§ 2.47 p.m.
§ THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (EARL WALDEGRAVE) rose to move that the Fertilisers (United Kingdom) Draft Scheme, 1960, be approved. The noble Earl said: My Lords, the draft Fertilisers Scheme for 1960 extends the subsidy arrangements for a further year from 1st July next. It covers the whole of the United Kingdom and provides for the payment of cash grants to farmers for nitrogenous and phosphatic fertilisers delivered to them during the year ending 30th June, 1961.
§ The main purpose of the subsidy is to encourage farmers to use more fertilisers and thus to improve the fertility of their soils. Farmers have responded in no uncertain fashion. Each year from 1952 to 1959 has witnessed a steady rise in the use of fertilisers, but this year there has been an exceptional increase. It will be some time before final figures are available, but it is quite certain that consumption this year will far exceed that of any previous year. There will probably be an increase of 13 per cent. or more on the year before. Farmers may well probably spend something like £91 million on fertilisers (compared with £62½ million five years ago), of which the Government will have contributed about £30 million.
§ The fine summer and autumn last year no doubt helped in achieving this result. But it is encouraging to find that deliveries of fertilisers this spring are also higher than those for the same period in any previous year since the subsidy was introduced. This indicates that farmers, under the stimulus of the fertilisers subsidy, and with the benefit of technical advice from the National Agricultural Advisory Service and from the manufacturers, are becoming increasingly conscious of the value of applying fertilisers to their land.
§ Your Lordships may be interested to know how we compare with other European countries in the use of fertilisers. Although we have no cause to be complacent we come out of any such comparison reasonably well, 465 especially when we remember that 40 per cent. of our agricultural land is under permanent grass. Fertilisers are naturally applied more heavily to crop land than to permanent grass. But surveys undertaken by Rothamsted and the National Agricultural Advisory Service, with voluntary assistance from the manufacturers, show that most of our potatoes, sugar beet and cereals receive enough fertiliser, and although there is room for further improvement on other root and fodder crops and on grassland we are making progress here too.
§ Turning now to the new Scheme, your Lordships will see that it is on the same general lines as before. But as your Lordships are aware, it was decided at this year's Annual Price Review to reduce the subsidy by about £1½ million. The main reason for this is that prices of many fertilisers have fallen in the last two years. Because this subsidy is a specific grant and not a percentage of cost, it therefore now represents a higher proportion of farmers' costs than it did when the present rates were approved two years ago. To give effect to the decision to reduce the subsidy we have, in agreement with the National Farmers' Union, made adjustments in the subsidy rates. These adjustments, while producing the reduction required, will simplify to some extent the schedules to the Scheme.
§ Broadly speaking, the reductions amount to 6d. a unit on nitrogen and 4d. on water soluble phosphoric acid. The subsidy on sulphate of ammonia, for instance, will come down from £9 19s 6d. to £9 9s. 0d. a ton, and on triple superphosphate from £17 12s. 6d. to 06 16s. 10d. a ton. The new rates will reduce the subsidy on nitrogen, we estimate, by about £870,000 in a full year, which is little more than 5 per cent, and on phosphates by £630,000, which is a little under 5 per cent. There is one relatively minor change in the provisions of the Scheme which I ought to mention to your Lordships. We have taken the opportunity this time to define the word "delivered" in paragraph 2 (1) in order to remove any doubt of its meaning in the context of the Scheme. These subsidies are paid on delivery of the fertiliser to the farmer, and while the form of application makes this clear, 466 we have felt it would be desirable to express it in the Scheme.
§ As your Lordships know, the chemical fertiliser industry has been the subject of a Report by the Monopolies Commission. Discussions are being held with the industry by officials of the Board of Trade and of my Ministry on the various matters to which the Report gives rise. These discussions are not yet complete, except as regards potash supplies; a statement about these supplies was made in another place on May 23. Your Lordships will appreciate that no further statement can be made until the discussions have been concluded.
§ Many fertiliser manufacturers—certainly the principal ones, I.C.I. and Fisons—have announced price reductions for the coming season. These reductions are no doubt made possible, in part, by the fuller use of existing capacity which has resulted from increased sales and the technical advances in manufacture which are taking place in the industry. But I think they also show that manufacturers are anxious, as we should expect, to take every opportunity of keeping down the cost of fertilisers to the farmer. We welcome these price reductions. As a result of these price reductions by the trade many fertilisers will be cheaper in the coming season, despite the lowering of the subsidy.
§ The consumption of fertilisers has risen by about 50 per cent. since the present Schemes were started in 1952 and, as I have already said, it is now at a record level. I see no reason why consumption should not continue to rise. My Lords, I beg to move that the Fertiliser Scheme for 1960 be approved.
§ Moved, That the Fertilisers (United Kingdom) Draft Scheme, 1960, be approved.—(Earl Waldegrave.)
§ 2.54 p.m.
§ LORD WISEMy Lords, in view of the debate which will take place after this Scheme has been approved, I shall not detain your Lordships for very long. I realise that this is not an agricultural day, and that we can discuss agriculture on another occasion. But so many Schemes are approved with only the Minister's introduction, that when a point arises, or seems to arise, I think that some comment should be made. I want 467 to discuss the Scheme as it is presented to us for affirmation, and to call attention to one matter which I hope may be touched upon by other noble Lords having farming experience. The Minister has already mentioned it, and I shall refer to it later.
Reading the Scheme, I agree that it appears to be simplicity itself. The Minister has referred to a reduction in his contribution towards the farmers' costs for fertilisers. I readily agree that over the years that contribution has been considerable, rising from £11,800,000 in 1952–53 through various increases (except in one year when there was a slight decrease) to £25,800,000 in 1958–59 and to £29 million in the present year, 1959–60. Naturally, those in the farming industry are glad to receive such financial assistance, thus enabling them to purchase fertilisers, among other things, and helping them to promote efficiency, increased production and improved fertility, which in turn results in high-grade home grown products. These contributions to the farmers increase their spending power and desire to buy and use fertilisers in greater quantity—as indeed they have done over the years—thus enabling chemical manufacturing firms to sell their products more readily, to keep their agents and workpeople employed, and to receive themselves remuneration and prices which amply repaid them for skill, research and labour. Further than that, the importation of raw 'materials in increasing quantities has a bearing on our balance of trade position, and balancing exports are needed to pay for what comes in to satisfy the farmers' needs.
The circle is not complete without reference to the benefits to the Exchequer by this additional agricultural trading. Tax revenue is drawn into the Exchequer by the taxation of profits, dividends, salaries and wages, and by petrol duties and such-like. Thus the whole Exchequer contribution which arises from the Scheme receives some alleviation. It is important to remember that the whole of it does not go down the drain, but that a considerable part comes back into the Revenue. The expenditure by farmers upon fertilisers has increased over the years from £65½ million in 1953–54 to £92 million in 1958–59, and a forecast of £96½ million 468 in 1959–60, which has been reduced by the Minister, I think, in his opening remarks, to £91½ million. These figures show an increase of nearly 50 per cent., and it is a measure of the very high trading in the agriculture industry in this one particular item of expense.
New factors—which have been mentioned—have crept into the matter this year. Fertiliser firms are reducing their prices to their customers, the farmers, and I commend them for this, because we have for many years asked for reductions in fertiliser prices. I will not hazard a guess as to the reasons for these reductions—there may be several—but we are grateful to the firms who have already announced price reductions, and we hope that all will follow that lead, if they have not already done so. The benefits of these reductions have been severely lessened by the reduction, amounting to £1½ million, in the total of the Government's contribution. The Minister mentioned figures which are small in themselves, but in volume run into £1½ million.
I think it is unfortunate that, at the very moment when farmers' costs as regards fertilisers are likely to be lowered, the Government should restrict their own contribution of assistance which has always been looked upon as an endeavour to improve agricultural output. I think that has been in the minds of the Government and successive Ministers all along. I admit that the matter was mentioned in the discussions on the Price Review, but it was barely touched upon; in fact it was mainly touched upon by two Scottish Peers who asked for an increase in the subsidy in order that it might benefit the marginal land. Some of the reductions in the Scheme are material: one of them was mentioned by the Minister—from £17 12s. 6d. per ton to £16 16s. 10d., which is a reduction of over 15s. a ton. What the farmer gains by the action of the fertiliser firms is now offset by Government action. This seems to me an unhappy state, and as the Government contribution is to be reduced I am afraid that the use of much-needed fertilisers may be lessened in the future. I admit that fertilisers have already been bought by farmers in advance, but come next autumn it may be a different tale altogether. The Minister has mentioned our national position, but it is not a 469 too happy one. I believe that we are eighth on the list of O.E.E.C. nations, and that on all sides we agree that there is room for improvement in this.
§ 3.2 p.m.
§ LORD STONHAMMy Lords, for the same reasons as my noble friend I will be extremely brief.
§ LORD SILKINMy Lords, I was about to move that this debate be adjourned. After all, this is a Private Members' day. We have an enormous list of speakers, and so far as I can gather there is no urgency about this Scheme going through to-day. To-morrow is a much lighter day and those who want to speak on this Motion will not feel inhibited, as they must do now with the atmosphere as it is. I seriously suggest that we might go on with the other Business on the Order Paper.
EARL WALDEGRAVEMy Lords, in the absence of my noble friend the Leader of the House, I would say that if it is the wish of your Lordships that this matter he adjourned until to-morrow I think it would be perfectly in order if somebody would move that. I personally should not object, and I do not think Her Majesty's Government would object.
§ LORD SILKINI have moved it, but with that encouragement I gladly move it again.
§ Moved, That the debate be adjourned until to-morrow.—(Lord Silkin.)
§ On Question, Motion agreed to, and debate adjourned accordingly.