AMENDMENTS OF THE POTATO MARKETING SCHEME, 1955 (Hansard, 9 April 1962)

§ LORD HASTINGS
My Lords, I beg to move that the draft Amendments of the Potato Marketing Scheme, 1955, be approved. In spite of the anxiety of my noble friend Lord Derwent, I am going to ask for your attention to be given to the more prosaic subject of potatoes before we get on to pipe-lines. The 1955 Scheme provided, among other things, that the Potato Marketing Board should be the means of implementing the guarantee given in respect of potatoes under the Agriculture Act, 1947. The Board was required to buy all ware potatoes offered to it by registered producers at the support price, 95 per cent. of which was met by the Government and 5 per cent. by the Board. The Scheme allows the Board to levy annual contributions from registered producers up to 20s. per acre of potatoes planted, and an excess acreage contribution of £10 per acre for every acre planted in excess of the producer's quota.
The individual guaranteed price arrangement was supplanted, as a result of the 1957 Annual Price Review, by the deficiency payments system, which came into effect in the 1959–60 season. The Board was no longer obliged to buy all potatoes offered by producers but it was expected to enter the market when prices fell below the guaranteed level and to buy potatoes with the object of supporting the market. In order to improve the successful operation of this system, the Potato Marketing Board submitted certain Amendments to registered producers in July, 1961 and to Ministers in the following month. Ministers gave the necessary opportunity for objections to be made and over 8,500 (there are some 75,000 registered producers) were received, mostly in a sterotyped form. A public inquiry was held and only 114 individuals and bodies indicated that they wished to appear and be heard. In the upshot, however, only 45 individuals and bodies appeared, either in person or by representation, before the Commissioner, whose report was carefully considered by Ministers before they came to a decision.
The Amendments now laid before the House for approval consist only of those 344 that were referred to the inquiry as having been the subject of objections. In accordance with the Agricultural Marketing Act the other Amendments may be approved by Ministers without Parliamentary proceedings. The Amendments before the House affect only three paragraphs of the Scheme. Those relating to paragraphs 69 and 83 appear to raise no substantial issue and were, indeed, mentioned by only one objector. The Amendments to paragraph 84 clearly are much more important and were criticised by all the objectors.
To deal first with paragraph 69, the proposed sub-paragraph (3) gives the Board explicit powers to attach such conditions as it thinks fit to any exemption that it may grant. As the Board is already entrusted with discretionary powers to grant exemptions to producers, it is reasonable to allow it discretion to attach conditions. The new power is likely to encourage the Board to grant exemption where at present it might not feel free to do so.
The Amendment to paragraph 83 is consequential on certain Amendments of paragraph 84, under which the Board may give relief from acreage contributions in special circumstances. The new sub-paragraph merely says that registered producers who make false statements to the Board in this connection shall be liable to the same penalties as already apply for false statements under paragraph 81. As subsections (4) and (6) of paragraph 84 are intended to help the Board to make concessions, it must be able to ensure that it gets accurate information.
I turn now to paragraph 84. This has been very extensively amended, but the main changes to which most of the objections refer are three: first, the raising of the maximum rate of ordinary contribution from £1 to £3 per acre of potato land; secondly, the raising of the maximum rate of excess acreage contribution from £10 to £25 per acre and, thirdly, the power given to the Board to raise the maximum rate of ordinary contribution beyond £3 if a poll of registered producers shows a two-thirds majority in favour of a higher maximum rate. The increase in the maximum rate of the ordinary contribution from £1 to £3 is required by the Board primarily in order to finance its contribution to 345 the Market Support Fund which the Government proposed at the Annual Review of 1961. There would be a five-year agreement with the Board, the Government undertaking to match each £1 contributed by the Board to the Fund with a contribution of £2, to be made available as required. The Board considers that its own annual contribution to the Fund should be at least £1 million, equivalent to roughly 30s. per acre. This would account for most of the increase of £2 in the maximum rate of ordinary contribution. The rest would be available for research, publicity and other developments that the Board may wish to undertake. These proposals the Government consider to be sound.
The increase from £10 to £25 in the maximum rate of excess acreage contribution is required by the Board as an additional deterrent to increased production in years declared by the Board to be quota years. Every registered producer has a basic acreage allotted to him. If the Board decides in the August preceding planting that a year is to be a quota year, it announces a percentage of basic acreage which registered producers may not exceed without becoming liable to excess acreage contribution on each acre in excess of their quota. The Board is satisfied that the present penalty of only £10 per acre is not enough to prevent substantial excess planting in certain years. Moreover, it points out the extra production from excess acreage adds considerably to the surplus in a quota year and involves the Board in additional expenditure in surplus disposal far exceeding the income obtained from the present levy of only £10 per acre. We are satisfied that the Board should have the power to raise excess acreage levies to a maximum rate of £25. It does not follow that it would necessarily do so at once, and no doubt it would be guided by circumstances and future experience.
The power to raise the ordinary contribution beyond the proposed maximum rate of £3 if a poll of registered producers votes in favour is required by the Board so that its income may, if necessary, be adjusted to changing conditions without the need for the expensive and slow process of a formal amendment. Other marketing boards are engaged in buying and selling the bulk of the marketed 346 supply of their product and they can, therefore, use part of their trading margin for administrative and other purposes as they think fit. We feel that the Potato Board, whose trading operations are generally confined to surplus disposal, should also have some latitude to raise its income should circumstances so require. We are satisfied that producers' interests are sufficiently safeguarded by the requirement that a two-thirds majority must be obtained at a poll of registered producers before any increase can be made in the maximum rate of ordinary contribution. This majority must be in terms of both productive capacity and numbers. The remaining provisions of paragraph 84 are designed to give the Board more latitude in dealing with various administrative matters. No substantial objection was raised to any of them.
My Lords, the Amendments to which I have referred were considered very fully by the Commissioner who held the public inquiry and whose report is available to your Lordships. He reached the conclusion in relation to the Amendments now before the House that the objectors had failed to substantiate their objections, and he went on to say: I consider that the proposals of the Board are a practical and efficient means of attaining the object of the 1947 Act in relation to the potato growing industry; that they are fair to both producers and consumers; and that the cost is reasonable and within the capacity of the industry". The Government accept these views and I, therefore, invite your Lordships to approve the Amendments that are now before the House. I beg to move.

§ LORD WALSTON
My Lords, the noble Lord, Lord Hastings, has explained this problem of potatoes with great lucidity and I have little to add to it and very little criticism of what he has said. Potatoes are a thorny problem from the marketing point of view. They are unfortunate in that their yield is extremely elastic whereas the demand for potatoes is extremely inelastic. The figures given at the public inquiry bear this out. There have in fact been three years in the last six when there was a surplus of potatoes, not a very large 347 surplus but something of the order of half a million tons, and when there has been a surplus the price has varied between £10 and £12 a ton. There have also been three years when there has been a deficiency and then the price has been roughly £20 to £22 a ton, very nearly double, which is a good indication of the problems of potato marketing. It is therefore, in my opinion, perfectly correct that the Potato Marketing Board should have considerable powers over the acreage of potatoes that are to be grown and that is precisely what these Amendments set out to give them.
However. I think that in a matter of this sort, where a producers' monopoly has been set up, and quite rightly set up, it is very much the duty of the Government to make quite certain that this monopoly is in no way abused in the interests of producers and to the detriment of consumers. I am quite sure that when there is a deficiency of potatoes there is at the same time considerable pressure on the Government and the Marketing Board for some encouragement to be given to the growing of more potatoes, but I am glad to see that the pressure has been resisted by the Government because that would only result in subsequent years in far greater surpluses than there have been in the past, with disastrous effects on selling prices and costs to the taxpayer. All I would say in this case is that. where there is any doubt in the mind either of the Board or, more particularly, of the Government as to whether encouragement should be given to extra production, with the consequent cost to the taxpayer, or to too little production, with a consequent rise in prices to the consumer, Her Majesty's Government should pursue a policy of expansion rather than of restriction. I personally should be far more prepared to give my support to them if there were something of a surplus in the future. They have been a little too strict with a marketing hoard of any kind concerning restrictionist powers. But in this particular instance I think they have acted perfectly correctly. The public inquiry has supported the view of the Potato Marketing Board; in my view the Government are right to accept that, and I am glad to support this Order.

§ LORD WILLIAMS OF BARNBURGH
My Lords, I add only one or two words to what my noble friend has said, because I entirely agree with all the proposals in this Order. From 1931 it has always been understood, by me at all events, that unless the Marketing Boards have all the power requisite to prevent hopelessly unbalanced prices, fluctuating all over the place, from one year to another, they can never do their job effectively. There was, and I suppose always will be, an outlook from some section of consumers that "somebody is organising scarcity deliberately to increase the price"—though whether it is supposed to be to save the taxpayer or to deal harshly with the consumer or producer, one never quite knows. What we do know, however, is what my noble friend has just said: that it is rare that two seasons are quite alike.
There could be a surplus with only a small increase in plantings, which would be difficult with regard to the ultimate price to the producer; or, of course, it might be the opposite way. But because of the doubts in the minds of the large consumers, say the fish and chip fryers, and people of that kind, there was passed in 1948 another Bill, a Marketing Bill, which gave the Minister fairly wide powers. He was given power to appoint representatives to each Marketing Board, and he was also given the power, if he felt that a Marketing Board was doing what it ought not to do, or was not doing what it should do, whether or not an increase was contemplated in the price of the commodity or something on those lines, to say "Stop! You can't do that there here". Therefore there is a good deal of power in the hands of the Minister to-day which was not there as the result of the Marketing Act of 1931.
I think I can say to your Lordships that these Amendments are quite the proper thing to have if we are going to preserve a sense of stability in the growing and marketing of potatoes. It is easy enough for the critic who is without serious thought for either the producer or consumer, but is just a critic, to say that this is merely organising scarcity for the purpose of either the producer or the taxpayer. My view of it is that it is not Communism in that 349 sense, but is real common sense, organising for plenty without violent fluctuations in prices which, in the long run, are good neither for the producer nor for the consumer. Therefore, in view of what happened at the inquiry, in particular, when there was so little strength in the cases submitted, I, with my noble friend, gladly support the Order and all it contains.

§ LORD HASTINGS
My Lords, my task this afternoon has been made exceedingly pleasant. It is part of the charm of your Lordships' House that one never knows whether one is going to be helped by the Opposition or opposed by them. Certainly this afternoon I have received a great deal of assistance from both noble Lords who have spoken. I am most grateful to them, too, for their general, and indeed their detailed, support of these amendments. I would point out to the noble Lord, Lord Walston, who referred to the fact that there had been three surpluses on the potato crop within the last five years, that of course these surpluses were produced on almost the same acreage as that which was employed in the two years which showed losses. This only illustrates the point that he was making about the extreme difficulty of controlling yields even though one controls acreage. He suggested that, possibly in the future, the Marketing Board might tend towards allowing a slightly increased acreage rather than restrict production. No doubt they will take note of what he has said. I think it is worth reminding noble Lords that the quotas are amended quite frequently. I believe I am right in saying that this year's plantings are based on a new quota worked out on the best three of the previous four years' plantings. It has been worked like that, and over the last six or seven years there have been three changes from the original basic quota. The Potato Marketing Board try to keep themselves up to date in that respect.
The noble Lord, Lord Williams of Barnburgh, with his great knowledge on this subject, agreed wholeheartedly with the proposal and suggested that perhaps sometimes certain consumer interests might make complaints—he referred in particular to the suppliers of fish and 350 chips. But it is of interest to remember that the Consumers' Committee for Great Britain submitted a report on this subject in April, 1961, just a year ago, on the operation of the Potato Marketing Scheme in the three years 1957–58 to 1959–60 inclusive. They reported that no complaints from consumers had been made direct to the Committee, which is, I think, most satisfactory. My Lords, again I thank the two noble Lords for their support, which is of great help in putting forward these amendments, and I hope that your Lordships will now give them your approval.