on occasion, the decisions are not agreed with by the unions. That is my first point.
§ My second point is that these decisions are primarily decisions on the changes to be made in the many different farm subsidies for the ensuing year. So far as they are expressions of agricultural policy they represent the line which the Government have been following since 1954. The stress has all this time been 853 on the importance of the market and on the need to make production more economic. Government policy is still the same.
§ My third point is on the effect of the Price Review as a whole. Everyone knows that this year's decisions mean that the value of this year's price guarantees has been reduced by £9 million. But there is, I think, a great deal of misunderstanding on how this sum is arrived at. As a result, this sum is sometimes seen out of perspective.
§ My Lords, may I start with what is said in the Agriculture Act, 1957? That Act, which is the means of keeping gradual and tolerable any reductions from time to time considered justifiable in the level of support for agriculture, laid down as the starting point of all calculations the total value of the guarantees. Now the total value of the guarantees this year was £1,270 million, and the Act laid down that any reductions should be limited to 2½per cent. of this total, subject to an allowance for any increase in production costs. This is a comparatively simple sum, but I am afraid I always seem to be doing arithmetic from this Dispatch Box. In this year the 2½ per cent. formula would have authorised a reduction of £32 million, less £13 million for the increased costs in production, like wage increases. In other words, the Government had authority to reduce by £19 million. In fact, the reduction was £9 million. The contrast between these two figures must not be overlooked. This was not a savage, slashing, sadistic cut. It was very much less than the maximum authorised by Parliament. Equally, I suggest, it is right, if things are to be got in perspective, to set the £9 million against this figure of £1,270 million. The reduction represents, in fact, only ¾ of 1 per cent. of the total.
§ We are certainly not advocating a restrictionist policy of seeking to limit farm output; what we are doing is reducing slightly the liability of the Exchequer. If production goes up beyond what the consumer will take at reasonable prices, the cost to the Exchequer of the guarantee will increase or the return to the producer will fall. Probably both. The aim must be to expand net income—that is, to increase the margin between costs and returns.854
§ I now turn to the decisions on the different farm products, and I hope that I shall be able to convince your Lordships, as we come to each one, of two propositions. First, that any changes that have been made are fair and balanced and reasonable; and, secondly, that there is no evidence in these changes of what has been described as a restrictive policy, if by that is meant a policy intended to reduce the profitability and viability of British agriculture. Let us take cereals, which are dealt with in paragraph 31 of the White Paper. The guaranteed price of wheat has been reduced by 8d. per cwt., and that of barley by 3d. To get these reductions into perspective, may I remind your Lordships that the guaranteed prices for cereals last year were between 27s. and 29s. a cwt. What I want to suggest is that these small reductions are fair and unlikely to restrict production. The fact is that yields have gone up substantially, and there can be no doubt that production is still profitable. At the same time, the subsidies on cereals are high in relation to market value (last year the subsidy on barley was over 40 per cent. of the market value), and it seemed only reasonable to make this small reduction to reduce the cost of the subsidy. I do not see how anyone can claim that the reductions are crippling or that they will restrict efficient production. On the contrary, we hope that the splendid achievements of British agriculture, particularly in increasing yields of cereal crops, will continue, fostered, I may say, by my Department's Advisory Services.
§ LORD STONHAM
My Lords, before the noble Earl leaves that point, could he compare the guaranteed price for wheat now, which is 26s. 11d. with the guaranteed price just three years ago, which was 30s.? Could he also deal with the point that, although yields have gone up, wages and other costs have gone up considerably, too?
My Lords, I could compare those two figures, but what comparison could I make for them? The determinations of the Review are made every year, with all the facts before us. It will certainly delay this debate if, in every case where a figure is mentioned, we are asked: "But what was the price in 1936, 1937 or 1948?" With great respect, I think the 855 noble Lord had better develop that point in his speech.
I should now like to turn to eggs, where, of course, there is a different story, The Government have definitely indicated to this section of the industry that production has risen to a point where it is uneconomic. In my view it was only right that they should say this. For the last three years the Government have warned the industry of the dangers of over-production. The facts are that the subsidy on eggs is at present running at about £36 million a year, which represents about 1d. on every egg and nearly one-seventh of our total subsidies. We have again had to say this year that we want fewer eggs, because supplies have outstripped demand. Of course, there is still plenty of scope for increased consumption—on average, each of us in this country eats fewer than five eggs a week, whereas Canadians and Americans eat six or more. So if the Egg Marketing Board can persuade everyone to buy that extra egg, at the sort of price they pay now, all will be well. Meanwhile, however, we decided that a reduction in the guaranteed price had to be made.
Even here, however, the reduction of 1.38d. is about ½d. a dozen less than the maximum permitted under the longterm assurances. Moreover, the changes we have made in the profit and loss sharing arrangements between the Government and the Board, which I have just explained in moving the Eggs Order, should do a great deal to reduce the year-to-year fluctuations in producers' prices. In 1959–60 these fluctuations considerably reduced producers' returns and it may well be that in 1960–61 producers will get a better return than in 1959–60 despite the further reduction in the guaranteed price.
My Lords, if the noble Earl is leaving eggs, could he tell me what is the estimate in this current financial year for the egg subsidy? I cannot find it in the White Paper, but I may have missed it.
In Appendix V, "Estimated Cost of Exchequer Support to Agriculture," the cost of implementing price guarantees for "Eggs, hen and duck," was £33.7 million in 1958–59, and £36.5 million in 1959–60. These are not projected figures—indeed 856 I do not think any of the figures in this White Paper are projected.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
My Lords, would the noble Earl agree that in fact on this particular commodity of eggs the Review shows nearly the maximum permitted reduction of 4 per cent.? It is just over 3 per cent, is it not?
My Lords, I think that that is so. We could have made the reduction ½d. more, but we did not adopt completely the maximum reduction.
May I now turn to milk, which is dealt with in paragraph 21? I really doubt whether dairy farmers have any cause to grumble at the determinations made there. We have reduced the market price by ¼d. a gallon so as not to encourage production over and above the requirements of the liquid market after allowing for an adequate reserve. At the same time, however, we have recognised the magnificent efforts made by the Milk Marketing Boards to increase their liquid sales, and we have recognised those efforts by increasing the standard quantities to which the guarantee applies. We have increased that by 19½ million gallons. This increase in the standard quantities is equivalent to an increase in the guaranteed price of 0.17d. per gallon, so that the effective reduction in the price is very marginal indeed. Furthermore, this increase in the standard quantities is not a once-for-all operation. We have agreed that in future years the standard quantities will be adjusted, gallon for gallon, with any future changes in liquid sales. So there is a real incentive here for the Milk Marketing Boards to carry on their successful efforts for stimulating demand. So far, surely, I have been able to make my case. These changes are fair, balanced and reasonable and there is no evidence that they will reduce the profitability of agriculture.
Now I come to pigs—paragraph 26—and here it is a case not of reductions but of increases in support. We have tackled the pig situation thoroughly 857 and comprehensively. We have done three things—perhaps this will help noble Lords who were not clear what was happening when I was moving the Order. First, we have increased the guaranteed price by 3d. a score. Second, we have separated the quality premiums for bacon pigs from the general guarantee; that was what the Order was for. This change is equivalent to increasing the guaranteed price by a further 6d. a score. The effect of these changes will be that all producers will be 9d. a score better off. Third, we have reduced the stabilising bands (as they are called) from 3s. to 2s. 3d. on either side of the guaranteed price, so that there will be less fluctuation in returns from week to week. The average return for bacon pigs as a result of these arrangements cannot fall by more than 1s. below the standard price, whatever the state of the markets. The bacon industry has not been slow to realise the great advantage of this, and already one firm and the farmers' own organisation, the Fatstock Marketing Corporation, are offering producers long-term contracts on attractive terms. As a result of all these changes we hope to see a moderate increase in the breeding herd and in the pig herd generally. We do not want to start another pig cycle, but the Government have definitely taken this step to promote and encourage this moderate recovery in pigs. There is no restriction here.
Conditions with regard to sheep, mutton and lamb, which you will find dealt with in paragraphs 28 and 29, are different. Even with a more normal pattern of marketing than we obtained in 1959–60, the prospect is undoubtedly of continuing heavy subsidy. It was £26 million last year and I am sure it did not come as a surprise to sheep farmers that we reduced the guaranteed price of 3s. 3½d. by ½d. a 1b. At the same time the housewife continues to show a preference for smaller joints, and to provide some further encouragement of marketing at lighter weights the maximum weights in respect of which the guarantee payments may be made are to be reduced. But we have given more than a year's notice to farmers in relation to the marketing of what are called hoggets, where there might have been difficulty. All this is in accordance with our policy of calling upon the industry to make small and gradual 858 changes in the emphasis on our different products. And although it is not strictly in the Annual Review, perhaps your Lordships will not mind if I mention that there will be this year a hill sheep subsidy of 3s. per ewe. I use that as an illustration of the flexibility of our agricultural policy and support system which enables us to give special assistance where necessary to a particular section of the industry.
I now turn to another kind of meat: beef, which is dealt with in paragraph 25 of the White Paper. Here we have left the guarantees unchanged. There is scope for an increase in supplies of beef. Some people have been saying that if we want to encourage beef production we ought to increase the guaranteed price. These critics surely overlook the fact of the substantial increases in price that were made in earlier years and the incentive we gave after the 1959 Annual Review, through the hill cow and calf subsidies, to the rearing of beef store cattle. This has resulted in a welcome increase in calves retained for beef production. We want to see the rate of production in prospect maintained, and in our judgment this can be achieved at the present level of the guaranteed price.
We have not only looked at the commodity guarantees but also reviewed the whole field of production grants which form so substantial a part of the assistance given to agriculture. We have decided to make only two changes in the production grants. The basic rate of the lime subsidy is to be increased from 60 per cent. to 65 per cent. but there will be no seasonal increase such as there has been in the past which tended to concentrate too much demand in a limited period. For fertilisers we shall be making some changes from July 1 in the rates of subsidy, and those changes will have the effect of reducing the total cost by about £1½ million. But I do not believe that that small reduction—5 per cent. of the fertiliser subsidy bill—will result in any appreciable decline in the usage of fertilisers. It is certainly not our intention to check the great expansion in the use of fertilisers that has taken place over these last years. The explanation of the reduction is simply that the prices of the bulk fertilisers sold in the United Kingdom have fallen in the last two years, and all that we are doing now is to make 859 slight adjustments in the rates of subsidy to take account of those lower prices.
So much for the individual subsidy changes; and surely we can fairly draw two conclusions from them. First, this is not a restrictive policy. That is, of course, the main criticism of the National Farmers' Union, but I cannot understand the justification for such a conclusion. It was not the aim of the Government. Secondly, it is equally not, in my view, the likely result of the Government's decision, unless farmers are persuaded to believe that this is the case and lose confidence. Of course, they may well lose confidence if noble Lords opposite cry "Ruin!", as did the noble Viscount the Leader of the Opposition when he wrote to a farming weekly the other day saying that he believed thatthe farming community is now in imminent danger of the same treatment as it got in 1920–21".
The noble Viscount says "Hear, head", but before agriculture can be treated as it was in the 1920's we should first have to remove from the Statute Book an enormous mass of legislation which nobody has any intention of removing. We should have to remove Lord Addison's Marketing Act, the 1947 Act, the 1948 Act, the 1957 Act and the 1958 Act. The whole system of guaranteed prices and efficiency payments would have to go. We should have to disband the National Agriculture Advisory Service, and, almost more than that, we should have to reverse the whole trend of thinking about agriculture that not only successive Governments but successive generations of our people have come to believe in. It is surely a quite unwarrantable exaggeration to say that this poor little White Paper is a hydrogen bomb of that sort.
Perhaps I might pull my conclusions together. Her Majesty's Government have not set a new and lower target for British agriculture, but what they have done, very reasonably in my view, has been to say this year, as they have said on several previous occasions, that some reduction in Exchequer support is called for. That is a very different proposition, and I am surprised to see it being said 860 that a small reduction in Exchequer support is a new policy and a policy with grave implications for British agriculture. The success of the industry is to be measured not by quantity of output alone, but by the extent the industry can improve its profitability by higher returns from the market and improved methods.
I know that we have said that the output of eggs should be reduced. Was this unreasonable? Was it unreasonable to say that there is no sense in producing more eggs than you can sell? Would it have been reasonable to continue the guaranteed price at the same level? On pigs we have, of course, moved in the opposite direction. We have deliberately increased the price to bring about a moderate increase in our breeding herd. Is that restriction? On beef, we have left the subsidy alone. Is that restriction? On cereals, we rely, and shall continue to rely, on home-grown production to a large extent. All we have said, which is surely reasonable, I think, is that corn growing is now sufficiently profitable to justify a reduction of a few pence per cwt. Wool is down 1d. from 54¼d. to 53¼d. per 1b. Sugar beet is down 2s. 6d. Potatoes are up 5s. 6d. a ton.
Surely it cannot be argued that these decisions add up to a restrictive policy. I sincerely hope that farmers will not be misled into thinking that that is so. What we are saying is that they must look to the market and develop those lines of production which are the more profitable. Surely it has long been recognised by all those who have, as I have, agriculture's interest at heart, that a sound and healthy agriculture must be able to do with less support. I have no hesitation in making this point. It was made a little time ago by one who is to speak later in the debate and who speaks with great authority—the noble Lord, Lord Netherthorpe. I hope he will not mind if I quote a speech he made as recently as 1958. He said:What indeed is the challenge to agriculture? I would suggest it is this: how can we progressively reduce the extent of the payment made annually by the Exchequer to the agricultural industry.That is what he said was the challenge to agriculture. I hope that when he comes to speak later he will agree with me that farming can, and should, seek to do with less Exchequer support.
861 My final point is this. It has also been suggested that this year's decisions mark the "selling down the river" to the foreigner of British agricultural interests. We see headlines that the bacon duties are being slashed by 50 per cent. Fifty per cent. of what? Of 10 per cent., so that the reduction amounts to the removal of no more than a 5 per cent. duty—a duty which, anyhow, was imposed for revenue purposes. Then we are told, as further evidence of this selling-out process to the foreigner, that other industries have their tariff walls, but the Government should not even chip at the support of farming in the shape of the subsidies. This seems to me to be an odd attitude. I do not wish to see farming lose its support and I cannot agree that a reduction of three-quarters of 1 per cent. is evidence that that support is disappearing; but surely it is nonsense to suggest that tariffs are being maintained whilst the farming subsidies are being slashed. The reverse is the case as is well known to your Lordships. We are moving into an age of freer trade. Industrial tariffs are being reduced. Farmers will be glad in the years to come that they have the safety net provided by the Agriculture Acts.
My Lords, I hope that I have convinced you that the decisions in this White Paper are in the interests of farming. I hope no one would think that I am in any way unsympathetic about the difficulties facing the industry to-day. Like any other industry, we cannot shut our eyes to developments taking place around us. I think it fair to say that the leaders of the industry are mindful of this, and in their discussions with us they have shown a statesmanlike understanding, even if we have not been able to agree fully on all occasions. I am a devoted supporter of agriculture and have been all my life. It is the backbone of the country. It has a value that cannot be measured solely by the size of its net output. I am proud of its achievements—of its increased output and efficiency, of the enormous strides it has made in mechanisation. We are the most mechanised farming nation in the world. One by-product of that is that our manufacturers have developed a most important export industry in agricultural machinery. That development is in itself a striking example of the 862 value to industry of a flourishing agriculture. Certainly it is the wish of Her Majesty's Government that there should always continue to be a thriving agriculture in this country.
Equally it is the judgment of Her Majesty's Government that this year's Review decisions are in the interests of agriculture. I cannot do better, my Lords, than to quote the last words of the White Paper I am asking your Lordships to approve. They are to be found at page 10, and are as follows:The Government consider that these determinations provide a fair and balanced answer to the two-fold problem of, on the one hand, enabling agriculture to maintain its prosperity and, on the other, protecting the taxpayer from an increasing burden.
§ My Lords, I beg to move.
§ Moved to resolve, That this House approves the Annual Review and Determination of Guarantees, 1960 (Cmnd. 970), made under the Agriculture Acts, 1947 and 1957.—(Earl Waldegrave.)
§ 3.47 p.m.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
My Lords, it is good to hear the noble Earl getting quite excited about this particular White Paper—much more excited than I have known him to be on previous occasions, or even other noble Lords who have dealt with this matter in the House in all the years that I have been here. It is a very good thing, it seems to me, that the comments on the White Paper of the Government have been so detailed and forthright. The Government really are a little excited. I am not a bit moved by the noble Earl's urgent call to observe the last paragraph of the White Paper. I will repeat the words:The Government consider that these determinations provide a fair and balanced answer to the two-fold problem of, on the one hand, enabling agriculture to maintain its prosperity and, on the other, protecting the taxpayer from an increasing burden ".The Government always seem to be making muddles about agriculture. They have had four distinctive "goes" at pigs. They made a complete mess of it, and it has led to serious and damaging reductions of the pig herds in the country. This is almost entirely the result of Government policy. Even in the White Paper there are completely contradictory statements. The noble Earl 863 has quoted the last paragraph, which I have again read, but your Lordships may care to look at paragraph 18 on page 6, the last three lines of which say:On the other hand, costs have continued to increase and the industry's net income on a normal weather basis is not at present rising.I suppose that that is a good argument for saying that this is the year when they should impose a cut in the guarantees of £9 million. Of course, the two things do not at all hold together.
It is no use for the noble Earl to get quite excited about the suggestion that people are trying to raise unfair warnings about the danger arising for agriculture in the future from the sort of thing that is going on now, in regard, first, to the agreement which has been come to with the Outer Seven, and, secondly, the proposal to move still further, if possible, to an agreement with the European Common Market. Even the noble Earl was anxious to say a word about the growing free trade which is visualised, although I do not think he went quite so far as the Minister himself has already gone. At any rate, the reports that I have seen in the Press from the Minister seem to indicate that he has given clear indication of growing efforts at entirely free trade. While that may please some Liberals—who by their attendance this afternoon do not seem to be very interested in this matter—the growing influence of the movement towards free trade is certainly something in which the farming industry have to be considered. Of course they ought to have their proper place: but how? One paper says, and says quite reasonably, that the farmers will be given a place all right, but that they are being squeezed into it; and this is one of the beginnings of the squeeze which is going on. A statement made by the honourable gentleman the Parliamentary Secretary (I believe at Cambridge) was on exactly the same lines, merely telling farmers that they have to be ready to fit their position into a growing degree of free trade.
All this time agriculture in this country has gradually been put upon a sound basis. That has been done, first, because the farmers came to the rescue of the country in a great war emergency, and secondly, because the prosperous condition of all firms and organisations 864 engaged in industrial production has been achieved, in the main, behind a heavy protective tariff—without which we in our bankrupt state as a nation in 1945 could not possibly have got exports going again. That is quite clear. In all that time Minister after Minister on the Government Benches in this House and in another place has argued that the subsidies which have been given through the guaranteed price system have been certainly no more than to offset the very heavy protection which has been given to industrial producers in this country.
Two documents of recent days are rather significant. The first is the Economic Survey, 1960. It is true that those Surveys do not often give very much attention to the farming industry. This year agriculture gets ten lines. From the lack of importance attached to agriculture by the Survey one would hardly think that in economic planning it has to be remembered that the agricultural industry is responsible for—I have not the exact figure in mind, but I believe it to be £1,500 million, a substantial part of the whole national production. What is more, if we had been unable to achieve the much higher rate of production of farm produce in this country to-day, as compared with pre-war, we should have had an even graver position from time to time with regard to our balance of payments. There is not the least doubt about that; but how much attention is given to it?
Look at the other document, the Hansard Report of the Budget statement by the right honourable gentleman the Chancellor of the Exchequer on April 4. He never really mentioned the place of the farming industry in the general structure of the national economy. Plenty of time was given to the position of other industries, and to what would be the effect of this, that and the other upon the general economy of the country; but not a word of thanks was said to the farming industry for the manner in which they are carrying on. Yet if we are really sincere in our local inquiries, as I am sure we all are in this House (there is a great deal of agricultural knowledge here; a great many noble Lords are themselves farmers and come in touch with local farmers and talk about farming; their talk is not confined to the few top machine-age farmers, farming very 865 large areas and employing greatly reduced manpower with much heavier use of machinery), we have to deal with farmers as a whole.
I would not argue for a moment that in the policies of post-war Governments a great deal has not been done in direct grants for improving productive efficiency. There has been a great deal of Government help in that connection, but it seems to me that in the present circumstances there is a grave danger of the smaller farmer being gradually pushed out of existence; that either he will be drawn into something like a big co-operative arrangement of producers combining together, or it will be a matter of getting rid of his land, selling out to someone who will run it as a big mechanised estate. I suppose that at times strong economic arguments could be advanced in that direction. On the other hand, Oliver Goldsmith's Deserted Village is not yet dead in our minds. Certainly one of the great backbones of a nation must be not merely the economic contribution but the human contribution to the life, health and integrity of that nation.
I am glad to welcome the words spoken by the noble Earl this afternoon in appreciation of the industry and of the people in it. It was very good of him to say that, and I appreciated it very much: but certainly the fear has been in my mind the whole time, since the Act of 1957, that this was the first real and main attempt to whittle down the 100 per cent. effect of the Acts of 1947 and 1948. There was put down clearly in print what the noble Earl himself has called this afternoon an indication of the intention to make more gradual and more tolerable the reductions that would take place; whereas it seems to me—
My Lords, I am sorry to interrupt the noble Viscount, but is he trying to develop an argument that in no circumstances and at no time should there ever be reductions in Exchequer support?
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
My Lords, not at all. We on this side of politics have always maintained—and we were very largely responsible for putting into operation in 1947 a permanent peace-time Statute for the structure of agriculture—that we should 866 have an Annual Review of Prices. We did not say at the same time that as soon as we got a sufficiently good electoral opportunity we would say, "Set the people free", and that the moment we begin to have some light showing through the tunnel of subsidies and coming out the other end we must take all controls off markets.
The noble Earl has emphasised again and again this afternoon the importance of the question: what is the market? When we have a planned economy, with an industry like agriculture we cannot afford to have a free market for commodities in respect of which substantial State support is being given, because inevitably we should see what in fact has been happening to agriculture—very large subsidies being paid out; and nobody disputes that they are not large in the total charge upon the Exchequer, for the amount is substantial. That is due to the farmers, however, because of their position in relation to the protection given by the State to all other types of industry in this country. But are the farmers getting the advantage of that?
Let us take a sample of the other side. Let us take a look at industrial production in this country. Compare the increase in the farmers' net incomes to-day with the increase in the incomes of those who are either directors or shareholders in industry. What kind of increase in his net income has the farmer had since the Conservative Government came in? Will the noble Earl tell me that? Can he give me any idea? It is stated in the White Paper that costs are up and income is not rising. What is the position in the rest of industry? The rest of industry has shown a boom almost completely unprecedented. We have large dividends being paid, enormous increases of capital shared out and untaxable capital gains; and we compare that to the position of the farmer, who is left hopelessly behind. He is, in fact, in the position put by Mr. Woolley, the President of the Farmers' Union, the other day: he is suffering a net loss of 5 per cent. on his income, which has not advanced pari passu with the rest of the producers' incomes throughout all other industry. He suffers that loss of 5 per cent. as against about the 30 per cent. increase which has been obtained by other industries in the country. Do you 867 think that that is fair, reasonable and tolerable? That is the kind of language which the noble Earl has been using this afternoon to try to persuade people.
My Lords, I think we must compare like with like. I will return to that subject if the noble Viscount likes, but I think we must compare how much of, and what is the proportion of, the incomes found by the taxpayer with the earnings on the market.
My Lords, I am sorry if I have not made myself clear. The income of farming is made up very largely of the subsidy from the State.
Yes; what is contributed by subsidy. And some industrial profits, of course, are not subsidised.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
My Lords, I should say that most of the very large increases have been subsidised by a high protective tariff; and because they are made on goods which have had to be purchased in part in this country, the consumer has paid for them. In regard to the farming subsidy the consumer has no protection. It would not have been necessary to pay, in my view, any subsidy upon the fat stock of the kind that has been produced and sent to the market—and it is being improved all the time: the farmer is doing his best—if they had been sold without the kind of prices which are fixed at the ringside. You rely upon the market. I see a market in Essex where, in buying for the London market, there is only one buyer; and directly that buyer begins to bid the others retire. You make arrangements as to how they divide the profit after it is over. I do not know whether we are to have a Scottish reply this afternoon by the Minister for Scotland, but these are facts, as George Buchanan used to say, and they "wilna ding". The consumer has had no real benefit as a result of 868 subsidies and the return to the free market, and the farmer has not got what he ought to have in relation to the rest of the community.
May I point out this fact? In relation to the difference in the value of money being paid to-day compared with its value in 1951, when the Conservative Government came in, there is an enormous drop in the value of the pound. Is there anybody who can argue that the farmer is better off to-day? I look to the distributive trade which I know well—at least, I know a little about it. I used to argue cases on the other side, speaking for the distributive organisation, on commodities like milk. I know the trade pretty well, and it does not help the farmers much to hear about the present position of milk in the view of the Government when every cost in distribution goes up. The Milk Marketing Board have to concede a rise in the margin of the wholesale and retail distributors. They get their money all right. But I know—because I produce milk myself, so I have an interest personally, as well as on behalf of all the farmers—that I am getting many pence less per gallon for T.T. milk to-day than I was getting nine years ago, and my costs in relation to it go up and up.
It may well be that, in regard to disposal, the advantages to the milk producers of having a good Marketing Board and a regular monthly cheque, enable them, very often, to save costs in other directions which would come through the bank; the producer has regular cash coming in month by month in relation to his returns on milk. But a really good top cowman costs, with overtime, anything from £11 to £15 or £16 a week. Compare that to the position ten years ago! Where is the producers' margin on milk compared to what it was then? The whole of the facts show quite clearly that if you know about farming and think about it you will realise that in all these sections the farmer is worse off. He is certainly worse off than he should be; he is actually worse off in net income.
It is all very well for the noble Earl to have a cut at me and say that if people like myself would not agitate and would get the farmers to take this kind of view of the White Paper everything would be all right. Of course I know that I am a "wicked Labour leader". But 869 let us talk about the very respectable, truly Conservative weekly newspaper that is published in the constituency in which I live. I live about nine miles from Colchester. I should like the noble Earl to listen to this quotation. It is rather long, but it is worth putting on record. It is not really the "wicked Labour leaders" who are responsible for working up the difficulty. Just listen to this:The day that the 1960 price review was announced must go down as the greatest disaster for British farming in this century.The net result was as forecast, although I think the reductions on barley and wheat were harder than expected. It is such a short time ago that we were told what heroes we would be if we would kindly grow some barley and save valuable American dollars. Not so very long before that we had fed a hungry nation through times when U-boats sank a lot of the imported food before it even got here.The U-boats have retreated sufficiently far enough in the official mind to throw agriculture to the dogs. The Minister's statement last week must be one of the most despicable ever delivered by a member of a British Government.That quotation is from the Essex County Standard, a weekly Conservative newspaper printed in Colchester by that very eminent old friend of Benham's—and all politicians who go to a certain book for quotations know the high standards of the family that own that newspaper. This newspaper, as a Conservative weekly, did its best to secure the return in the area of three Ministers, Mr. Butler, Colonel Alport and Mr. Hare, the Minister of Agriculture. This is a journal which has been in support of getting them in. But that is what it thinks of the White Paper. I do not think that the noble Earl really need bother to throw darts at me, if I may say that to him. He can get plenty of that from his own Party newspapers. And so it goes on.
Mr. Woolley, the Chairman of the National Farmers' Union said, as published in the Farmers Weekly on March 18:During the past twelve years the industry has increased its net output by 20 per cent"—although I see that others connected with the other farmers' unions have said that it increased really more than that, and I think that probably in the twelve years the increase has been more than 20 per cent.— 870with great benefit to the people of this country. In the process the value of the industry's income, aligned with the change in the value of money, has gone down 5 per cent., while that of the population as a whole has gone up by 30 per cent.If the noble Earl can prove to me in argument this afternoon that that is a mis-statement, I will accept it from him, if he will give me the facts. But is that statement true? And, if so, what case is there for cutting the farmer's position this year? It says:In the process, the value of the industry's income, allowing for the change in the value of money, has gone downby that amount. I spoke just now about the change in the value of money. Do we really believe that the farmer is making progress as fast as other classes of the community in adjusting his actual spending power to the differing values in money?
I must say that I find it completely impossible, among the welter of tables, statistics and general assumptions in the Market Review White Paper, to get the real facts about the situation. The general, average rise in production for the country as a whole, we are told, during the last few years, over all industry, has been about 2 per cent. Then we are told, all of a sudden, at the end of the season 1959–60, that agricultural production has gone up by 7 per cent.—from 161 compared to pre-war to 168 compared to pre-war. How do you get the figure? Where does it come from? Of course, if we accept it, it is a truly remarkable achievement compared with what has been going on in the rest of industry. But is it wholly true, or is it an assumption obtained from a few leading researches here and there? How was it obtained? We never hear what is the case that is put in detail to the farmers when they negotiate. We are never supplied, along with the White Paper, with any detail of what has been the main basis of argument put up by the industry on any part of this Paper. We never hear. If you take the 168 per cent., surely the farmers ought to be entitled to an increase in income, whereas in fact they have a lower net income to-day. And now the Government propose to make it more difficult for them to get a higher one by imposing this year a cut of £9 million in the guaranteed prices.
My Lords, I interrupt with great hesitation, but these figures are so extremely difficult across the Floor of the House. On these estimates, the increased costs and the cuts will leave what has been called a "divi". They will leave an increase to the farmers this year, on the estimates, of £3 million.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
I am amazed. I can only just imagine £3 million. I shall have to begin to think of all the figures I have read and looked at. I have it. That means, of course, that the Government assume £25 million for increased efficiency. That is what it is. Then, of course, they take off from the increased efficiency the £13 million of extra costs, and that leaves £12 million as increased efficiency. That is what is left after deducting the extra costs. Then the Government are taking £9 million, so it is assumed on this very rough estimate that that means the farmers will be better off to the extent of £3 million, divided among 350,000 of them.
I was interrupting the noble Viscount only to say that, however small the increase is, it is not the same as the argument the noble Viscount has been developing all the afternoon so far: that their income is to be reduced.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
I said the guaranteed prices are to be reduced, and that therefore that was to be assumed: and I think rightly so. Of course, the noble Earl can say, "Ah, yes, but we are relying upon a still further increase in efficiency every year cumulatively in order to get to that figure". That happens—every year. For the last eight years the Government have been arguing that the farmer is so much better off by increased efficiency, and they always set that against the claim for guaranteed prices and against the guarantee subsidy to be given to the farmer. That has been going on the whole time.
I would say that there is many a farmer who could demonstrate by his bank account that he is not better off. He may be able to show you, too, what it has cost him in extra cost to get this extra efficiency. He is very grateful to the State where he has been enabled, by way of building grants, ploughing-up 872 grants and so on, to get more efficiency; but, in respect of many of the grants, he has had to find a considerable amount of capital. Many of the farmers have not the capital, and so they overdraw at the bank, where they have to pay extra charges at a very high rate—say, 5½ or 6 per cent. If you really want to find out what the farmer's position is, you ought to take a few more samples of audited accounts, and not merely rely, as you seem to have done in the White Paper, on a few skilled economists at a university taking a few and then bringing you the answer. I do not think that that will do. At any rate, we in the farming community that I talk to sometimes are not at all satisfied that we are better off. We know that we are worse off as a result of the change in the value of money, of the decisions in Price Reviews over the last eight years, and of the depressions which descend upon us.
I should like to come to the last point, and that is the point that the noble Earl makes when he says that there is not the slightest ground for saying that this White Paper is in any sense restrictive. He said proudly, after this item and that item, "Where is the restriction?" I should myself say that, taking the White Paper as a whole, there is plenty to show restriction. The noble Earl says, "Take wheat—the reduction is only 8d. per cwt." But the guarantee price has been steadily reduced over the last few years. Is that not restrictive? If there has not been the same rate of restriction in barley, how do you account for the fact that there have been fluctuations in wheat cultivations and a steady increase in barley? But you still have reduced the barley only 3d. per cwt. and wheat by 8d.
We know that sugar beet, instead of being a struggling, climbing industry, trying to get out of the doldrums, as it was years ago, is now a large and successful industry. You are cutting the producers in this industry. On what basis? You think they have enough, and you want to restrict them. I am speaking from memory now, and I must be careful; but I think it is stated in the White Paper that this industry is doing very well, and that there is no need to go on expanding at the same rate. If you look at the East Anglian Farmer's Weekly paper, you will see the figures of the 873 expected position of the sugar industry. We have always had a good case for the peace-time production of sugar from sugar beet in this country, compared with the old arguments of Free Trade 40 years ago, when it was argued on the basis of a division of labour between cheap, black labour and white labour. It was a good thing to have Free Trade, so as to have supplies on the cheap; but we have got rid of all that in late years.
To-day sugar is not being produced abroad at the same rate of increase as demand for sugar in the world is increasing—not by a very long way. It is estimated that between 1965 and 1970 the position may well be that you will be shouting for a much larger increase in the sugar beet industry. I doubt whether the particular 2s. 6d. deduction from guaranteed sugar beet will make much difference in the acreage which is likely to be taken up; but it may lead to some decrease if you go on pursuing this kind of prescriptive medicine of reduction year by year, and in the end you will have to call it all back and try to reorganise the sugar beet production again. There is no real continuity in this policy.
The last thing I want to say to the noble Earl is this. He speaks about having to remove a great number of pieces of legislation and Statutes from the Statute Book if the kind of assumptions which have been made and certain criticisms, both mine and those of other people, were likely to evolve. Well, it did not take long to repeal the Corn Production Act; and if there is any merit in the legislation now on the Statute Book, it does not lie to the credit of the Party opposite but to the Party on this side of the House. There was nothing like the 1947 Act for agriculture before the war; and there was never any agreement to organise marketing boards until, as the noble Earl so generously admitted, Christopher Addison introduced the first Marketing Act in 1931. But I do not think that that is going to deter anybody.
I should like to ask a question on this point. I forget whether it was the noble Earl or one of his co-Ministers in the Ministry who said the other day that there would be no alteration in the principles of the 1957 Act, at least, not for the lifetime of this Parliament. Does that mean that at the end of this Parliament 874 you are going to come to a more serious revision of the present protection of farmers and that these are just moves on the way? As I say, I am not sure who it is that I am quoting.
My Lords, I think that the noble Viscount may be quoting from the Election pledge of the Party to which I have the honour to belong, which said that the figures in the 1957 Act would not be altered during the lifetime of this Parliament. I do not believe that any Party going to the country on an Election ought to be so ambitious as to think beyond the lifetime of its own Parliament, even if it is returned.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
That is most interesting. I am very happy to be reinforced in the statement, even in the manner in which the noble Earl has done it, from an Election pledge. But I wonder what sort of reliance the farmers can put upon such a pledge as that.
My Lords, really, I must protest, because I do not think the noble Viscount is being fair. Is he saying that he would make a pledge for the lifetime of another Parliament for which he may have no responsibility, but may still be in Opposition?
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
I certainly should not want to do that. All I can say is that I hardly expect the farmers to accept that as a very wonderful pledge, considering how many pledges the Government have made on the electoral platforms of 1951, 1955 and 1959. I have seen what pledges they have made.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
And all carried out! That's "all my eye and Betty Martin"—I was reminded of that saying on the television the other evening; it is a very old one and a very nice one. However, I have given your Lordships my general view of this matter. I beg the Government to reconsider it in the course of this year—I know it is no good trying to get them to alter it this time. I beg the Minister to convey to his colleagues the feeling that there is in 875 the rural districts to-day; that is, that agriculture is not being given its proper place in the economy of the country. If he will do that, and see that Parliament, when it comes to judge upon the decisions of the Government, has full information as to why and how—because this White Paper is certainly a "poor little Paper," as the noble Earl says; but it does a lot of harm—then we shall have a better situation in the future. Give us some hope in the agricultural industry. Wherever I have been in the last three or four weeks I have not had to make much talk about the White Paper; the talk has been made to me, because they know that I come up here. The feeling in the country about this White Paper is almost indescribable, and it seems to be only the Ministers on the Government Bench who do not understand it.
§ 4.26 p.m.
§ LORD FISHER
My Lords, I would ask your Lordships' indulgence as this is the first time that I have spoken in this House. I will be brief. There are many serious matters affecting this country and the peace of the world which call for your Lordships' deliberations. Among them, on the one hand, are the feelings of colour, race and creed, so deeply rooted in the traditions of the past; and, on the other hand, forces so modern that only a few know their true power, and we can only guess at how close we are to total destruction. However, we must assume that these threats to our peaceful existence will be resolved, for we are considering the farming industry in the long term; and we must assume that we shall continue to live in this Island home of ours, with the many ties we have with our friends and cousins in the Antipodes, in the New World and, indeed, throughout Europe and the other continents. That being so, we have a particular problem to deal with; that is, the maintenance of an agricultural industry in a country which is an ideal market for all the surplus food available in the world within the reach of the sea.
The majority of the population of these Islands will continue to earn their living in a factory of some sort, relying on their own traditional skill as engineers to produce goods which the rest of the world wishes to buy. This 876 is the basic fact that we must accept in reviewing the industry on which probably one-tenth of our nation depends for a living. The stability of the home market for the products of the nine-tenths of our people not engaged in farm production is maintained by tariffs on imported goods competing with them; so that, by and large, there is not a great quantity of dumping of foreign surpluses of manufactured goods here. That the pattern of these tariffs will change is more than likely; but they will not disappear. That is the key to the guaranteed prices.
I should like to bring forward for your Lordships' consideration three points which are being pushed into the background by the sheer weight of numbers of people who are ignorant of the countryside and of farming. It is no fault of theirs; they simply never see the country, rather as a Middle-Westerner may never see the ocean. The first point, and by far the most important, is directly related to these protecting tariffs, and it seems to have been overlooked in the general enthusiasm for the Government to spend less on the farming industry. It is that the food subsidies were not and are not paid out to "featherbed" the farmer, but were and are designed to protect the farmer from foreign dumping, while at the same time giving the urban dweller the benefit of being able to buy the world surplus food at the lowest possible price.
This country is still the greatest market for food in the world, and largely a free market. This cannot be repeated too often when the general feeling seems to be that the food subsidies are guaranteed only for a few years—say another three or four years—and are anyhow a sort of Government gift to the farmer. They are not. They are the guarantee of the stability of the industry, pledged by all Parties to preserve it, and to continue so long as the policy remains to import cheap food. In the last few years this seems to have been overlooked in the Price Reviews, when the emphasis has shifted from the reality that these are guarantees to the supposition that they are gifts to the farmers.
The second point is really part and parcel of this and concerns the Price Review itself, and the enormous gulf 877 which seems to exist between the views of the Minister and the farmers' unions. This is destroying the goodwill of the Government in the eyes of the farmer, especially when an increase in wages and a cut in prices come within a month. Each year costs go up, and each year the farmers are told that, owing to their increased efficiency, they can absorb so much of these increases on the principle that it is jolly nice of the people to give them anything at all. But in fact does any industry have its tariffs lowered as it becomes more efficient? No; the industry gets some benefit instead. Not so the farmer, whose reward for his enterprise and productive efficiency has in the past simply been a reduced guarantee.
Finally, the third, but by no means the least, of the subjects I wish to mention, concerns the wage awards to an industry which has not suffered a strike for the past century. These awards have been way below the demands. We have been and are being served by a loyal and skilled body of men and women. Admittedly the charge for labour is by far the largest of the farmers' costs, and any further rise in wages must be reflected in a reduction in the numbers employed. But compared with other industries their rewards are not high, and few people connected with the industry would disagree with the necessity for narrowing the gap between the average earnings of farm workers and those of unskilled factory hands. I thank your Lordships for your kindness in hearing me, and I ask you not to forget agriculture in this time of national prosperity.
§ 4.33 p.m.
§ LORD FORBES
My Lords, I am delighted to be the first to congratulate the noble Lord, Lord Fisher, on his excellent maiden speech. If I may say so, he delivered his speech with great authority, and I am sure I shall be voicing the opinion of your Lordships' House if I say that we hope to hear the noble Lord make many other speeches in this House in the future.
As usual, I must begin by declaring an interest. I believe that most people could have guessed what the result of this Price Review would be. In that respect I must congratulate the Government on sticking to the rails. I do not think we shall gain anything by criticising the White Paper, but rather I think we should look to see whether it was 878 based upon a correct or an incorrect foundation. I believe the White Paper was not based on the correct foundation—anyway, not on the correct foundation for 1960. Having said that, I want to give my reasons for that assumption and, at the same time, to make some recommendations for the future.
Our agricultural policy has not run off the rails, but I venture to suggest that ever since the Outer Seven was thought of the points have been turned the wrong way. No longer is British agriculture speeding down the main line together with other industries. It is now being diverted by the Government into a siding, where eventually it could begin to rot like other wagons that go into railway sidings. Ever since the Outer Seven was thought of, our agricultural policy has tended to become somewhat negative. Surely, it is wrong to have a policy of limited production, a "marking time" policy, when we still import nearly half the food we require—and this, incidentally, makes a big inroad on our balance of payments position—and when in this World Refugee Year there are still masses of starving and underfed people in various parts of the world. What a pity it is when in the British Isles we have some of the most go-ahead and certainly the best farm workers in the world! Our farmers, with a little incentive, could produce more; yet to-day the Government do not want to see increased production, except for beef and a moderate increase for pigs. All other commodities seem to have reached saturation points so far as the Government are concerned.
May I suggest that this is not a very rosy outlook for the farmers, especially when they hear of other industries expanding and sharing in making us a more prosperous nation. While others march on, some to the Summit, the farmer, each time he takes a step forward, is asked to tighten his belt one more hole. I should like to suggest that the Government should not try to control agricultural production. Instead, they should encourage all production from land which they consider to be either economical for food production or which should be used for agriculture on social grounds. The Government cannot fully control agricultural production without controlling nature, and nature is something that even the wisest of Governments cannot control. Take milk production, 879 for instance. The Government may find one day that they have gone too far with restricting milk production. They will think that they can increase the flow of milk at the next Price Review. But they may be surprised when they do not get that increase within a year. They will be even more surprised when they have to wait for at least three years before they get that increase. It would appear that in certain places the facts of animal life are not fully understood.
Now another point. The Government want farmers to bring down the cost of production without increasing production, except for beef and pigs. This they try to do by squeezing the farmer year by year, with the result that the farmer sees his income dwindling, slowly but surely. He has to cut down on one of his major costs, which is often labour. This means replacing manual labour by machines. But machines are very expensive, and to-day, with a small margin of profit, many farmers just cannot build up sufficient capital for this purpose. So, the farmer, rather naturally, is forced to tackle the problem another way, that of increasing his income by increasing production—in other words, in the case of the dairy farmer, by getting more cows and selling more milk. Yet that is exactly what the Government do not want.
I am sure that a little more investigation would show that the Government's present policy can bring hardship. For with a small margin of profit, resulting in the need for increased efficiency, the farmer is driven to specialisation. And this means that if the particular commodity in which the farmer specialises is out of favour with the Government, even though it may carry a very small percentage reduction, the farmer may suffer considerable hardship over a period of years. Make no mistake, my Lords, the farmer cannot easily change from one type of building to another, because to-day he is being forced to become a specialist, often with expensive buildings and equipment to suit his particular type of production. These buildings and equipment are much too expensive to change to suit the wishes of the Government, a Government which is concentrating all its efforts to ensure that our manufactured goods sell abroad. Unfortunately, 880 our agricultural industry is to-day a convenient tool for the expansion of other industries. The control of agricultural production is convenient because it enables us to sell our manufactured goods to countries where we purchase our foodstuffs.
I believe that few outside the agricultural industry itself realise that farmers are so dependent on, yet have so little control over, the weather. Owing to the weather, farmers often suffer great disasters. It is perhaps invidious to relate a personal matter, but I know this to be 100 per cent. true, and I think it well illustrates my point. In January of this year, in my part of Scotland, we had the worst snowstorm within living memory. Not far from where I live four people lost their lives in this snowstorm. A lot of cattle and sheep were lost, and in this one small area great damage was done to buildings. I myself had a steading which had 84 milking cows in it. That steading collapsed, causing roughly £8,000 worth of damage. There are many risks in farming; those risks have to be taken by the farmer, but they should also be taken into account by the Government when they are determining prices.
My Lords, Her Majesty's Government must get our agricultural industry out of the siding. We must decide on the land we wish, for various reasons, to keep in production, and must produce as much as we can off that land. While there are people in the world starving, and until our balance of payments situation is far better, we should be producing more and not less. Of course there will be surpluses at home from time to time. Surpluses should not only be a matter of concern for the Marketing Boards and the Government, but should also be a matter on which the Government of this country should speak to our friends and Allies across the Atlantic, the Americans, to see how we can solve this great problem of feeding the underfed people throughout the world.
I should like to make one suggestion about subsidies. I am sure it is well known that with the present system some subsidies find their way into the wrong pockets while other subsidies never get near the right pockets. This, I know, is a very difficult problem, and I have one possible solution to suggest. I suggest that all farms should be graded— 881 and this, I assure your Lordships, is not nearly such a monumental task as it may sound, as already the Ministry and the Department of Agriculture officers know the farms in their areas. Farms should be graded according to a number of factors; for instance, the soil, its location, the proximity of markets and a number of other factors. Then of all the agricultural subsidies paid out, the lowest-graded farms—that is the worst farms—should get 100 per cent. of the subsidies, while the highest graded farms—the best farms—might get only a small percentage of the subsidies. This, I maintain, is the only way to ensure anything like fairness over subsidies.
May I now turn to one particular matter that is causing considerable concern in Scotland? That is, the problem of the marginal land. Her Majesty's Government have so far acted absolutely within their rights. Marginal agricultural production grants were never intended to go on for ever or to be in any way untouchable. They were originally designed to get marginal land back into production. What I think the Government will now have to decide is whether or not they wish marginal land to remain in production, either for economic or social reasons. If the answer is "Yes" on even one of those grounds, then the Government must do something to assist the right production—and I would underline the word "right".
Unquestionably the crop that should be grown on marginal land is grass. Unless Her Majesty's Government are prepared in the future to give some assistance for the production of grass on marginal land it is absolutely certain that the present green grass will deteriorate once more into grey rough pasture, and the money, some of it the taxpayer's money, put into this land will have been wasted. Grass will deteriorate because grass on marginal land requires two or three times as much fertiliser to keep it in production as grass on good arable land. May I suggest that the way to keep grass on marginal land in production might be to increase the subsidy on fertilisers used on marginal land? Of course it is also important to use the best grass seed on this type of land, so some assistance over the purchase of grass seed might also be beneficial. We should make no mistake that in England there is the problem of the 882 small farmer; in Scotland there is the problem of marginal land. These are two separate problems requiring two separate solutions.
Finally, Her Majesty's Government are doing immeasurable good for this country as a whole, but rather, I am afraid, at the expense of the farming community. Much hard thinking about our agricultural policy must be done, and must be done quickly. British agriculture must once more be given its head so that our farmers can play their part in bringing prosperity to this country, especially by improving our balance-of-payments position and also in feeding those less fortunate than ourselves, the starving people of the world.
§ 4.50 p.m.
§ LORD WISE
My Lords, it is my great pleasure at the commencement of what I have to say this afternoon to offer my congratulations from this side of the House to the noble Lord, Lord Fisher, on his maiden speech. I know very well the area from which Lord Fisher comes, and I am therefore glad to find him in the House to add to our agricultural discussions. We enjoyed what he had to say, and I was particularly pleased with his reference to the farm worker. He bore out my own views entirely in that respect, and in other ways, and I hope that we shall have the pleasure of hearing him on many occasions in the future. I congratulate him.
Irrespective of what the Minister has said about the reception of the Price Review, it is obvious from the widespread adverse Press comments and the resolutions from meetings of the farmers and others interested in the welfare of the countryside that never before has a Review been received with so much displeasure and criticism. The storm of protest is still rising. Only in the last two or three days I have seen most adverse comments about the Review, and in my view the Government are in heavy weather in this and possibly in other matters. No doubt noble Lords will wish individually during the course of our discussion to express themselves upon specific points which interest them—as indeed has already been done in the few speeches which we have heard. It is obvious, I think, from what we have already heard this afternoon, that the Government will have no smooth passage for their Resolution.
883 I want to mention one particular matter. As is known to your Lordships, I come from a rural area the farmers of which will feel the full force of the uncalled for action of the Government. I say "uncalled for" and I mean it, because in my view there cannot at this time be any valid reason or justification for reducing our farming income, and it is obvious that that is what the Government are doing. Generally, those incomes are small in comparison with others and in relation to the services we render to the community in the national interest—which is no small measure of service. Can anyone honestly say that there is any one industry at the present time more important for the welfare of this country and the world than that which, here and elsewhere, seeks to produce the foods by which we alone and others can live? Agriculturists do not seek to destroy, oppress or exploit, but to produce, nurture and tend their products so as to cater for the needs of mankind. There is no industry which is less self-seeking than agriculture. We render a service without exploitation, and our low annual incomes are the result of a year's hard work. We are necessary in the national life and economy, and what we can save in imports, which have already been referred to, can be transferred to alleviate starvation in the remote parts of the world. It is sheer lunacy to say that we can over-produce food here or elsewhere, or that any commodity is in ample supply, as the Review states in one particular, while millions are in daily want and distress.
We are entitled to prove the measure of disapproval by agriculture of the Government's agricultural policy by reference to the crops we grow, the methods of our farming and the difficulties under which practical and working farmers have to struggle to obtain a reasonable livelihood from the land. I have on previous occasions used the general low level of agricultural incomes and our dependence upon Government aid—a dependence which should not be necessary if we could be sure of assured marketing conditions guaranteeing that we could sell our products at prices to repay us for our efforts and outlay. The struggle has been such that, year by year, many industrious farmers, farm workers and their families have had to give it up 884 and leave the land owing to dwindling resources and adverse circumstances beyond their control. In some instances, such a fate has been quite undeserved, and, as I see it, the future does not warrant any optimism of better times to come.
I am not seeking to do what the noble Earl suggested is being done from this side, to say anything very derogatory in regard to the industry. If the industry is given many more doses of the same medicine as we are having at the moment, then a surgical operation of a controlling nature—I am greatly in favour of something which controls our industry—will be necessary to revive it. We cannot survive without some clearer thinking by the Government and the Minister. East Anglian farmers will suffer from each of the eight reductions in the Review. Sheep, eggs, wheat, barley, oats and sugar beet are "bread and butter" products with us. They are the main foundation of our general farming. All have received a cut.
Perhaps the most significant and unexpected at this time is the reduction in the guaranteed price of 2s. 6d. a ton for sugar beet. My noble Leader has made reference to this, but I will deal with it in more detail. The noble Earl who opened this discussion referred to it only in relation to the reduction of 2s. 6d. a ton in the price. I have watched this crop being produced in Norfolk for fifty years, since the factory at Cantley was first opened. These have been years of experiment, progress and increasing efficiency. Our record is good. Sugar beet has been steadily advancing in favour and usefulness. It played its part in two war efforts; it provides a high level of labour; it is costly to produce, harvest and market, but it has a ready-money aspect and certain conditions which conform more accurately to the provision of an easier market and guaranteed price under the Agriculture Act, 1947, than any other crop or stock covered by that Act. The profit margin, except in the case of high yields, is not unduly high. Two elements, of gambling and sharp practice in the disposal of the crop, are not so apparent to the producer, who knows more or less what he will receive.
In the 'thirties 250,000 acres of light arable land were saved by sugar beet 885 production. It provides tons of good cattle and stock feed in the tops. It plays an important part in our rotational farming. I want to ask, why has this crop come under the axe? What is its future to be? Will a further cut be imposed next year? Who will gain by reducing the farmers' reward for a year's hard work and enterprise? None goes to the Revenue, as is actually shown in the Review record of subsidies and grants. So why penalise the sugar beet producer? Have any capitalist sugar group or undertaking been prodding Her Majesty's Government for their own ends? We are entitled to know and I ask the noble Earl the Minister to give a real and reliable explanation if he knows the answer.
The Review disposes of the sugar beet reduction in three very short paragraphs. Paragraph 34 tells us that each year the contract acreage is over-subscribed and that sugar is in ample supply. Paragraph 19 of Appendix VI tells us that the guarantee arrangements for 1960–61 will be similar to those in operation in 1959–60; and paragraph 20 states that transport arrangements for 1961–62 are to be negotiated. Those are the sole references to sugar beet in this Price Review of Her Majesty's Government except for the statement of the reduction in price. If the Government think they can dispose of an important cut in this way they are very badly advised as to the feelings of sugar beet growers. In this respect I could show them, here and now, some references at meetings of people interested in sugar beet as to what is really thought of the Government at the present time.
Let us look at the hollowness of the reference in paragraph 34, the statement that the contract acreage has been oversubscribed and sugar is in ample supply. Possibly it may be that here and there, in sugar beet factories, a farmer may have an extra acre or two, through having had extra seed; but here are the national figures for last year: Table A, Appendix I (page 11 of the Review) shows that it is estimated that the acreage for 1959–60 (which must be known by now) was down by 4,000 acres, and tonnage by 414,000. These figures do not suggest over-subscribing of acreage or over-production of sugar.
May I say a word or two about the financial implications? The noble Earl 886 the Minister has been trying to persuade us that from the farmers' point of view very little money is involved in these various reductions. But here is what is involved in regard to sugar beet: assuming that this season's crop is the same as last year's, namely, 5,328,000 tons, the reduction of 2s. 6d. per ton would mean a loss to the farmers of this country of £666,000—two-thirds of £1 million. On an average of 12 tons an acre (which was the national average for last year) that would mean a reduction in price of £1 10s. per acre. But the reduction in the farmers' income does not rest there, by a very long way. This year they will have to meet higher costs than last year—higher labour costs for agricultural and harvesting operations an a weekly piecework basis; increased bank and loan charges; in some cases, increased rents; higher costs of repairs and cost of cottages; and a number of contingent expenses. In all, these will amount to around £4 or £5 an acre.
On the basis of last year's acreage of 435,000, the difference, on the wrong side, for the farmers will be nearly £2 million on sugar beet alone. In this respect the action of Her Majesty's Government is lamentable. Agriculture has a case for an increase in prices, but sugar beet producers have a loss of nearly £2 million inflicted upon them by the reduction in price and the higher costs which the crop will take to produce. It is no wonder that the National Farmers' Union and other agricultural leaders have disowned Her Majesty's Government and would not be party to their Price Review.
I want to say just a few words about the Paper which we discussed earlier to-day. A few weeks ago I raised a point with the noble Earl the Minister on the possible leakage of information on deficiency payments in regard to the deadweight centres. I see by this new Paper that the definition of "producer" is the same as in previous Papers. On that occasion the noble Earl the Minister told me that my reading of the word "producer" was not quite in conformity with the views of the Ministry, and that the word "producer" included the name of the person who presented the fatstock for certification. My difficulty is this: the noble Earl mentioned that the Fat-stock Marketing Corporation could be classified as the sender for purposes of certification and that other people could 887 be classified in the same way, also. I find no quarrel with the Fatstock Marketing Corporation in respect of the fact that they publish their prices week by week and then, when they have notification of the exact amount of deficiency payment or stabilisation payment for that week, publish and pay to their senders the proper price.
My difficulty rests with those concerns who publish their prices at the commencement of a week in which pigs are sent to them but who have no knowledge whatever at that time of the amount of the deficiency payment or stabilisation payment—which are not published by the Ministry until probably ten days after their advertisement has appeared in local newspapers. They have published their weight prices (whether grade 1 or grade 2) to include the deficiency payment, and it may well be that there is there a leakage which should not arise and should not penalise the actual sender of the stock to the certification centre. It may be stated that there are advantages in that they can receive the deficiency payment when it is made by the Government, but there is no guarantee whatever that the full amount of this deficiency payment is handed over, either to the sender or (as in my instance) to the producer—who in my view is entitled to the full deficiency payment. Is the noble Earl going to reply to that point now?
My Lords, if the noble Lord is going to leave the point it may be convenient if I attempt to deal with it now, for there will be a number of points to be replied to at the end of the debate. The producer is a free agent. He can do what he likes in this matter. If it is convenient to him to have his stock presented to the certification centre by a third party, whether it is the Fatstock Marketing Corporation, to which the noble Lord does not seem to have any objection, or to these other people he has not named to whom the noble Lord does object, is entirely up to the producer. If in the following week, when he works out the prices, he sees that he has not been paid enough, what is he going to do? He is not going to give them more business. We are always doing this on my own farms. We check the prices we get in the market with the prices from the Fatstock Marketing 888 Corporation and so on, and decide what is the best way of marketing our products and the most convenient way. If the producer does not think that the people who are presenting his stock for him are doing it rightly, he goes somewhere else next week.
§ LORD WISE
My Lords, that may be all right. I commend the Fatstock Marketing Corporation because I think they act honestly in the matter by stating their prices at the commencement of the week; and when they come to the deficiency payment they amend the prices to include the deficiency payment. That is what I want everybody to do in order that the deficiency payment cannot leak. I hardly like to state it in your Lordships' House, but it is within my knowledge that a well-known group of processers have benefited to the tune of several hundred pounds by this particular method; and in the interests of the producers of this country I want to stop that. The advertisements I have here are from local people. They have stated their price for this week, but they do not know now what the deficiency payment is likely to be; and the poor miserable farmer (I almost said that the noble Earl was one of them, if he does not know what price he should get) sending his stock to these particular people who state a definite price may be subject to fairly heavy losses.
The noble Lord refers to "the poor miserable farmer". I would say the poor stupid farmer—if he accepts evidence from the noble Lord, Lord Wise, that there is somebody who is going to "pinch" some of the subsidy and "do him down". He should not do that twice. I cannot conceive any reason why he should, and I really do not think that he does. He must think that there is some advantage to him for doing this.
§ LORD STONHAM
Surely that is not the point, my Lords. This is taxpayers' money. Government money; and apparently the Government are conniving in, or are willing to close their eyes to, an obvious leak, which has been admitted by the noble Earl.
My Lords, it is not a leak, and I do not admit it. I am sorry that we must go over all this again. As the noble Lord, Lord Wise, has said, in this new Order the definition of "producer" is the same as that in the previous Order. It says:'Products', in relation to any fatstock, means the person in whose name the fatstock is presented for certification.There is no leak. The Government are not being swindled so long as they hand the deficiency payment to the producer so defined, namely the person who presents. How that person gets the stock is another matter altogether.
§ LORD WISE
My Lords, let me finish in regard to this. I have quoted prices which are issued at the commencement of a week. The sender of pigs to those particular concerns does not know in the least how much deficiency payment is included in the prices which have been printed in the papers. So he cannot check up the following week, when the deficiency payments are announced, to see whether he was fairly or unfairly treated in regard to those prices.
Now may I conclude? I have dealt with one branch of arable farming which has been treated harshly in the Review. I could prove an equally good case for proper treatment in respect of cereal crops, wheat, barley and the rest, all adding up to a severe condemnation of the Government's agricultural policy. We are tired of this chopping and changing about year by year. We want stable conditions which will leave us alone for a reasonable period. We want more clear thinking in Government circles, with a better understanding of the farmers' difficulties. Most farmers obtain their reward by hard work, day in and day out, not by living on their wits to catch other people. Above all, we have a feeling that there should be greater efficiency—a word we often hear, and I expect we shall hear more of it—aniong those who at present have the guidance of our fortunes and livelihoods in their hands.
§ 5.15 p.m.
My Lords, some years ago, when food was very short in this country, there used to take part in our agricultural debates many noble Lords who were not agriculturists; they were hankers and eaters and the like. 890 I thought it would not be a bad idea if we revived this process to some extent. I approach this debate as a plain, simple eater, and also as a taxpayer. I listened with great interest to the noble Lord, Lord Wise, and though I am not very technically acquainted with sugar beet, from my brief acquaintance with a beet factory I did notice from the statistics that the production of beet appears to be approximately double that of pre-war. Seeing that our West Indian Colonies are almost entirely dependent on the production of sugar and the marketing of that sugar in this country, I think the East Anglian farmer has not got a bad share of the British sugar market in the circumstances, if he can get a subsidised production of double that of pre-war. I do not know how he grew any at all last year. From my brief excursion into Norfolk in the early days of October, and with happy results in one of the constituencies there, it is a mystery how any sugar beet survived in the ground.
Each year I listen to the noble Viscount the Leader of the Opposition; each year his farming losses get heavier. How attractive this way of life must be, that a man can go on tilling the soil for so long at ever increasing losses, my Lords! The noble Viscount is, quite clearly, becoming more and more the hobby farmer every year. I was very pleased to hear the maiden speech of my noble friend Lord Fisher, because he echoed many of my sentiments; and I hope that we shall hear him again in defence of the countryside, because I believe, like him, that a nation is not a balanced nation without a prosperous countryside. And seeing that our farmers are handicapped by climate, size and so on, and have to compete with the very specialist producers all over the world all the time, it is obvious that they cannot do it without support of some sort or kind.
The Party opposite would like that support to be in the form that the Government would buy everything the farmer produces. That is being done in America, and it has tied up the most colossal sums of the taxpayer's money in the support of prices. I believe that great warehousing space in the United States is also tied up in that way, so I do not think that is a very good idea. I personally am rather inclined to tariffs, 891 but the Electorate are not very fond of tariffs, and the Government have produced this extremely ingenious method by which farming is given support to-day. I am fully willing to pay taxation in order to provide that support, to provide that prosperous countryside; but I want to insist that the money is going to the right people and in the right direction, and I am not always satisfied that that is the case.
I have for a long time been very unhappy about the egg situation. The subsidy for the year which has just ended has apparently run to something like £36½ million, and one wonders what could have been done for agriculture, in the way of new buildings and so on, with this sum of money. I am doubtful whether it is necessary to subsidise the production of eggs at all. In fact, this £36½ million has gone merely to reduce the price in the shops to the consumer; and I have seen it reckoned that something like a 1d. an egg has been knocked off the price of eggs in the shops by the taxpayer. In the present state of prosperity in this country, a food subsidy of that nature is absolutely unnecessary.
The Government have got into a most appalling tangle with this 1947 Act, which, in my humble opinion, ought never to have contained eggs at all. They have got into a position whereby any producer can come forward and can demand subsidised support for any quantity he chooses to put into a packing station; and the more he puts in the more the market is depressed, and greater is the amount that has to be provided by the taxpayer. The Government get the worst of both worlds in the end, because they have to lower the price in every Review in order to try to discourage this production. It will ultimately produce bankruptcies among some of the producers, and the others—the farmers' wives, and so on, who do not keep costs—will go on producing more and more in order to keep up the volume of their pin money—because they do not pay for the hens' food themselves.
I believe that one of the most important things at the moment is for the Minister of Agriculture and his advisers to start thinking out a new plan for eggs. I have read the present Eggs Order, and so far as it is possible to understand it (it seems to be still more complicated 892 than any of the others), I think it is not very likely to restrict the loss; because, fundamentally, until you tackle the question of providing an open outlet for every egg that anybody chooses to bring along, you can never get out of this tangle which you are in. I submit that no thinking farmer could demand such conditions for farming: that, without any restriction on quantity, he is entitled to a support for eggs which can go down only a very small fraction each year. Therefore we must have something quite new.
These things have been done in other places, and the Minister's advisers have, of course, access to all particulars. In my short experience I have come across two things which might contain the skeleton of a scheme. There were the Brazilian coffee arrangements before the war. There exactly the same problem arose. Brazil divided the coffee into three different quotas. The producer got the full market price for the market quota; the next quota was called the "equilibrium" quota, which was put on the market only if it was required, and for this he got a lower price; and, finally, there was the destruction quota, for which he got just the railway freight to the nearest destruction depôt. The Japanese were faced with the same problem when their cloth imports into India were restricted before the war. They had to apply a quota to all producers; and if a new producer wanted to come into the market, he had to buy a small portion of quota, which was put up to auction every so often. We shall have to look at eggs again under some such scheme as that. It is no longer possible to expect the taxpayer to underwrite every egg laid in this country, regardless of quantity. Otherwise, there will be a revolt by the taxpaper. Moreover, he realises perfectly well that, whatever opinions he and other people may have about the palatability, freshness and so on, of the eggs going through the packing stations from the egg factories to-day, nobody can deny that they are low-cost producers, and can probably produce as cheaply as anybody else in the world.
My Lords, all these schemes to support agriculture are getting more and more elaborate. My noble friend Lord Forbes had a new elaboration of grading farms. As they get more 893 elaborate, I think that these schemes get more and more vulnerable to the original sin of man, and I must confess that I immediately thought of one or two ways by which the grading of farms could be turned to profitable account in the Highlands. When we turn on to sheep, of which I know absolutely nothing, except that I like them roasted, I find that the subsidy has gone up in this last year from £11.7 million to £25.9 million. The White Paper says:The subsidy in 1959–60 will be more than double that for 1958–59. and over the year as a whole the unit rate of subsidy will average about half the market price. This is due in part to abnormally heavy marketings at the peak period; but the prospect, even with a more normal pattern of marketings, is of continuing heavy subsidy".Half the market price subsidy!
The other side of the picture seems to be represented by a cutting that I have here from the Sunday Express of March 27, 1960, which I am sure the noble Earl, the Under-Secretary, has seen. I realise that not everything printed in every Sunday paper in this country is always absolutely accurate, but when one sees at a very prominent place in a very prominent paper headlines such as "Sold lambs kept until prices rise", and "Swindlers net fortune from sheep subsidy", quite clearly some investigation has to take place. Of course, this is all substantiated by interviews with people.
§ LORD AMWELL
May I intervene? If the subsidy amounts to half the market price, is it not about time that, in a debate of this character, something should be said about the monstrous leakage between what the farmer gets and what the consumer pays?
I was not going into the details of this article, because the writer goes into some detail, and it might put ideas into the heads of some of my Scottish sheep-farming friends behind me; but it is all entered into there. It is a system by which some farmers, who have apparently obtained a subsidy without having a sheep killed at all when the market price was very low, have then brought them back and marketed them later, when the price was very high. There are allegations of an elaborate swindle. If there has been a démenti published, I have not read it, and I should be very pleased if my noble friend would tell me immediately. Obviously, there is no need to pursue the point.
I do not want to make an elaborate reply to the point, but I want to say this at once. I do not know that a démenti has been published, because there is no swindle here, elaborate or otherwise. I will elaborate on this point later, if I am asked, but just to allay my noble friend's fears I would say now that there is no swindle here at all. Perhaps it would be convenient if I endeavoured to answer the point now, because my noble friend gave me notice that he would mention it and the matter was raised in the newspapers. When you have a sheep or lamb ready to earn its subsidy, you present it by a number of means (and the noble Lord, Lord Wise, will agree) to a certification centre. The presenter will get the deficiency payment, if there is any deficiency payment due, there and then. The lamb then has a punched hole made in its ear so that it cannot be presented again. You must not take that lamb and breed from it, because it has been presented for slaughter: that would be an offence; and our inspectors go round the country to see that sheep with these holes in their ears are not being used for breeding. That would be a swindle.
A swindle was not alleged in this case. What was alleged in this case was that, the sheep having been presented and the deficiency payment made, it was not then immediately slaughtered but was retained and sold later. So it may have been. The subsidy was paid at the time the subsidy ought to have been paid. The sheep was presented later on because the man took a gamble that the market was going to rise. And it did rise. There is no leakage of money here at all. This practice, I am told, took place last summer, although not to the extent that the newspapers say, because there was a large marketing of Scottish lambs, particularly, due to the pasturage being so dry. This in fact had the effect of steadying the market. The lambs had been certified and the farmer got the subsidy and then said, "I think the price is going up", he retained the lambs for a time and then sold to a butcher later on. It is not a swindle, and there was no leakage of Government money.
§ LORD STONHAM
My Lords, the subsidy is paid on estimated dressed car-case weight. In the instance the noble 895 Lord was quoting, was the subsidy paid when the sheep were killed, or was it paid when they were first presented?
If the sheep were sold by auction it would be by estimate. If it were sold by dead weight it would be—but no, it could not have been done that way; it must have been presented at auction.
I am glad to hear that there is no criminal misappropriation in this way by the farming community of the Government's funds. But to a layman it seems that the great elaboration of these schemes and Orders has meant that there is a certain amount of what the layman would regard as unpremeditated leakage. I bring this point up rather to emphasise how important is the confidence between town and country. It is a very delicate plant and it is vital that agriculture should keep its house absolutely clean. I regard the National Farmers' Union as something in the nature of a guild of farmers, and I have no doubt that if farmers were found to be cheating over subsidies of this nature the National Farmers' Union would expel them. As the Ministry Orders tend to get more and more elaborate, I emphasise that the staff of the Ministry will have to get more and more alert to the original sin of man.
§ 5.35 p.m.
§ LORD DOUGLAS OF BARLOCH
My Lords, like the noble Lord who has just spoken, my only interest in this subject is as a consumer and a taxpayer; but consumers and taxpayers, after all, are the vast majority of the citizens of this country and their interests are not unimportant. First, let us look at this from the 896 point of view of the taxpayer, who is contributing £259 million a year by way of subsidies to agriculture. Let us compare that with the aggregate farming net income of £356½ million a year. What is coming from the Exchequer is equal to 72 per cent. of net farm income; that is to say, 72 per cent. of the return to the farmer for his work and for the capital which he has invested. Or compare it with the total labour cost in agriculture of £318 million. The Exchequer support, therefore, represents over 80 per cent. of the labour costs in agriculture. These are certainly rather surprising figures, and I do not know any other industry which is being supported by the taxpayer to that extent.
It may be that one would feel happier about this if the result to the consumer were more agreeable. But what is the position at the present moment? Everybody in this country is complaining about the food which is bought in the market. They complain that it is unappetising and inferior. It would be an interesting thing if some altruistic person would conduct a public opinion poll upon this; and I think that the results would somewhat surprise the Government. I do not find anybody who is satisfied about the condition of the food which is for sale in this country. Let me give some illustrations. The potatoes are tasteless, full of blemishes and have been treated with chemicals in order to prevent sprouting; nobody dares to eat a potato skin any longer; in some cases the haulms have been treated with arsenic or other chemical in order to wither them and some of that penetrates into the soil.
Eggs are all passed through egg marketing stations; they reach the consumer stale and are of poor quality in many cases, having been produced by mass production means in batteries, where poultry are kept under most artificial conditions. Chickens are in many cases implanted with hormones in order to save a certain amount of feeding, or they may be treated with antibiotics in order to get a quick result; and the quality of the meat is not what it used to be. In many cases they are reared under extremely artificial conditions, kept in confinement from hatching until they are slaughtered. Pork is also something which may be 897 treated with antibiotics, and when I asked a question about this recently the noble Earl said that it was quite impossible for the consumer to know whether this had happened or not. Consequently he cannot have any satisfaction with regard to what he is eating.
Milk is almost invariably extremely stale. In the large towns like London it is quite commonly two or three days old before it reaches the consumer. In the vast majority of cases it has been pasteurised, a process which at the present day is entirely unnecessary for the purpose for which it was originally introduced, because all dairy herds in this country now are tuberculin tested, and the original object of destroying the germs of tuberculosis no longer has any significance. It is in fact pasteurised for a purely commercial purpose, and that is to enable it to be handled in bulk and to be kept for very long periods before it reaches the consumer. The result of that, of course, is that it has been altered in quality by the heat treatment, and it is gradually deteriorating during storage. It does not turn sour, but merely gradually turns putrid.
Green vegetables are coarse and flavourless, due, no doubt, to the conditions under which they have been grown and stimulated with fertilisers, which produce a lush growth but which destroy the quality of the vegetable. In many cases there is the risk that they have been contaminated by sprays which have been used for agricultural purposes and therefore are potential carriers of poisonous substances. Fruit also has been subjected to spraying, sometimes many times during the course of its growth, and there once more one does not know whether it is a carrier of toxic substances or not.
As to wheat, that does not reach the consumer in its natural condition; it reaches him in the form of flour or flour products, and therefore perhaps it is impossible to judge what the quality of the wheat is. We can only judge what the quality of the flour is, or what the quality of the bread and other flour products may be. The general public know perfectly well that the bread which is now supplied to them does not keep. It gets stale and mouldy in a very short time, with the result that immense quantities of it are thrown away as waste and are not consumed at all.
§ LORD MANCROFT
My Lords could the noble Lord explain to a layman how it is that, if our food is so unutterably beastly, the health of the country seems to improve by leaps and bounds?
§ LORD DOUGLAS OF BARLOCH
My Lords, the noble Lord is assuming that the health of the country is improving by leaps and bounds. It is a well-known fact that, although the death rate in early life, and particularly in infancy, has diminished greatly in recent years, not due to the food supplies about which I am talking but to better hygiene and a better standard of living generally, it is not true that the health of the people of older ages has improved to the same extent. The prevalence of chronic diseases of various kinds, rheumatic, bronchitic and so on, is well known. So it is not correct to say that health generally has improved to that extent, or that the improvement is due to the quality of the food which is eaten. It may indeed be due to the fact that the standard of living has risen generally and that people are able to get food in abundance. There is no doubt that that is so, and also that the economic condition of this country has changed greatly during this century. That is an entirely different subject which has nothing to do with what I am talking about at this moment.
There is no reason why this country, which is now one of the richest in the world, should not have both an abundant food supply and one of the best quality. But who is there who speaks up for the consumers? The Ministry of Agriculture and of Food ought to be the protectors of the public, but what is done in order to ensure that we should have food of good quality which we are justified in expecting, having regard to the enormous amount of money which is spent as subsidy in one way or another to agriculture?
§ 5.48 p.m.
My Lords, I must declare a triple interest in this debate—I am an eater; I am a taxpayer, and alas! I am a farmer. I am really very disappointed that the racket my noble friend and I were cooking up, of sheep-running on moors, is not going to be profitable. But probably it is just as well. I have no quarrel with the general theory of price review; 899 nor the determination of prices, nor the system. But I have some reservations. The noble Earl, Lord Waldegrave, asked us to keep this matter in perspective, which I think we should do. An enormous number of figures, world trends and averages and general things of that sort, have been bandied about, which I find very hard to follow, and I should like to try in a very few moments to get down to something nearer the ground. This is an agricultural debate, and I think the earth should come into it.
May I read Section 1 (1) of the Agriculture Act, 1947? Talking about guaranteed prices and assured markets it says:The following provisions of this Part of this Act shall have effect for the purpose of promoting and maintaining, by the provision of guaranteed prices and assured markets for the produce mentioned in the First Schedule to this Act"—and this is the part which I ask your Lordships to note. I have read the whole subsection so that I could not be accused of taking it out if its context—a stable and efficient agricultural industry capable of producing such part of the nation's food and other agricultural produce as in the national interest it is desirable to produce in the United Kingdom, and of producing it at minimum prices consistently with proper remuneration and living conditions for farmers and workers in agriculture and an adequate return on capital invested in the industry.I want to question whether the whole of that subsection is being met by this Price Review. May I point out that docking £9 million off the Exchequer contribution really increases the total food bill of the country by .05 of 1 per cent.—not a very large proportion perhaps, but that is the figure: .05 of 1 per cent. of the amount that the country spends on food.
Last year, 1959, we had a negotiated Price Review, and on the whole, after a very interesting debate in your Lordships' House, we all agreed that it was more or less just and reasonable. If it was just and reasonable then, it seems to me to follow that farmers should be able to expect the opportunity of earning at least the same reward for their efforts this year, under the 1960 Price Review, as they did then; otherwise, the two things do not tie up. Whether they have that opportunity remains to be proved. 900 The Government's contention is that it is so, and my contention is that in certain circumstances it is not so. The real bone of contention is this £25 million increased efficiency. I think difficulty also arises through the taking of averages. The average, of course, is the point in the middle; there must be a point on one side which is higher and one on the other side which is lower. Either the chap on the high side is getting too much or the chap on the bottom side is getting too little, if the thing is cut really near the bone.
I should like to apply this Price Review to see how it affects a farm of my own which I am farming myself, and I should like to go into a little detail because I do not want it to be said this is purely a hobby farm, or that I have not taken advantage of all the opportunities offered by the Government, on which they are charging or theoretically debiting this £25 million. The farm is a classified farm, a classified stock-rearing, area, and that prohibits me from doing anything else than rearing store cattle. I can keep a few yearlings; I can keep pigs, chickens, sheep. But I cannot—and this is the point—fatten an animal; and therefore I cannot avail myself of a guarantee price. There is no guarantee price for the chap who produces stores. The Government will say, "You are getting, the hill cattle subsidy". I agree. But there is no long-term guarantee that it is going to stay. The same thing applies to the calf-rearing subsidy, which I get, and to the ploughing subsidies, which I also get. The man producing store cattle is not protected to the same extent, except indirectly, as the man producing straight commodity products; and he is prohibited also from doing so.
On my farm I have one man on 97 acres. I have yet to find how you divide a man; you must have one man on one farm, unless it is an adjoining farm. In point of fact, I have four farms in this area, and two crofts. My total labour is four men. I do not think anybody would say that that was excessive labour, and I do not think anybody would say that I could pay off a man. On this particular 97 acres he produces the feed for the winter keep of 30 yearlings; he produces the summer grazing, rotational grazing, and part-time grazing for 60 hill cows and calves, and, in addition, about three weeks' keep for 901 a flock of sheep which we lamb on the turnips. That man is pretty busy. In addition, he has three miles of fence, three-quarters of a mile of road, and, I think, four miles of ditching to keep up. So he is not idle. Also, to make sure he has something to do in the evening he keeps a store sow which produces two litters of pigs, store pigs, but with no guaranteed price. There are no chickens because I think it would be too much. In times of harvest, silage-making, and so on, I work the four men on these four farms, two crofts, together in a gang. They work on farm A, B, C and so on.
The Government say, "Improve efficiency". How can you? With one man you cannot cut your labour bill. They say, "Keep more cattle". But the ground will not keep it. They say, "Get your advice from the Government Advisory Centre in Aberdeen". I do; and I follow it. They say, "Employ rotational grazing. Plough up more land, and get more land in rotational grazing". This land has been in rotational grazing for 30 years, and that applies to a large number of farms in Scotland. In order to produce feed it is farmed in what is called the six-shift system, which means I go right round the farm in six years. There are 34 acres in oats, 17 acres in silage and turnips, and the rest is in grass for three years, some made into hay and some silage, as well for winter keep of these animals and for summer grazing. It is impossible to use that classified ground harder than that—I think it: is probably too hard as it is. I have taken all available advice I can get, and nobody has produced any scheme that I can employ which will not only increase the efficiency but turn that increased efficiency into money. The only thing I can sell is the cattle I can breed on the place, the calves; and the amount I can get is determined by the number of cattle I can keep, which is already the full amount, and a bit of luck if no losses arise.
I am sorry to be so long, but I want to point out that there is a limit to this efficiency business, and the limit is reached on a small farm far sooner than on a large farm. I always bought my lime at a time when the maximum subsidy, 70 per cent., was given. I cannot do that now, because the Government have reduced the subsidy by 5 per cent., 902 though they said they had put it up by 5 per cent. The most efficient chap buys in the best market, and that was at a time when the subsidy was 70 per cent. So far as I am concerned Her Majesty's Government have now reduced the subsidy by 5 per cent. As maintenance dressing I require to apply two tons to the acre on 17 acres. On a 17-acre break, it is a neutralising value of about 45 per cent. on this year's prices; and I get a very cheap rate because I have put all the land together. That means that on that farm it will cost me a reduction in benefit of 85s. I come to the fertilisers, compound fertilisers for the grain. On grass and turnips again I get them at an extremely cheap rate, and again I buy them in August and store them, in order to get the 30s. a ton discount by doing so. That works out at a price of £12 a ton. The subsidy on that is reduced by 5 per cent., which means exactly the same as a 5 per cent. increase in price, so far as I am concerned. Then 14 per cent. basic slag, at £5 a ton, means another 5 per cent. on costs.
Then my labour has gone up 7s. a week. I do not grudge it—the man is worth it; but I have to pay it. That increases my bill by 364s. a year. The average yield of oats on that ground is poor; it is only five quarters, and it is very poor ground. My deficiency payment, or rather the guaranteed price for that 34 acres, works out at minus 128s. So that on this farm, owing to the particular conditions—there are hundreds of other farms like it, because nearly all farms are small ones—my costs are up by about £31 a year, and my deficiency payment in subsidies and suchlike things on oats, which is the only side product which I can sell, is down by £6 10s., so I am really £37 worse off under this Price Review than I was last year.
These farms are costed by the College in Aberdeen as a sample; they are part of a sample of about 40 farms. The profit on this type of farm, if everything goes well—and these farms are run quite well—is in the order of £500. So that by taking ordinary advice, doing everything that I am told and getting on with the job, I am now to be docked 7 per cent. on that basis. There we are. I do not expect the noble Lord to bandy figures about the Floor of your Lordships' House to-day, but I hope that he will read and will check those figures.
903 I should like to say how glad I was that my noble friend Lord Forbes took up my hobby horse with which I bored some of your Lordships in the last agricultural debate, When all is said and done, the organisation is there. I was criticised that I was intending to set up a new bureaucratic organisation. If I may be so bold as to say it, I think that that really is pretty nearly rubbish, because it is there already. I was also told, "You cannot have a means test." What on earth is the Small Farmer Scheme? When you have to put in a scheme to make your farm viable and also other schemes of assistance, you can get assistance only—and rightly so; I am not querying it at all—on proving that you cannot get along without it, and that it is going to be a profitable thing to do. That is just as much a means test as anything we are suggesting here, and I hope that the noble Lord will in due course give it serious attention. I did not warn him last time and I got a "brush-off" which I rightly deserved; but I hope that this time, with both of us at it, he will seriously consider that matter.
Of course, the same thing applies in Scotland to the abolition of M.A.P. Scheme. This is a most serious matter. It is easy enough to abolish these things, but if nothing is put in their stead then you will, of course, lose confidence. It is much more a matter of confidence. The actual harm that this Price Review will do to a few farmers is a row of beans—I quite admit it—but I do not think that the Government have complied in entirety with the spirit of Part I of the 1947 Act. They have looked after their own side of it, but not the farmer's side. I feel that for the sake of saving £9 million and reducing the overall cost of food to the consumer by .05 per cent. it is rather unworthy.
§ 6.5 p.m.
§ THE MINISTER OF STATE, SCOTTISH OFFICE (LORD CRAIGTON)
My Lords, as the noble Viscount, Lord Stonehaven, has raised a Scottish point, perhaps I could reply quite briefly at this juncture. We will study with great interest the speech of the noble Viscount. As he forecast, I am not able to deal with the details that he raised. He raised a technical problem which he says is very 904 real: that we are now reaching the limit of efficiency. I join issue a little with him, in that one never reaches the limit of efficiency; but as one goes along, progress necessarily is slower. I can see the point about being taken as an average farmer. As he rightly says, one is never ion the line; one is always either above or below the line.
I should like to say a word about the point made by the noble Lord, Lord Douglas of Barloch, who said that one was never satisfied with the food of this country. I hope that he was referring to England and Wales, because nowhere in the world is there tastier or better quality meat and fish than in Scotland. All the food in Scotland is of fine quality. My problem is not to get good food, but not to eat too much of it.
The noble Lord, Lord Forbes, and the noble Viscount, Lord Stonehaven, raised some general points, to which my noble friend will refer when he comes to wind up. He made special mention of the Marginal Agricultural Production scheme in Scotland. As noble Lords know, the Government have made a three-year scheme under Section 75 of the Agriculture (Scotland) Act, 1948, to cover the three cropping seasons 1960, 1961 and 1962, during which period the needs of the farms that have been receiving M.A.P. assistance will be kept under review. The reviews will be carried out by the agricultural executive committees, who, in making their reviews, have discretion to adjudge the degree of marginality of a holding. They are also to take into account the benefits derived from other forms of assistance (such as the improvement grants), and the economics of the enterprise as a whole.
Before the end of the three-year scheme, a special review will be carried out by the Department of Agriculture for Scotland and the agricultural executive committees of those farms still receiving assistance. The position of these holdings will then be discussed with the National Farmers' Union in the light of the review and of other forms of assistance then available. Generally speaking, the Government think that now, after achieving expansion in hill cattle numbers, marginal upland farmers should be able to maintain the fertility of their grazings with the help of the general subsidies—ploughing grant, lime and fertiliser subsidies, and calf subsidies, as well 905 as the special hill cattle subsidy. I have noted what the noble Viscount has said about not being sure that these will be continued, but I think that his fears are unfounded. But, in any case, we have undertaken to review the position before the end of the three-year scheme, and we must await that review. We do not underrate the importance of the agricultural and social considerations which are involved and to which my noble friend Lord Forbes referred. I would assure the noble Lord, who has told me that he cannot be here for the winding-up, that we have taken note of his comments and suggestions about grass and marginal land.
§ 6.9 p.m.
My Lords, I should like to add my congratulations to the noble Lord, Lord Fisher, on his excellent maiden speech. I feel sure that his live intellect will be a great asset to your Lordships' debates. I must commiserate with the noble Lord, Lord Douglas of Barloch, on the filthy food which he is forced to consume. I myself find that my frame increases in direct proportion to the enjoyment of my food. His evidently decreases in direct proportion to the misery which is inflicted upon him at mealtimes. I can only suggest to him that he takes the advice of Dr. Barbara Moore and lives on wholesome honey which is not touched by the wicked farmer.
We have heard to-day a certain amount about the flourishing state of agriculture. Figures have been put forward to prove that. I am afraid that I am going to disagree with a great deal that has been said. What I have to say, and any arguments that I may put forward, are based on the fact that to my mind confidence in the future of agriculture is decreasing, and decreasing rapidly. This Price Review has merely resulted in accelerating that. Over the past ten years agriculture has become tighter and more competitive. I hold no quarrel with that—it was to be expected—but profitability has decreased. I do not entirely blame Her Majesty's Government for that, though I expect noble Lords opposite would like to do so. I shall blame Her Majesty's Government if they refuse to recognise it.
It is true that agriculture has had much helpful legislation over the past fifteen years from both types of Government, 906 but there is one commodity which no legislation can manufacture, a commodity that is engendered and comes about and one on which the whole future and prosperity of agriculture depends, and that is, confidence. To my mind confidence has been gradually going out over the past five years, and if Her Majesty's Government fail to see that, I can only say that they must be staring at a magnesium flare and apparently unable to see.
I blame Her Majesty's Government not so much for reducing the subsidies under the Price Review by £9 million but for failing to realise that by reducing subsidies by that sum they are merely encouraging this dissipation of confidence, which is worth far more than £9 million. It is said that the agriculture bill rises each year and must be contained. It is true that £250 million is a large sum of money but what does it amount to?—£5 per person per year, 2s. per person per week, the price of ten cigarettes. That does not seem to be a large premium to pay for the prerogative of the public to buy limitless cheap food.
It is said that we must keep a fair balance between the demands of agriculture and those of the taxpayer. That is perfectly true, but a fair balance does not mean a balance in which the scales of agriculture are consistently the lighter. It is not universally stated (although the noble Viscount who leads the Opposition did state it this afternoon) that in real terms, taking into account the change in the value of money since 1948, the farmers' income has decreased by 5 per cent. whereas that of the rest of the community has increased by 30 per cent.; and yet during this period farmers have modernised their holdings Out of all proportion and poured millions of pounds into their business—and for what? For a smaller return.
If the noble Earl does not like my taking 1948 as the starting year—for he may say it is loaded in favour of my argument, and possibly it is—then may I suggest to him that we take 1947? I would ask your Lordships to bear these figures in mind because they are interesting. Since 1947 the agricultural net output has increased by 33⅓ per cent. whereas that of the rest of the community has increased by 36 per cent.—virtually the same increase. Yet in the same 907 period the real net income of those in agriculture rose by 3 per cent. while in the rest of the community it rose by 34 per cent. That is a very significant difference. If the noble Earl is sceptical as to who the rest of the community are in this context, let me assure him that these figures represent the total of all personal incomes, including wages, salaries, professional earnings, pensions and so forth.
I am not concerned that farmers themselves are less well off—they expected to be. My concern is this. Why should people be expected and encouraged to invest their money in agriculture when they know as a sure and certain fact that they are going to get less and less for the products they sell? It is like running up an escalator that is going down. If one runs hard enough one may keep pace, but a sensible man will get off that escalator and find one that is going in the right direction.
In the past I have supported Her Majesty's Government whenever there have been cuts because I considered it right and proper, in the national interest, for agriculture to become tighter; but there is a limit to the amount one can squeeze a balloon without it bursting, and I believe that that limit has come. If we destroy, or even damage, an industry the size of agriculture, we bring down with it not only farmers and farm workers, but also the engineering industry, the fertiliser industry, freight and haulage, millers, compounders, and all those other people whose very existence is so intimately connected with a prosperous agriculture. And let us remember that agriculture has an output of £1,500 million. It is the largest industry in the country, an industry with an output three times that of Imperial Chemical Industries, and one and a half times the size of the motor and shipbuilding industries put together.
The noble Earl will probably agree with what I have just said. Where we disagree is on how much tighter the balloon can be squeezed. I believe that this has gone too far, and I can see this reduction of £9 million resulting merely in confidence running out of the industry. In that respect, I feel that the Price Review has been a misjudgment. We are told that agriculture is lucky, because under the 1957 Act Her Majesty's 908 Government could have made reductions of 2½ per cent.—which in this year would mean £19 million—whereas in fact they have made reductions of only £9 million, so that a further £10 million could be taken off. I deplore that attitude. I remember the Bill being introduced into your Lordships' House and with what joy it was obtained. I was an enthusiastic supporter, for I thought that here at last was a Bill which would give the farming industry confidence and stability. A very different complexion has now been put on that Act. It is now a method of reducing the agricultural support annually. That is an action which I personally deplore.
My Lords, will the noble Earl allow me to interrupt him on this point? There is no different complexion on the Act now as compared with the time when it was introduced into your Lordships' House. It was to regulate and make tolerable the decrease that might become justifiable in the determination of the Reviews. There is nothing more or less in it than that, and it is quite unfair and wrong to say that the Bill is being interpreted now in any way differently from the way it which it was said it would be used when it was introduced.
My Lords, I did not imagine that the noble Earl would let that fly past his head, but the fact remains that this Bill came in with the interpretation that it was a support for agriculture, and the farmers accepted it as such—
My Lords, it is like having one's arm cut off, and then, when one complains to one's persecutor, being told one is lucky not to have lost one's head as well. We are told that farmers' incomes have risen and that they ought to be satisfied, though in real terms their incomes are decreasing.
Her Majesty's Government, too, have forgotten one important point. In the last five years the broiler industry has greatly increased its output, from one million to 115 million birds, with a gross output of the value of £50 million. This is an industry which has grown and flourished without any kind of support. Yet these figures are taken into the general agricultural Price Review figures. 909 If the figures of this new industry were removed from the figures of the agricultural industry as a whole it would be found that there is a very much greater difference in output and income in the five years between then and now.
Agriculture is an industry which must prosper. There are so many varied opinions. Some talk scathingly of farmers' subsidies. It is not the farmer who is subsidised. If an industry sells its produce below the cost of production, then surely the one who benefits is the one who, because of the subsidy, is able to purchase artificially cheap goods. In this connection I should like to draw to your Lordships' attention a few details. Last August, English wheat was sold at £17 per ton. At home, imported wheat was £26. The Government bore a subsidy of £9 a ton. But who, in fact, received the benefit of that subsidy? The farmer did not. He received the cheque, but the housewife did not receive any benefit from cheaper bread. The person who received the benefit of that subsidy was the man who, because of it, purchased cheap wheat. The same applies to barley. In 1954 one would have turned down 110s.; this year one accepts gladly 82s. 6d. or 85s. One is told it does not matter because the deficiency payment will make up the difference. But who is benefiting from that? It is not the farmer; it is not the beer drinker; it is the person who purchases this artificially cheap food.
I would draw your Lordships' attention also to the fertiliser industry. What would happen if the fertiliser subsidy were removed? The first thing is that the price of fertilisers would come down. We have already had an example of one firm that has been accused by the Monopolies Commission of overcharging. But who is getting the benefit of the subsidy? The fertiliser manufacturers, because they can keep their costs at an artificially high level. If I may give an example, I would draw your Lordships' attention to white fish meal, the price of which, in December last year, was £71 a ton; and that in this country is virtually a monopoly. The Peruvian fish meal was imported at £53 a ton, and since December the price of fish meal dropped in England from £71 to £59 10s. I cannot believe that any noble Lord would imagine that the farmer has had 910 the benefit of that subsidy which was on fish meal at £71 a ton.
These thoughts prompt one to ask numerous questions. Are we right to subsidise agriculture? Are we doing it in the right way? Is the subsidy going where it is intended to go? Is it large enough? Is the farmer's return on his capital large enough? Is he joining in on this "Never had it so good" era? Is his standard of living going to double in 25 years? Is the nation getting the full benefit of these subsidies? Are we right in asking for an impossibility: for the farmer to reduce his costs and at the same time to reduce his output? I know my answers to these questions, but they will be different from other noble Lords' answers. They will be different from the answers of noble Lords opposite; they will be different from the answers given by townsmen and crofters in the North of Scotland and hill sheep farmers in Wales. Everyone has his own opinion, and there is more divergence of opinion over this great industry, agriculture, than any other. It is like driving through a fog: we tend to follow the lights of the car in which we sit.
It is for those reasons, my Lords, and to clear up some of these vital and important points, that I should like to see the appointment of a Royal Commission on Agriculture. Such a body could inquire into these many difficult and highly controversial points and details, and could throw some reasonable form of light, which at least would be impartial, on to them, in order that everyone—the farmer, the taxpayer, and indeed the whole country—might benefit. Such a Commission would certainly clear the air a great deal. Agriculture must progress for the benefit of the whole country. But do not ask it to make itself more efficient, cut its costs, cut its output and then slice its income. If we do that we are asking the impossible, and disaster will follow. The first important ingredient for future success is confidence in the future, and I believe that this confidence has diminished as a result of this Price Review. We are not being asked to-day to approve Her Majesty's Government's agricultural policy. We are being asked something far simpler: do we or do we not approve this present Price Review, yes or no? My answer, my Lords, is, No.
§ 6.25 p.m.
§ LORD NETHERTHORPE
My Lords, I should like to join in paying tribute to the noble Lord, Lord Fisher, for his most important and useful maiden speech, in that he pinpointed the vital issues of agricultural policy that confront us at this time. The noble Earl, Lord Ferrers, has just now referred to the Motion before the House. The tenor of this debate would have me equally believe that we cannot support this particular Motion. I should like, however, to declare my personal interest, in that I am, first of all, a farmer; secondly, I happen to be a director of a fertiliser company; and thirdly, I have actually taken part in the Price Review discussions referred to in the Motion. If I may at this point of time, I should like to pay tribute to the high sense of responsibility and, indeed, great ability displayed by the President of the National Farmers' Union of England and Wales, Mr. Harold Woolley, who led the Farmers' Union side at this Review. But I should be equally failing in my duty if I did not commend also the statesmanlike way in which the negotiations were conducted under the chairmanship of the Departmental official along with all his colleagues.
Indeed, there is little difference between us on the basic data. One of the interesting facets of the negotiations as they have developed over the years has been the degree to which we have got closer together more and more each year on the basic data. Where, of course, inevitably there is room for difference of opinion is on the interpretation of the data, and it is from that basis that the present controversy stems. The noble Earl in his opening remarks talked about the charge against the Government that the policy adumbrated in the White Paper was restrictionist. I would contend that it is the only construction that could be put on the policy statement under the heading of "Production and guarantee policy".
Let us look at the commodity for which you claim a prospect of expansion, milk. There has, indeed, been acknowledgment of the gigantic efforts made by the milk industry—that is, the Milk Marketing Board and distributive trade—in increasing the sales of liquid milk. And the recognition of that endeavour, and that producers' money and distributors' money should be in line with the increase 912 in the standard quantity of milk because of that increase in liquid consumption, is long overdue. We have also acknowledged the need for a safety margin. But here we are in a country importing something like 50 per cent. of the total consumption of dairy products, and yet we are still trying to restrict the amount of milk that is produced and diverted into manufactured milk products.
And what has happened as a result? The first time we get a drought, or, indeed, a short supply of dairy products on the world market, because we have not ourselves been producing to capacity the consumer has to "pay through the nose". Indeed, when the shortage of cheese existed some while ago, the Dutch Government put a surcharge on the export of cheese to our market, and in consequence the consumer of cheese here was exploited to that extent. We have invested in the physical assets of manufacturing plant in the dairy industry in this country a vast sum of money, and we have a considerable potential production of dairy products from this dairy industry if we sought to use it. And that, I repeat, is in a section of the industry where 50 per cent. of the total consumption of dairy produce is in fact imported.
Now we come to another commodity, sheep, where it is said positively that we must check the expansion of production. In order to facilitate this check there has been a reduction in the price not only of mutton and lamb, but also of wool, and the qualifying criteria have been so tightened as to cut out of support a substantial number of sheep. Then the weights of sheep have been adjusted in an attempt to get weights and sizes of sheep progressively down more nearly to meet what is assumed to be public taste. There has been a concession with regard to pigs, calculated to create a moderate increase in the production of pigs. But let us not deceive ourselves: that is merely to redress real damage that was done two years ago, which precluded the possibility of our continuing to supply pigmeat from home sources and thereby making it more necessary for our market to be satisfied by imported sources of bacon pigmeat.
That concession, nevertheless, is welcome, as, indeed, is the method of operating the guarantee; and I should like to endorse the proposals made in the 913 Order that has yet to come before this House, because I believe that they are calculated to improve the lot of the pig industry of this country—namely, in regard to pigs which are offered on deadweight and grade, the majority of which go to bacon production. I believe that the proposed alterations in the scheme are indeed worth while, and are calculated to make some contribution to the position, if not, as the noble Viscount the Leader of the Opposition said earlier, going the whole way and dividing, specifically the two categories of pigs—for I think one realises that there are some positive snags in that particular procedure.
Then we go to eggs. Granted, eggs have, in common parlance, "taken a knock". They took a very serious knock last year because of the application of the profit-sharing arrangements, due to the loss of revenue from the market of something like 5d. a dozen; but a further cut of 1.38d. could well be calculated to do precisely what the noble Earl, Lord Ferrers, said and undermine the confidence of the egg producer until there is a repetition of the position we had in pigs. We ran short of pigs, and we could well run short of eggs because of the prejudice to the producers position. Let it not be so, because what we want to do in this country is to maintain the satisfaction of the consumer market for home-produced eggs, and not make room for the alternative source of imported supplies. The commodity for which we are given no discouragement, in which we are told there is scope for improved production, is beef. Yet here is a commodity which, by common acceptance of the agricultural economists, has shown a very definite decline in profit. But is there any redress in this Review for increased cost in beef production? No; just no change.
Let us look at the three commodities, therefore, which are consumers of the crop which the Government said so clearly in their White Paper is to be the crop requiring the greatest encouragement. It says in the White Paper, under the heading, "Commodity Objectives":… continuing emphasis on the better production and use of grass as a means towards reducing costs of production. In general, this will call for the maintenance or increase of the area of rotation grass".914 Why do we grow grass? Is it to make into hay for packing material because there is no stock to eat it? Or, indeed, do we grow grass because, with two blades where one used to grow, we can transform it into meat for the consumers of this country? Here we are discouraged to produce milk and milk products; we are being told to check the expansion of sheep; and we are told that there should be no positive encouragement in the production of beef, which has already suffered increased costs and shown a very definite decline in profit. I call that a restrictionist policy, and that is what the Farmers' Union meant when they made the declaration. That is what has caused this undermining in the confidence of the farming community. Therefore I feel, quite frankly, that the significance of this Review lies not only in the harshness of the settlement; it is, in fact, as the noble Earl, Lord Ferrers, said, a real knock at the confidence of the farming community in what really is the rôle of agriculture in this country, where we are talking in terms of a free market and a liberal trading policy.
Now had we seen a change in the fortunes of the beef producers, I personally believe that it would have had two major effects. First, I think it would have effected a switch between, certainly, the medium and the large-size milk producers, who, because of their very versatility, could have switched over to beef—presumably a wanted commodity. That, in turn, would have made more room for the smaller producers of milk, who, by their own progressive efficiency, could well have stepped up production and satisfied the gap left by those weaned away to beef production. Had that been the case, then any other short supply from the standard quantity already determined would have been taken care of by the diluting effect that the price mechanism has on the reward per gallon of milk produced. So any concern about the open-ended Exchequer commitment would, I think, have been well taken care of. I therefore believe that the fault of this Price Review determination is really that it has not left room for selected expansion of British agriculture along the lines which are best calculated to make a contribution to the national good, and it is on that premise 915 that I object to the form of the determinations, because of their impact on production policy.
Of course, we are challenged as an industry always to increase our efficiency. The real criterion of efficiency, when all is said and done, is the unit cost of production. That, in the final analysis, is the real yardstick. The noble Earl quoted a statement that I made in 1958, but he did what I think is within his licence—or indeed, is within the licence of anybody: he quoted only part of what I said in 1958. I should like to remind him of what I actually said, if I may be permitted so to do. This is how he quoted me:What indeed was the challenge to agriculture? I would suggest that it is this: how can we progressively reduce the extent of the payment made annually by the Exchequer to the agricultural industry?With that I agree, but I then went on to say:You may look askance, but the happiest day of my life will be when we can negotiate in February a reduction in our price level because our costs have been reduced already.Now there is a very great difference between interpreting efficiency in the reduction of costs where you have a stable level of costs, as compared with the reduction of prices against an inflationary cost position. Therefore, my Lords, I feel it is unwarranted to make that sort of challenge to the industry without taking due account of the extent of the increased cost that the industry has had, and has, to bear.
My Lords, I really must ask the noble Lord if he will give way for a moment. Is he suggesting that we have not taken into consideration the increased costs this year in the Review?
§ LORD NETHERTHORPE
The fact of the matter is, as I say, that the real criterion of efficiency is the unit cost of production. But if it is bedevilled by constant increases in factor costs, then it cannot reveal itself in a reduction of unit cost. That is the problem that besets us; and it is the reason we can 916 claim progressive efficiency to an outstanding extent, when we realise that from 1948 up to, and indeed including, 1960 the industry has absorbed without recoupment no less than £200 million worth of increased costs—an annual average of something like £16 million to £17 million. But that has been done, I would remind your Lordships, largely on the basis of an expanding production.
It is true that efficiency, as such, can be interpreted in one of two or three ways. It can be greater production from the same inputs; it can be the same production from less inputs; or it can be more production from less inputs. But in agriculture, curiously enough, it is one of the facts of agricultural life that the real effect of increased efficiency almost invariably means an expanding outlet for production, and everyone who is worthy of the name of farmer in your Lordships' House knows that that is absolutely true. Therefore, if you are going progressively to increase efficiency, there must be room for an expanding outlet, at least on a selective basis. That is the contention of the industry, I am sure, when they object to the nature of this particular settlement.
We have, as the noble Earl has said, faced the increases in costs. We have had our costs increased on this Review by £13 million, so far as the Review commodities are concerned, but in excess of that, so far as the whole industry is concerned—and the economy of the industry must be kept in mind, as well as just the producers of Review commodities. Nevertheless, £13 million applies to Review commodities. It is suggested that in order to meet an increased cost bill of £13 million the reduction of £9 million in the price of the guarantees can, in fact, be an award virtually of £3 million to help the farming industry to pay those increased costs. I despair of that sort of philosophy. May I show your Lordships how wrong it can be? If the same principle had been applied to the settlement last year, when the award was plus £3 million and the net income was £360 million, by that same token the 1959–60 net income should have been up to £380 million. It is, in fact, £6½ million worse than it was last year. So for the Government to contend that they have awarded the industry £3 million this year, and to hope that they are thereby enabling it to improve its 917 net income position, does not stand up against the experience of the previous year's operations.
I am the first to admit that we in the agricultural industry have, during 1959–60, in monetary terms and in actual income improved our position from 1958–59. But from what a deplorable level! From a level, indeed, in which due account had to be taken of the abnormal weather conditions in 1958–59. This time we had more normal weather conditions—if one ever dare talk about "normal weather conditions" in this country—and. in consequence, the net income on the actual basis did come up. But in normal net income terms the figure has, in fact, shown a decline.
I am sure the noble Lord will not mind if I mention this point, because he will not want to overstate his case. I really think it is a slight exaggeration to say that last summer, the best summer I remember in my life, was more nearly normal. It was a very good summer.
§ LORD NETHERTHORPE
I defer to that comment, because I have been taught that it is always nice to be fair and favourable; and I should regard last summer as a fair and favourable one.
§ LORD NETHERTHORPE
If one starts discussing what is a normal year, then the intricacy of the calculation done departmentally of what would be normal, as contrasted with actual would baffle people not so clever as those entrusted with the task.
The noble Earl, Lord Ferrers, and indeed many other noble Lords, have referred to the evaluation of efficiency at £25 million. That is a purely arbitrary assessment for which there is no actual justification on actuarial grounds; and to contemplate that you can, year in and year out, with the variations of the seasons as they are, have a constant of increased efficiency at a valuation of £25 million is, in my view, little short of ludicrous. Therefore it is really a question of how resilient the industry is to face the increased costs such as we now have to face. What are they, in fact? Costs that are likely to decline subsequently? Hardly that! One is the labour cost. We 918 believe that our men are going to be looking over their shoulders at industrial workers' earnings. So that that cost is not likely to go down. The other is the rent increase permitted by the 1958 Act. In consequence of these inroads into our resources by increased costs, we are being asked, in the middle, so to speak, to help to support our two partners in the industry with a declining income ourselves. In my view, it just does not stand examination.
The financial position has been so adequately dealt with by the noble Earl, Lord Ferrers, that I will not take up the time of your Lordships' House in repeating it. Nevertheless, I should like to make one particular point with regard to the long-term assurances in the 1957 Act. I had perhaps as much to do with the drawing up of that Act and the negotiations that led up to it, as the noble Earl the Chief Whip well knows, as anybody else; and I utterly repudiate that the 1957 Act was anything but a piece of legislation to substitute for what had been so inadequate in the minimum price arrangements under the Act as it was before the amendment. In other words, it was to insulate the producers of agricultural products from the prospect of catastrophe. It was underpinning the long term. It was never an entitlement to Government that they could automatically reduce, year by year, the income of the farming community by a cut-back in guarantees.
Nobody ever suggested, unless the noble Lord is suggesting it now, that the 1957 Act was an Act whereby the Government automatically reduced by so much. The Act said that if the determinations showed that the farmers' profits had gone up so much, and their costs had gone down so much, we could justly reduce the guarantees by 30 per cent., even then we were not to do that by more than 2½ per cent.
§ LORD NETHERTHORPE
I accept that angle of it, but it makes no difference at all to the point I am seeking to make. In other words, there is no virtue to be claimed by Government that they could have gone back to £19 million, because that was never a concept of the Act nor the principle behind it.
I should like now to make one or two comments with regard to the value the country gets from the support given to 919 the agricultural industry through the subsidy. First of all, I think it costs the country 5 per cent. of the total bill for food consumed in this country. For that 5 per cent., despite the forebodings of the noble Lord, Lord Douglas of Barloch, about the quality of food, I believe that this country is better fed and more cheaply fed than any other country in the world. That is only because the contribution made by British agriculture has made it possible on two grounds. The first is the production we have ourselves made; and the second is the fact that, if we had not been making it, we should have been buying in a sellers' market a reduced availability of food for a bigger indent. And I am perfectly certain that, in those circumstances, costwise British consumers would be paying a tremendous lot more for the food than they are now, when we have sustained the level of production that we have done.
In another place only the other day the Chancellor of the Exchequer complimented one of the speakers contributing to the debate because he made a reference to a particular Government expenditure and related it to the total Government expenditure and to the national product. So far as the food subsidies are concerned, the facts are that they absorbed 1.2 per cent. in 1959–60, as against 1.5 per cent. in 1954–55. That was the first year after decontrol, and that is the proportion of the gross national product. So, in fact, although the subsidies now stand at £259 million and, because of the very nature of them, they are bound to fluctuate, they still represent a lower percentage of the national product than they were immediately after decontrol.
One of the other things I feel prompted to say, arising out of a further remark of the noble Earl, Lord Ferrers, is this. The Government of the day chose this type of agricultural support because they construed that the balance of advantage to an industrial manufacturing nation lay in having the freest possible market for raw materials and food. An expert committee under Dr. Haberler, of the United States, operating this Committee on behalf of G.A.T.T., confirmed that it was the least likely method of giving support to agriculture if the object was to prevent inhibiting freer trade. But 920 the decision taken by Her Majesty's Government was that the deficiency-payments concept was the way of giving effect to this particular type of support.
This system comes under public scrutiny once every year, and it is before your Lordships' House now. If, however, it had been a tariff, we should have been in the position of having a tariff until we were committed to have it reviewed. There would have been no public spotlight. The surcharge would have been there on the price at which we sold our food; and then, if we had increased efficiency, we should have been able to share that efficiency between the producer and the consumer of food on a proportion calculated to sustain the best interest, first, of our market and, secondly, of our economic financial position. That would have been the position resulting from that sort of policy. But instead of that, because the Government have chosen to operate a deficiency-payments system on direct Exchequer payment, the first charge on progressive efficiency now becomes the Exchequer liability, and the reward to the farming industry for increasing its efficiency is beclouded and bedevilled by that first charge which is made against it. I believe it is imperative that we should have a more equitable share between the producer, the taxpayer and the consumer of the accepted increased efficiency of the farming community.
One final word, if I may, on the policy, rather than the Review Determinations. Under the free market concept and the price support programme we have a means of permitting a free flow of food produce into this country from any other country with surpluses, regardless of the real cost of that food in the country of origin. But at the other extreme we have the safeguards of the anti-dumping legislation, which it is not always easy to persuade the appropriate Government Department to invoke. Between those two extremes there is, in my view, the need for some complementary action to try to create stability in the market for agriculture and food products on this, the tone-setter, of the world market for food. Here may I go back to a remark made by the noble Lord, Lord Hawke, when he was talking in this vein about other industries and ourselves. I believe, and I think all other farmers believe, that it is necessary to keep a very fine 921 balance between the price of food to the consumer as produced at home and the reward to primary producers whose markets we hope to supply with manufactured goods overseas. Therefore, in my view, the essential complement is machinery and positive action by the Government to try to create more stability within the market. Then we shall not, I feel, be up against the sort of criticism that Government action has been harsh and unjustified. It is in that spirit that I say I cannot support the Motion.
§ 6.57 p.m.
§ LORD AMHERST OF HACKNEY
My Lords, I think every one of us in this House wishes to see in this country a prosperous agriculture. We have just listened to a most persuasive speech by the noble Lord, Lord Netherthorpe, who speaks with such tremendous authority on this subject. I do not want to enter into a verbal battle with him, because I know what a tremendous expert he is. But there is one question which has been worrying me, which is that, in discussing this Price Review, there is a difference of opinion over whether or not allowance should be made for efficiency. The figure that is quoted in the Review is £25 million. I think the tenor of the noble Lord's remarks was that the policy was restrictionist and that therefore one could not accept this figure of £25 million as justified. On the other hand, during last year production increased considerably, from 161 to 168 per cent. In fact, agricultural production has been increasing. I cannot quite understand, therefore, why, in an increasing agricultural production, one cannot take some account of efficiency.
§ LORD NETHERTHORPE
My Lords, may I be permitted to correct any misunderstanding? I never claimed that the industry was not progressively efficient; nor, indeed, that due account should not be taken of it. What I said was that there is no basic calculation which can justify the precise figure of £25 million per annum—indeed, it is bound to vary year by year. What I emphasised is that no proportion, or an insufficient, inequitable proportion, of the efficiency factor is left to the producers to spur them to greater efforts and to give them the income to invest in more efficiency.
§ LORD AMHERST OF HACKNEY
I am grateful to the noble Lord. I think that over this Review we need to keep our sense of proportion and to realise that we are dealing with a cut of £9 million on the very large figure of £1,270 million, after a year when farmers actual income—I know not the adjusted income—has been increased by £41 million. I realise that at the moment many farmers in the country are extremely worried about the situation. I do not think that after a Review one has ever heard so many people clamouring for the resignation of the Minister. But again I feel that we ought to keep a sense of proportion. I think that the great trouble at the moment is psychological rather than actual. I cannot feel that the actual cut is going to be a very serious one. I think there are a lot of farmers who feel, as the noble Earl, Lord Ferrers, said, that they are on the down escalator going up, and that their incomes are not increasing while everybody else's income is going right away from them.
Is that, in fact, the case? It depends very much, of course, where you start your calculation. If you take the year 1948, just after the main injection of capital, you come to the conclusion that there has been very little increase, and in fact, in real income, a slight decrease. But why should one take 1948? The situation is rather different if you take 1946–47; it is more favourable. If you go back to the 1939 figures, I agree that is a most unfavourable time for farmers. But the farmer, in terms of real money, is twice as well off as he was then, while the rest of the community in real terms, I gather, is 40 per cent. better off. So in that way he is not quite behind in the race.
I was looking at some figures in a paper called, Preliminary Estimates of National Income and Expenditure. There are figures given for the very rapid increase in personal income. There has been a tremendous increase in wages, but that has not necessarily been general throughout all sections of the community. If one takes "Other small traders and partnerships"—small businesses—between 1954 and 1958, if my calculations are correct, they have improved their position in taxable income by 13 per cent., the farmer by 12 per cent., the professional man by 16 per cent. The whole of that group of 923 self-employed and small businesses and professional men from 1954 to 1959 had increased their incomes by 16 per cent., as opposed to the farmers' 12 per cent. I agree that the farmer has not increased as rapidly as the others, but only in that case by a matter of 4 per cent. And I think everybody will realise that in the earlier part of the time, during the war and immediately after the war, the farmer probably increased his income more quickly than some other sections of the community. I am not saying that I do not think the farmer ought to have a higher income, but I think one should keep a sense of proportion in these things.
Could the noble Lord tell me whether those very interesting figures take account of the capital invested and the different risks in farming from, say, keeping a small sweet shop?
§ LORD AMHERST OF HACKNEY
This is their taxable income. Of course various businesses would have various amounts of capital locked up in them. I agree that the farmer has very much more; but, of course, these increases are only percentages increases and not actual income. I do not think that anybody who goes around the countryside at the moment can believe that farming is a depressed industry.
I was interested in one figure I was reading the other day and that is the figure for the investment per farm in farm machinery, which in 1948 was £900 and to-day is over £2,000. There is a tremendous investment going on, and we all know how much use is being made of the Farm improvement Scheme.
§ LORD AMHERST OF HACKNEY
And, of course, the facilities for borrowing, which the banks make available, where the total has gone up from £200 million to £300 million. There are, however, one or two trends which I think are very disturbing. Looking first at dairy farming, I was interested to see in the Milk Marketing Board's Report what I thought were rather surprising figures—this is dealing only with recorded herds. Between 1954 and 1958 the number of recorded herds has gone down by 4,000, 924 whilst the number of cows had remained stationary, which does rather look as though the smaller farmer is finding a great difficulty. There was another report on that subject and there was a census of the accounts of a number of farms—I believe it was in Aberdeenshire. In one group were those with under 30 cows, and in the other group were those having 30 and above. It was discovered there that the cost per cow in the smaller herds was £10 higher than the cost in the larger herds. I believe that that was largely attributable to the fact that many of the smaller herds were in family concerns, so that the cows received a great deal more individual attention. But the cows, being ungrateful creatures, repaid this extra care by giving 100 gallons per cow less than in the larger herds. So I think that there is at the moment a great deal of difficulty among small farms. But, of course, we have the Small Farmer Scheme which should help to deal with that situation.
This is not purely a problem that affects only this country; it is a problem which affects most countries in the world at the moment. After all, France is not without her problems over small farms. Surely we are in a position where, owing to increased efficiency, fewer people are processing more and more food for the world to eat, and the purchasing power of the people who are the potential consumers of it has not gone up in proportion, so that we are getting these world surpluses. To say that one should encourage everywhere a policy of unlimited production—this has been said once or twice this afternoon—in present world circumstances would lead to disaster. One would merely have more and more unsaleable products. I am not saying that there are not a number of starving people who do not need them, but as the economics of the world are at the moment they could not be taken up.
I do not see that we can run our agriculture completely in isolation. Naturally, we are bound to be affected by the increases in our market leading to export difficulties in many foreign and Commonwealth countries; but it is a most intricate pattern, and any large injection of extra money into the Price Review which stimulated a lot of production might not only lead to considerable difficulties in the future with our relations with other countries, but 925 also lead to heavy burdens on our own taxpayers. Therefore, in any Review it must be a matter of striking a balance between three different things.
I should have thought that it was difficult to see in regard to which of the commodities in this Review one could have increased the price, except possibly, as the noble Lord, Lord Netherthorpe, said, that of meat. I do not really see how one can increase the price of milk or of eggs. I should have liked to feel that one need not have cut the price of sugar beet, because it is a useful crop and, being a sugar-beet grower myself, obviously I do not like having a cut. On the other hand, there is no doubt that most growers of sugar beet apply for many more acres than they are growing at the moment because it is an extremely good crop. Not only is it a profitable crop in itself, but it has a large number of by-products—there is the pulp, which you get back, and the sugar beet tops.
I cannot imagine that anybody would give up or reduce his acreage of sugar beet if there is a cut of half-a-crown a ton, which is something like £2 an acre on a crop worth nearly £100 an acre. I do not think that we face disaster over that, particularly as at present there is an abundance of sugar in the world. Quite recently, when I was in Queensland, in Australia, sugar cane was being ploughed in because there was a glut on the world market. I think that in that case, unpleasant as it is, the cut is justified. Naturally, I, as a farmer, should have liked to see the total value of the guarantees raised, but I do not think that this Review will, or should, lead to any disastrous contraction of the farming industry, which at the moment is, I think, on a very sound basis. Therefore, I am prepared to support the Government.
§ 7.17 p.m.
§ LORD STONHAM
My Lords, I should hope that farmers were going to gain more comfort than I do from Lord Amherst of Hackney's suggestion and advice that they should keep a sense of proportion and that their trouble is psychological rather than actual. I do not think that that will comfort anyone much at all. We are used to the noble Lord viewing the Government's acts and deeds through rose-coloured spectacles, but I 926 should have thought that, even through such spectacles, he would have noticed, in mentioning that the annual farm income was up by some £41 million in this year as compared with the previous year, that, adjusted to normal conditions, it was £7 million less. I do not think, therefore, that any farmers are going to take much comfort from regarding that as a mere psychological difference. When we are quoting figures I think we should quote like with like.
§ LORD AMHERST OF HACKNEY
My Lords, the point is that at other times when there is a bad year and incomes are down, appeals are always made to the Government to take into consideration the fact that it was a particularly bad year.
§ LORD STONHAM
The appeals are never made by the farmers' representatives, the National Farmers' Union, who always base their case on sound facts. I think it would be agreed that, apart from the speech to which I have just referred, every speech in this debate has been highly critical and, in most cases, condemnatory of the Government's policy as expressed in the White Paper. That statement does not exclude a speech by the noble Lord, Lord Fisher. I join with others in congratulating him on a first-rate maiden speech. If I may say so with respect, it had all the qualities of a good speech in that it was direct, had a lot of common sense, was well delivered and was reasonably brief. Perhaps there might have been one tiny fault in it, in that it was apparently not so uncontroversial as the noble Lord might have thought, because all the cheers came from this side. I only hope that we shall have many opportunities from this side to cheer him again.
Turning to the noble Earl, Lord Waldegrave, the longer I listened to him the more sorry I felt for him, because his speech was one long apology which became the more passionate as his case became weaker. Even his intervention seemed unfortunate, when, for example, he got up to interrupt my noble friend Lord Netherthorpe, and said that as far as he was concerned last summer was the finest that he ever remembered—which it may well have been. He was endeavouring to disagree with the noble Lord who had said it was an average or balanced year.
§ LORD STONHAM
My Lords, I am grateful to the noble Earl. May I ask him to look at the figures in his own White Paper? There he will read that the 1959–60 forecast of annual income was £356½ million, which, adjusted to normal weather conditions, was £355½ million. It would be impossible to imagine a more normal year than that, when the difference was only one-quarter of 1 per cent.
I thought that the speeches, particularly those from noble Lords opposite, varied greatly. There was the blistering attack of the noble Earl, Lord Ferrers, who, I thought, effectively pricked the noble Earl's balloon in commenting on his statement that the price changes were fair, balanced and reasonable. There was the speech, which I thought was completely devastating, from the noble Lord, Lord Netherthorpe, dealing with the statement by the noble Earl that Her Majesty's Government are not seeking to restrict production. That was a quite absurd statement. I was surprised by a burst of humour from the noble Lord, Lord Forbes, earlier. I thought he accurately summed up the Government's policy when he said they were sticking to the rails. After all, if one sticks to the rails one does not move. The noble Earl then made his point even more clear by saying that agriculture was being diverted into a siding, and that if it stayed there it would rot.
The noble Lord, Lord Hawke, made it quite clear that as a non-farmer and a taxpayer he was willing to support subsidies for agriculture, provided he could be assured that they were going to the right people for the right purposes; but even he said that Her Majesty's Government had got themselves into a most appalling tangle. I do not think there is any question but that, in a sense, we have got to the parting of the ways. The noble Earl, Lord Waldegrave, as it were, made a plea for the Price Review. He said the changes were so tiny. That is the age-old plea of the housemaid—that it was a very small baby. No doubt on the first occasion the housemaid was forgiven; but if, like Her Majesty's Government, she had kept on coming back with the same small baby many times, the cumulative effect would have become disastrous.
928 I have taken part in a number of agricultural debates in your Lordships' House, and I have several times declared my view that in substituting price support for fixed guaranteed prices Her Majesty's Government destroyed the farmers' charter, the 1947 Act. The noble Earl said, of course, that if we were going to destroy agriculture we should have to scrap the 1947 Act, the 1957 Act and all kinds of other Acts. But one does not have to scrap them: one has merely to undermine them completely so that they do not operate. That is precisely what Her Majesty's Government have done and are doing.
I say that the price-support policy of Her Majesty's Government will destroy itself and, in the process, will destroy British agriculture. I feel that the truth of these two conclusions can no longer be denied. I would ask your Lordships to look at two inescapable facts. The first is that the taxpayer is providing 73 per cent. of the farmer's net income. Support to agriculture is costing £259 million, out of a total net income of £355 million. That is a tremendous volume of support. That is fact No. 1. Fact No. 2 is that for every £1 worth of food the farmer produced in 1948 he is now producing 25s. worth, and is getting only 19s. for it. I believe that that answers all the two-and-fro points to which we have listened. In 1948 terms, comparing like with like, the farmer is producing 25s. worth of food for every £1 worth that he then produced, and he is getting only 19s. The volume of his production has increased by 24 per cent., but his real income has dropped by 5 per cent. This is the result of what the noble Earl calls "enabling agriculture to maintain its prosperity". It is a prime example of failing to maintain prosperity, because despite working ever harder and more efficiently, the farmer cannot maintain his position—the noble Earl, Lord Ferrers, spoke of being unable to maintain one's position on an escalator. Yet in the same period to which I have referred, company profits in industry have increased by 85 per cent., and, as has been stated several times, the real income of the rest of the community has gone up by 30 per cent.
It is the Government's price-support policy which has created the intolerable situation where, on the one hand, the taxpayer is mulcted to the tune of £259 929 million while, on the other, the farmer, despite remarkable increases in efficiency, is worse off than at any time since 1945. In their self-created dilemma the Government know inevitably that the total subsidy Bill continues to be a heavy burden upon the taxpayer, and so they try to impose a static agriculture which, as the noble Lord, Lord Forbes said, is impossible; because agriculture, like Nature, cannot stand still. Then the industry is implored to reduce its unit costs of production, to improve its methods and make better use of its resources. But it has been doing this for years, to the tune of £25 million a year, and Her Majesty's Government have been steadily taking away that £25 million, and more besides.
Farmers are also advised to reduce production of certain commodities. But output cannot be reduced without increasing the cost. Greater efficiency means increased output. The two things are inextricably linked. Surely the whole object of production grants for fertilisers and machinery, the Farm Improvement Scheme and the Small Farmers Scheme is to increase efficiency and output and reduce unit costs. But under the price-support policy increased output must mean a higher subsidy bill, and so inevitably the Government have to reduce the price again, in order to reduce the overall level of the subsidies which the taxpayer is called upon to pay. Thus this system carries the seeds of its own destruction. In paragraph 12 of the White Paper farmers are advised to concentrate on the more remunerative lines at the expense of others. Have not all of us who know anything about agriculture in our own practice said how wrong it is to go chasing more remunerative lines? If there is any sound policy in agriculture it is a long-term and continuous one. Supposing the farmers take the advice of the Government and go into more remunerative lines, what happens? Up goes production, up goes the subsidy bill and obviously down comes the price; and the line is no longer remunerative. That is absolute nonsense.
My Lords, if I may interrupt the noble Lord, I have been listening to his argument with great interest and I hope he will propound his alternative.
§ LORD STONHAM
My Lords, perhaps the noble Earl will allow me to make my own speech in my own way. I know his eagerness, but I assume that he has conceded so far the case I have made, for obviously if he disagreed he would have interrupted me sooner.
My Lords, I have certainly not conceded the noble Lord's case. I have not interrupted him sooner because I wanted him to run on as I thought he might be going to tell me what he would do when we are producing 101 per cent. of the eggs needed by the market.
§ LORD STONHAM
My Lords, if the noble Earl will allow me, I propose to do just that. But I hope that, so far, I have the general agreement of the House in this respect: that when farmers, through higher efficiency, using their resources better, increase production, then by the very nature of things the price at which they can sell goes down; by the nature of things subsidies go up; and the Government come along and say, "We cannot possibly afford it" and therefore the price is forced down again. There is no argument about that; that is a fact. If they are to survive with this cut-price policy, farmers are compelled to a greater intensification of production and greater output; and this is often dependent on the purchase of feeding-stuffs, which means increased imports, the very thing we want to avoid.
I say that this vicious, crazy circle is entirely created by injecting subsidies into a free market of distribution, allied, as it were, to support prices for the farmer. You are trying to marry something which is completely fluid and something which is semi-fixed, and that is why I say that it will destroy itself unless agriculture is destroyed first. These are facts, in my view—I may with interest hear the noble Earl deny them—which cannot be denied and which ought not to be ignored. I hope that the National Farmers' Union will put them to the public with all the force they can command.
In case there should be any doubt about this, let me say that we on these Benches fully support agricultural subsidies provided they benefit the farmer and the consumer. But the time has come—and this is the point that was 931 raised by the noble Earl, Lord Ferrers—to ask the question very seriously whether they can do either. I made a close examination of the prices at which farmers sell Review commodities and the prices paid by the housewife. The results are quite startling. First, I should like to deal with wheat. I interrupted the noble Earl during his speech and he invited me to make my point on this. I now make it, and I hope he will interrupt me immediately I quote any inaccuracy. The listed prices for imported hard wheats from August, 1959, last year, to January of this year varied between 25s. 3d. and 26s. 1d. a cwt. The home wheat price for the same period varied between 17s. 10d. and 22s. 2d. a cwt. Australian wheat prices were steady around 23s. 6d.; and French wheat prices varied from 22s. 6d. to 23s. 5d.
My first comment on that is that the average subsidy the taxpayer was therefore compelled to pay on our wheat was £7 a ton; and the price of hard wheats was anything from £4 to £8 a ton more than the millers paid to our farmers. In case anyone argues that hard wheat was worth more, I would point out that the Australian wheat, which is a fairly soft wheat, was £5 a ton above our price; and the French wheat, strictly comparable to ours, was always £1 or £2 a ton more. It is fantastic that we should tolerate a situation where we pay up to £10 a ton subsidy on wheat and allow the millers and distributors to confiscate two-thirds. That is what it means, and that is what the noble Earl, Lord Ferrers, was saying about fertilisers. And why is it—perhaps Lord Waldegrave will tell us—that whereas all the imports were virtually steady in price throughout the year, ours varied from 17s. 10d. to 22s. 2d., a difference of 25 per cent., which makes a cruel farce of the guaranteed price to the small farmer? If the merchants can pay such prices for foreign wheat, why cannot they do the same for ours? I think that the most important point arising from this is for the public to realise that the British farmer is getting less than 2d. a lb. for his wheat, and the British housewife is paying 1s. for a 1¾ lb. loaf.
My Lords, the noble Lord seems to have left the point of the difference between the price 932 of foreign wheat and that of home-grown wheat. I am sorry that he gave no notice of this, so that I have not the figures in front of me or at my fingertips, but I am sure his figures are correct because he is very careful. But I think we must be careful of the conclusions we draw. May it not be a fact that, in this country, we get small parcels of wheat to be picked up by buyers from farms, a few hundredweights at a time—wheat that has not been cleaned, wheat that is wet—and is it quite fair to compare those figures with the figures of wheat in bulk at the quayside that can be handled in great tonnages and quantities? I think a good deal of the difference will be accounted for in that way.
§ LORD STONHAM
Of course, my Lords, I take the noble Earl's point, but the figures I am quoting are the official average figures, not only for the hard wheats and Australian wheats but for our own home-grown wheats. The figures are supplied by his own Department. If those figures are wrong—
My Lords, I did not for a moment suggest that they were wrong. The noble Lord must be fair. I said I had not the figures at my fingertips or with me but I had no doubt that the noble Lord quoted them correctly. I then tried to give an explanation of the difference.
§ LORD STONHAM
My Lords, I do not want to pursue that particular point. I have pointed out this great difference. I have asked a particular question as to why the foreign imported and Commonwealth wheats should be virtually steady in price throughput the year, and are brought on the open market, and why—and this is true—ours vary by as much as 25 per cent. I think that that is a vital point.
I want to repeat what I regard as the most important point. That is, the British farmer is selling his wheat at less than 2d. a lb. and the British housewife is paying 1s. for a 1¾ lb. loaf. When the taxpayer paid a bread subsidy of £55 million, the loaf was 6d. Now, with a wheat subsidy of over £20 million, the loaf is 1s.—double. Your Lordships will perceive that there is a difference of £35 million cost to the taxpayer. That £35 million is equal to 2d. a loaf. It means that the other 4d. on the loaf which we are 933 now paying—we are paying 1s.—is going to the millers and distributors. There is no other possible explanation. Again, I am quite willing to be interrupted, but there is no other possible explanation. Whilst bread prices have gone up, wheat prices have gone down. After the first cut in the bread subsidy the loaf went to 72d. That was in 1952. When the subsidy was finally removed in September, 1956, the loaf was 8½d. The value of the then remaining subsidy was 1¾d. a loaf; that is, on a total cost of 10¼d. So in four years since then bread has gone up 20 per cent. with no comparable increase in costs.
Meanwhile, the average market price for home-grown wheat has dropped from approximately £23 a ton in 1956 to just over £20 a ton, and this drop in recent years in wheat prices is equivalent to 1½d. for a loaf. There is no question that the distributors have pocketed this extra profit and, of course, the subsidy as well. So the net result—and this is the important thing to remember—of the Government's policy in respect of wheat is that the farmer is getting a lot less for his wheat, the housewife is paying double for her bread, the taxpayer is paying £20 million in subsidies, and the millers and distributors are pocketing the subsidy and vast profits besides. It is a scandal and a racket which, in my view, the Government, as it must be known, are aiding and abetting. If Her Majesty's Government want to help the farmer and reduce living costs, they must deal with these racketeers and stop them from making vast profits out of public funds.
The noble Earl asked me what can be done. I suggest that he should investigate the possibility, at least at the wholesale stage, of fixing wheat prices; because if the millers (and I hope the noble Earl will not just smile over this) voluntarily, as it were, can virtually pay fixed prices for imported, hard Australian wheats, why can they not, with the help of the Government, do much the same for ours? If that is not done, if some control is not instituted, then this racket will continue. It must be done: how overwise can farmers follow the Government's advice to get returns from the market—a market which is rigged against them in this way?
Next, a word about pigs, pork and bacon. In 1951 the farmer got £23 for a good bacon pig, and the housewife 934 paid 3s. 1d. a lb. for best bacon and 2s. 6d. a lb. for loin of pork. To-day, with subsidies about the same level, the farmer gets £16 or £17 for his pig, and the housewife pays 4s. 8d. for the same kind of bacon—and on Saturday I saw in a butcher's shop a loin of pork at 5s. 6d. a lb. Again, does anybody want to challenge it? Again, is there any explanation for it other than the exorbitant profits which are being made in distribution? That is apart from the absurdity that bacon, despite the cost of processing, is selling in the shops at much lower prices than fresh pork.
My Lords, it is impossible to obtain official figures for the global retail price realisation value of any of the new commodities, but after much inquiry and considerable trouble I have arrived at a recent estimate for a number of them, and have compared each total with the tonal figure received by the farmer. The results are quite staggering. For example, the official figure for the value of output of fat pigs, included in the guarantees, is £158 million. This includes £21 million of subsidy; so it follows that the farmer actually sold the pigs which qualified for subsidy for a total of £137 million. According to my estimate, including the £21 million he provides as a taxpayer, the consumer is paying £301 million for that same tonnage of fat pigs, assuming they were all sold as pork. That means £137 million to the farmer for breeding and rearing them, and £164 million to the distributors—an increase of 112 per cent. on the farmer's price. It is this which accounts for the crippling price which the housewife has to pay for the pork. Even this might be supportable if the farmer were better off; but he is not. His price is lower than ever; and the lower his price the higher the subsidy and the fatter the profits of the distributors. It is an intolerable situation.
In some ways, the position with lamb is worse. The subsidy on lamb amounts to £26 million—that is, one-third of the total value of output. That means that the farmer sells the total output for £53 million, or an average of 2s. 2d. per lb., compared with the guarantee price of 3s. 3d. By my estimate, the consumer taxpayer pays £111 million for what the farmer sells for £53 million—an increase of 110 per cent. for distribution costs. 935 I am conscious that this, like my other estimates, may be an understatement, because there have been occasions when the subsidy amounted to more than the price at which the farmer sold, but this drop was never fully reflected in the retail price. Then fat cattle. The subsidy element, of course, is almost negligible, but the pattern is the same. The farmer sells his beasts for £200 million, and the consumer pays £452 million—an increase of 125 per cent. on the farmer's price. But the largest "on cost", so far as my discoveries go, occurs with potatoes, which should be the easiest Review commodity to distribute. The farmer sells his potatoes, according to the official figure, for £65 million—£66 million included in the Review list, less £1 million subsidy—and the consumer pays £171 million. Again, this increase of 160 per cent. for distribution may be a serious wider-estimate.
Apart from milk, eggs are the only Review commodity where distribution costs are reasonable, and the only one where the housewife can be seen to be getting an advantage from the subsidies. The producer sells his eggs for £124 million, and the housewife pays £158 million for them, plus £36 million in subsidy. This reasonably satisfactory outcome is due in part to the fact that home producers supply virtually the whole market and partly to the work of the Egg Marketing Board. Certainly there is nothing else which begins to compare with it in the whole field of agriculture. Again, the noble Earl might like to look at that as a pointer to what might be done to reduce these distribution costs: give the producers very much more power in the formation of producer marketing boards.
My Lords, in my submission, in the case of wheat and bread the actual, undeniable, official figures prove that we are suffering an unconscionable racket. With the other commodities, all my figures are the official ones, except the retail realisation, which is an estimate—and I believe an underestimate, which your Lordships can largely confirm from your own experience. But at the very least they add up to an overwhelming case for an urgent inquiry into the way in which the benefits for agricultural support are finally distributed. I am certain that such an inquiry would prove 936 that farmers and consumers derive little or no benefit from the greater part of the subsidies. If that is so, and if it is shown that distribution costs are unjustifiably high, we must alter the system so as to ensure that subsidies achieve the purpose for which they are intended—namely, a progressive and prosperous agriculture combined with reasonable consumer prices.
There must also be a decision regarding the place and scope of agriculture in our economy and the way it is to be achieved and maintained. At present, we have no policy, just a mass of stupid contradictions: 350,000 farmers, three-quarters of whom occupy only one-quarter of the land and employ only 20 per cent. of the labour force. The right hand of the Government squeezes the little man out of the industry with their price policy, and the left hand puts him back again with production grants and small farmers' schemes. British agriculture has the highest mechanisation and the highest productivity in the world. We could have a sizable industry without subsidies, but it would mean farming in bigger units and leaving much land untilled. It would also mean a rural revolution, and would change the face of Britain. Surely no one wants that. But we cannot go on under a system which makes efficiency and consequent high yields a disaster, and where the Minister bewails favourable weather conditions because they make the cost of support so heavy. That is the economics of Bedlam, yet that is the system the Government have created. I have proved, my Lords, that the money we are paying as consumers and taxpayers is not going to the producers but to the distributors. We must end this madness and give our producers a chance. A healthy, prosperous agriculture is in every way essential to a prosperous, healthy Britain. The Government must make the necessary changes before it is too late, or make way for those who will.
§ 7.49 p.m.
My Lords, we have had a long debate, and I will be as brief as I can, but a great number of points have been raised to which I ought to reply. I should like first to reply to the noble Lord, Lord Amherst of 937 Hackney, who made, I thought, a most sincere contribution to this debate; because what he said was this, "As a farmer I naturally should have liked to have more, but as a reasonable man I did not really expect it. I make a lot of money out of my sugar beet, and I think the Review is sound." My Lords, we have been having some very strong speeches this afternoon, and I would say that it is that kind of statement which the noble Lord, Lord Amherst of Hackney, made, that I have been meeting as I have been going round the country. I met it as recently as last Friday when I was in Devonshire addressing farmers in that county. The complete contrast to that speech was that of the noble Lord, Lord Stonham, to which we have just listened. He went so far as to say that farmers get no benefit from these subsidies. That is an exaggeration. It cannot be right to go as far as that. The noble Lord, Lord Stonham, comes out quite clearly and we can see what he is about.
§ LORD STONHAM
My Lords, if I may interrupt the noble Earl may I say that my exact words were that farmers and consumers get little or no benefit from the greater part of the subsidies.
No doubt we can read the actual words to-morrow in the OFFICIAL REPORT. The noble Lord is really not concerned with this Price Review at all. He is concerned with his theory that the support system which we operate, the guaranteed prices and deficiency payments, is a bad one, and that the Socialist system of bulk buying and State trading is a good one. It really does not arise out of this Price Review, and I am not going to follow the noble Lord through his argument. All I would say is that when I go abroad—and I was abroad the other day at the Agricultural Ministerial Meeting of the O.E.E.C.— I find it interesting to note that all the representatives of foreign countries say to an Englishman: "We envy you your system of agricultural support. We wish we could afford it."
The other thing the noble Lord, Lord Stonham, said was that all this money was being wasted; it is leaking away; it is a racket of the middlemen. That is a roost irresponsible statement to make. The noble Lord sits next to the noble Viscount the Leader of the Opposition, who has all his life. I believe, 938 been connected with the Co-operative Movement. The Co-operative Movement are one of the largest bakers in the country. Are they racketeers? The noble Lord's thesis was that all this money is going to the middlemen, and one of the biggest middlemen in the country is the Co-operative Movement.
§ LORD STONHAM
Would the noble Earl deal with the point I made and tell us where the money is going? It does not vanish into thin air.
At this time of night I am not going to analyse the distributors' costs, the retailers' costs, the wholesalers' costs, the first retailers' and factors' costs all the way through.
I should like to pay tribute to the noble Lord, Lord Fisher, on his maiden speech. It was a very good speech. From my point of view, it was not all that I should have liked, because it was slightly critical of the Government; but I would add my congratulations to the noble Lord and I hope that we shall hear from him again. His views were sincerely stated.
I come now to the remarks of the noble Viscount the Leader of the Opposition. Again, I cannot answer all the queries he raised, but there are two points to which I think I should reply. He asked how these estimates are produced, and said, in rather a despising tone, that these are a lot of figures produced in the universities or somewhere. That is not so. These figures are produced by the Ministry's economists and statisticians, and they are accurate. They are checked, and found to be extremely accurate, by the cross checks that we take when we go to the despised university economists. They are based on firm statistics of sales of farm produce. In the powerful speech he made, the noble Lord, Lord Netherthorpe, said: "We have no disagreement about the data." So I think the noble Viscount, Lord Alexander of Hillsborough, can be assured, and need have no fears as to these figures having been thought up by a wicked Government and being all wrong. We have no disagreement about the data on the statistics. The noble Viscount then said something which somewhat surprised me, and I have ascertained that my surprise was justified. He said that nine years ago, which 939 would take us back to 1951, he was getting pence a gallon more for his TT milk than he is getting to-day.
I have had these figures looked up, and in 1950–51 the average pool price was 2s. 10.1d. a gallon. In 1959–60 the estimated net price realised by farmers for all types of sales was 3s. 0½d. a gallon. I think that the noble Viscount must have been misinformed when he used that figure.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
Is that a figure averaged over the whole of the marketing boards in existence, or is it for England and Wales?
I cannot answer that question straight off; but I do not think it could make much difference.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
I will have the actual prices paid to me checked so that we can confirm whether I am right or wrong, and if I am wrong I will apologise.
I now come to the speech of the noble Lord, Lord Forbes, which was partially answered by my noble friend Lord Craigton. We really must try to keep our feet on the ground here. One of the points made by the noble Lord was that we should have a higher price for milk. He said that if the price of milk were reduced we should be getting more milk, because farmers would have to produce more, and that would embarrass the Milk Marketing Board. But if you put the price of milk up, surely you will get even more milk. It may be right that if you put the price of milk down you will get more milk, but it is certain that if you put up the price you will get more. I am a dairy farmer, and if my manager told me to-morrow what he was going to do, as the price of milk had gone up by 6d., I am sure that he would say he would try to produce more.
But the important point raised by the noble Lord, Lord Forbes, was this. He used this argument about tariffs, and said that industries are much less exposed than agriculture. Surely this argument 940 overlooks entirely the immense advantages which farmers derive from the guaranteed prices and deficiency subsidies system. The effectiveness of a tariff depends on the price of the imports to which it applies and on a system of guaranteed prices. On the other hand, not only is the farmer effectively protected against the effect of reductions in world prices, but the Exchequer takes the brunt of the effects of foreign competition by making up the average market price to the level of the guaranteed price. I am satisfied, particularly when we are moving into an era of freer trade, that the tariff is not such a good weapon to protect us as is the system of guaranteed prices and deficiency payments. Figures have been used this afternoon to show that the measure of the farmers' gain from subsidies is about 5 per cent. or 6 per cent. But my information is that the tariff equivalent, if I may use that phrase, to our subsidy system is at least 25 per cent. This is a handsome margin of preference over either the foreigner or the Commonwealth.
The noble Lord, Lord Wise, suggested that there was no reason for reducing any of the subsidies, and he asked for clearer thinking on this side of the House. The clearer thinking, surely, must come on the other side of the House. I could not follow the figures the noble Lord, Lord Wise, quoted. He said that the reduction in the price of sugar beet was going to cost the farmers in East Anglia £2 million. That was not very clear thinking.
My Lords, I will certainly work it out, but I will not get that answer. I cannot attempt to follow the noble Lord through this sugar beet trouble of his. He asked why the cost was not in the White Paper. It is because it is paid by the consumer. There is a different system for sugar beet from that for the other products. I think we had sufficient answer on sugar beet from the noble Lord, Lord Amherst of Hackney, who was frank enough to say, "What is 2s. 6d.? What is £2 on £100 profit per acre?"
It is not £100 profit, but £100 return per acre. However. I think we should leave that.
The noble Lord, Lord Hawke, mentioned eggs, and he was looking for a new system altogether for the support of eggs. He thought it was not possible for the Government to underwrite every egg laid. I do not know, but I think that that goes rather far of the Review which we are considering at the moment, when the matter before us is a question of the reduction of 1.38d. per dozen. The noble Lord raised the point about there being a leak in the sheep subsidies about which I hope I was able to allay his fears. But I omitted to tell him that the farmers' Fatstock Marketing Corporation were one of the big buyers of sheep at this time of alleged swindle (which was no such thing) and they put these sheep into cold store and steadied the market all round, which was a good thing to do.
The noble Lord, Lord Douglas of Barloch, painted a very gloomy picture indeed. I do not think he wanted me to answer him, and I am quite certain he would not agree with any answer I gave, so I hope that at this late hour he will allow me to pass on. The noble Viscount, Lord Stonehaven, was answered by my noble friend, Lord Craigton. The noble Lord had a harrowing picture of how his farm had gone down by £6 10s. 0d., I think it was, but the noble Lord, Lord Craigton, dealt with that. Then we come to a very powerful speech by the noble Earl, Lord Ferrers. He used an argument with which I find it difficult to keep patience. He used what I call the "ten-cigarette" argument. It is said, "With these huge costs, could we not have more money for this? It is only equivalent to ten cigarettes a week for all of us." You can argue anything on that basis. We were having a debate the other day in your Lordships' House about putting power lines underground, and somebody said that to put all the power lines underground would cost one Blue Streak. One cannot argue like that about economic subjects. There must be a balance and a proportion.
942 There is one point I must correct in the powerful speech of the noble Earl, Lord Ferrers. I do not know how much of it was as inaccurate as the point he made about broilers, but he said that these broilers, representing a fine new industry in which he was engaged and which is not subsidised in any way, were of course taken into the Price Review, and so on. But they are not. The £1,270 million, which is the total value of the guarantees, and which is the amount we can reduce by 2½ per cent., has no figure in it for broilers, because they are not a Review commodity.
My Lords, may I interrupt for one moment? If I have made an inaccurate statement I certainly apologise, but I have always understood, from all the figures one sees, that the figures far table poultry were taken into account in these Reviews. If that is wrong, I apologise.
Of course, I accept that. The point at issue is this. The permitted reduction under the 1957 Act—as I explained in my opening remarks—is 2½ per cent. of the total value of the guarantees. That is calculated at £1,270 million, and does not include any amount for broilers.
§ LORD NETHERTHORPE
Nevertheless, it is true to say that broiler production does come into the calculation of the net aggregate income of the industry. I think that that was the point the noble Earl was trying to put.
The noble Earl may have been trying to put that point, but he was using his argument as a reason why the 2½ per cent. reduction was unjust.
My Lords, may I interrupt once more? What I was endeavouring to say was that when we are told that farmers' incomes have been increasing and output has been increasing, that does contain the figures for the output of chickens, which has increased considerably.
Of course, the gross output of the industry includes broilers, brussels sprouts and all sorts of things which are not a Review commodity.
943 The main point, and the main substance of the remarks of the noble Lord, Lord Netherthorpe, can be summed up in this way: there was too little money left in the pockets of the farmers and, more galling than that, the prosperity was not keeping pace with the prosperity in other branches of industry. Now how much money, or how much less money, will the farmers be earning in 1960 than in 1959? It would be a bold man who would say that he knew the answer to that. Statistically, the position seems to be this. Costs are assumed—we have had these figures over and again, but they are important—to have gone up by £13 million. It is presumed also that efficiency will increase the farmers' income by £25 million. So far, the picture is that the farmers' income improves by £12 million. Against this, however, is the reduction of the guarantees by £9 million. If all these figures are accurate estimates, in the next year the farmers will improve their position by £3 million. But the critics say that that is too small an increase for a great industry such as this. But all these calculations—and this is what we really must remember in keeping this Price Review in proportion—are the best that the statisticians can do. No one will claim that they are anything like a scientific or accurate forecast of what will actually 'happen. The weather will come in to put the arithmeticians wrong. If doubts are cast on any of these figures, we have to cast doubts on all of them.
I ask your Lordships to remember that in his speech the noble Lord, Lord Netherthorpe, said, "We have never quarrelled with the Ministry's officials about the data". Let us remember that. If it is fair to suggest that this £25 million for increased efficiency is excessive, it is equally fair to say that the figure for increased costs may be proved to be excessive.
§ LORD NETHERTHORPE
My Lords, would the noble Earl permit me to repeat the point I sought to make? He contended that, all things being equal, if the efficiency increased by £25 million, despite the fact that there was a reduction in the cash value of the guarantees by £9 million, and despite the fact that there was an increase in the costs of £13 million, the net income of the industry 944 should increase by £3 million. That is the contention of the noble Earl. May I remind him of the position as it was last year when the same £25 million (which is as yet unestablished actuarially) was reputed to be in play where, in fact we had an £11 million increase in cost; and we got, not a reduction of guarantees of £9 million, but an increase of £3 million. On the hypothesis the noble Earl now postulates we should have had a net income of £380 million in 1959–60, whereas in fact we show a decrease in net income of £6½ million from the then existing net income figure. I only wanted to make sure that that was the argument sustained on the noble Earl's own premise.
I thank the noble Lord for his intervention, but I would say that we have enough on our plate in dealing with one Price Review, and I do not think we had better open last year's as well.
On the £25 million efficiency estimate I want only to stress that it is only 2 per cent. of value of gross output. It has never been challenged as a reasonable figure to take for efficiency. It is the sort of figure which other industries achieve and of which agriculture must surely be capable. I should be the first to admit that all statistical calculations are uncertain, and I have always thought that the gunners are right: that when you have done all the calculations it is better to see that the gun is not pointing 180 degrees in the other direction. On these "dead reckoning" tests, I think we can, for farming efficiency, rest assured. We cannot make a precise calculation of what this efficiency amounts to. We can, however, produce one concrete figure. The Government have for many years been supporting agriculture outside the scope of the price guarantees by a number of improvement schemes. Noble Lords will be familiar with the Farm Improvement Scheme and Land drainage and water supply grants. There are also considerable sums spent on advisory services and research, all of which contribute to the increased efficiency of agriculture. It is good that this service is being given, but it is also some evidence of the steps being taken to secure increased efficiency. In the last five years the value of these services has amounted to more than £100 million, quite apart from the grants for lime and 945 fertilisers, the Small Farmers Scheme and other items included in the Review. When one adds to that the investment from the industry itself, and the outstanding advances in science during these last years, it seems to me that on the "dead reckoning" test it is not unreasonable to go on sticking to this conventional figure of £25 million.
The other point I should like to reply to is this question of farmers' real income, the charge that it has declined by 5 per cent. since 1948 while that of the rest of the community has increased by 30 per cent. This sort of statistical exercise is a fascinating game, but let us take one comparison of this kind, because the true picture depends very much on the year one chooses for comparison. If comparison is made with the pre-war position as the base, the real income of farmers has increased by 100 per cent., while that of the community generally has risen by only 40 per cent. Having said that, we can, of course, agree there was enormous scope for improvement of the pre-war farming position. But even considering only the post-war period the choice of base is of exceptional and great importance.
One thing has struck me forcible about the speeches in the House that I have listened to this afternoon. I think that all noble Lords have spoken from the premise that a healthy and profitable and prosperous agriculture is desirable. Most noble Lords, certainly those on this side of the House, agree that it is the aim of Her Majesty's Government to maintain a healthy and profitable agriculture in this country. Their criticisms have been directed not at the general aim and policy but at the methods of achieving it. I respect honest doubts; I do not object to such criticism; I think I can meet it; I think the solid arguments are on my side. I tried to express them in my opening remarks, and I am quite confident that time will show this year's price determination will bring not disaster but added strength to British agriculture.
But there has been another type of criticism which I must confess I am sorry to hear in your Lordships' House, and I am afraid that I can describe the criticism only as a charge of insincerity; that my right honourable friend and the Government, while saying openly that a 946 great and prosperous agriculture is their aim, are at the same time secretly plotting to kill it by slow poison. My Lords, what else do such words as have been used this afternoon mean? "We are going back to 1920–21]"—words used by the noble Lord, Lord Stonham. I know well how naked agriculture was in the 1920s, because during the 1920s I was reading for an agricultural degree at the university—
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
I went into public print on that, and I said that there was a danger of it.
An imminent danger. There were not many of us reading agriculture in those days, and we were not taken very seriously. But I suppose that we had faith that there would be change; and change there was. The change came. Most certainly the 1947 and 1948 Acts would have been unthinkable in those days. The Party of the noble Lords opposite cannot take all the credit for those Acts. Little did I dream that, 30 years after taking my degree, I should be in charge in your Lordships' House of the 1958 Act, designed to improve and strengthen and bring up to date those great Acts which were by then ten years old.
If, then, it is really true that agriculture is in imminent danger of this 1920–21 treatment, my right honourable friend and the Government must now at this moment be actively engaged on undermining these solid foundations, and preparations for dismantling this whole massive structure must be well in hand. But what are the signs of this? Let us look at the last three years. Mr. Amory's 1957 Act, immeasurably strengthened the guarantee price system and for the first time provided for the payment of capital grants for the fixed equipment of the industry. Then there was the 1958 Act—the Act which strengthened the partnership between landlord and tenant. Then there was the 1959 Act which helped the small farmer. Then, only a few weeks ago, we put upon the Statute 947 Book the 1960 Horticulture Act to help that section of the industry. This is not evidence that it is going to get my right honourable friend convicted on such a charge. There is no evidence. This is factious criticism which I reject utterly and completely, and I am only sorry that it should ever have been raised in your Lordships' House. We have been discussing to-night the affairs of a healthy
§ Resolved in the affirmative, and Resolution agreed to accordingly.