§ 3.7 p.m.
§ LORD STONHAMMy Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
§ [The Question was as follows:
§ To ask Her Majesty's Government whether they are aware that Imperial Chemical Industries are selling sulphate of ammonia in Eire at £12 10s. per ton, compared with the price of over £18 a ton charged to United Kingdom farmers, and, having regard to this firm's near-monopoly position in this material, whether they are satisfied that the price of £18 per ton does not include an unreasonably high profit.]
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (EARL WALDEGRAVE)My Lords, the Government are aware that sulphate of ammonia from this country has been offered to importers in the Irish Republic at prices in the region of £12 10s. a ton c.i.f. for compounding. I understand that the price to the Irish farmer is substantially more than this figure. To-day's price of sulphate of ammonia to the British farmer is £20 7s. 6d., 6-ton lots, carriage paid buyer's station. The prices which are charged in export markets for small quantities of sulphate of ammonia cannot validly be compared however with home market prices. In these marginal sales in export markets it is often necessary for British exporters 308 to charge a price lower than the home market price if they are to obtain the business in competition with suppliers in other countries who are themselves often exporting at a price below their domestic price. Noble Lords will be aware that in its Report on the Supply of Chemical Fertilisers, published in July, 1959, the Monopolies Commission found that I.C.I.'s profits on the sale of sulphate of ammonia in the home market were not unreasonable and, indeed, that I.C.I., in the development and conduct of its fertiliser business, had shown a conscious regard for the public interest. Since the last year considered by the Monopolies Commission, which was 1956–57, the price of ammonium sulphate sold to farmers in this country has fallen by between 14s. 6d. and £1 2s. 6d. per ton and the Government have no reason to believe that current prices give I.C.I. an unreasonably high profit.
§ LORD STONHAMMy Lords, is the noble Earl aware that I.C.I. recently persuaded the Government to increase the duty on sulphate of ammonia for East Germany, on the grounds that they were "dumping", and the East Germans wanted to sell here at precisely the same price at which is selling in Eire? Can the noble Earl justify forcing British farmers to pay this high price and the taxpayers to pay a subsidy? Or would it not be possible for us to appoint the Government of Ireland as our buying agent and sell it to British farmers at £13 a ton? Is that Alice in Wonderland suggestion any less credible than Waldegrave in Ireland?
EARL WALDEGRAVEMy Lords, I am aware of the anti-dumping duty. An order under the Customs Duties (Dumping and Subsidies) Act, 1957, imposing an anti-dumping duty of £3 per ton on imports of sulphate from East Germany came into force on March 3. This followed an application made on behalf of all the British producers of sulphate and after investigation the Board of Trade were satisfied that the East German sulphate was dumped, that the dumping threatened material injury to the British industry and that the imposition of the duty would be in the national interest. I think we must keep economic common sense here. When products such as sulphate of ammonia 309 are made in large plants, it is economically sound to export the surplus over home market requirements at a price sufficient to cover prime costs and to make some contribution to overheads. If that were not done, the alternative must be to load all the overheads on to home market prices and thus increase them.
§ VISCOUNT ALEXANDER OF HILLSBOROUGHMy Lords, we are well aware of the usual practice in business of having variable prices. That is all right, provided these spread the carrying of all overhead costs. But we are dealing with supplies mainly to the farming industry, which is subsidised by the taxpayer. Fertilisers are heavily subsidised. And here we are agreeing to an arrangement by which the price of sulphate of ammonia to the farmers is increased, or kept at a high level, because of anti-dumping duty, when otherwise it could have been imported and sold competitively at the same price at which it is being sold in Eire—at £6, or £5 10s. at least, below the present market price. Is that fair to the taxpayer, who has to meet the subsidies on fertilisers? Was that considered by the Board of Trade?
EARL WALDEGRAVEMy Lords, that was certainly considered by the Board of Trade, and I think, on consideration, that it is fair to the taxpayer. The decision of my right honourable friend the President of the Board of Trade was made carefully after he considered that there was a substantial threat to the industry. We had had experience previously, as the noble Viscount will remember, of dumped sulphate of ammonia from other countries in Europe. Dumped imports could cause material injury to our established home industry if they were allowed in.
§ LORD WILLIAMS OF BARNBURGHMy Lords, may I ask the noble Earl this: if the Northern Irish farmers decided to forfeit the subsidy presently granted to them, would they be able to secure their fertiliser at £12 10s. a ton instead of at £20?
EARL WALDEGRAVEMy Lords, I am not quite clear what the noble Lord means. It is not a question of forfeiting the subsidy. I understand that there is no sulphate of ammonia industry in the 310 Republic and, therefore, they get their fertiliser (it is a small amount; I think it was 8,000 tons only which was exported) where they can. But that does not apply to Northern Ireland.
§ LORD WILLIAMS OF BARNBURGHMy Lords, I do not think the noble Earl quite understood the object of my question. Presumably the Northern Irish farmer has his fertiliser subsidised. What I asked was: if the Northern Irish farmer decided to forfeit any subsidy from the Treasury, could he secure his sulphate of ammonia at £12 10s. a ton instead of paying £20?
EARL WALDEGRAVEMy Lords, this is a rather remote hypothesis, which it is always difficult to answer. I suggest that the answer to the hypothetical question is, "No".
§ LORD STONHAMMy Lords, can the noble Earl say whether there is anything to stop anyone in this country or Northern Ireland from buying fertiliser now as cheaply as it can be bought from Eire? Can the noble Earl say what the difference is between East Germans dumping here at £12 10s. a ton and the I.C.I. doing the same thing in Eire?
EARL WALDEGRAVEMy Lords, I hoped I had made it clear in answer to the second part of the Question that in this country there is an established industry for manufacturing sulphate of ammonia which is likely to suffer, and which the President of the Board of Trade has decided will suffer, from dumping. That is not the case in the Irish Republic.
§ VISCOUNT ALEXANDER OF HILLSBOROUGHMy Lords, would the noble Earl convey to his right honourable friend the Minister that there is some feeling arising out of this in the farming industry that probably they were being over-charged before the time of the inquiry before the Monopolies Commission? Wages and costs and other things have gone up since then, and yet I.C.I. since the hearing before the Monopolies Commission have reduced the prices, and the farmers may think they have been overcharged all the way through. Ought not this matter to be referred again to the Monopolies Commission?
EARL WALDEGRAVEMy Lords, when we have a careful Report from the Monopolies Commission, which I have here before me, I think we must abide by it. I think noble Lords would like me to say that paragraph 701 of the Report says:
Neither I.C.I.'s monopoly nor any things done by the company operate or may be expected to operate against the public interest.That is the finding of the Monopolies Commission.
§ LORD SHEPHERDMy Lords, would the noble Earl not agree that there are many in this House who consider that the Minister's reply is entirely unsatisfactory? Will the noble Earl accept from me that the price of sulphate of ammonia shipped to Colombo from Western Germany is to-day £16 5s. a ton? That would give an f.o.b. price of approximately £10 a ton. If it is brought to the United Kingdom, taking into account freight, it would land at approximately £13 10s. a ton. If there was then a duty of 33⅓ per cent. the figure would come very close to that indicated in the Question put down this afternoon. Would the noble Earl also take into account the indications of prices that I gave in this House in a debate on the Courtaulds and I.C.I. merger, when I showed a considerable similarity between Continental prices, taking into account duty, and those charged by I.C.I.? Would he promise to look into the question of taking duty off these items where I.C.I. have the monopoly?
EARL WALDEGRAVEMy Lords, I will certainly look carefully into the figures the noble Lord has given, but I cannot make any promise as to the conclusion to which I shall come after I have studied them.
LORD HAWKEMy Lords, are Her Majesty's Government not aware that it is common commercial practice where-ever a commodity is in over-supply; and is it a fact that the National Coal Board to-day are selling coal more cheaply to foreign countries than to the subsidised British Railways, and that the same applies to the national steel works?
§ LORD STONHAMBut is the noble Earl aware that the difference is that the country owns the Coal Board? Would not the solution be to take over I.C.I.?
§ THE LORD PRESIDENT OF THE COUNCIL AND MINISTER FOR SCIENCE (VISCOUNT HAILSHAM)My Lords, I do not think the ownership of various businesses arises out of the original Question.