HL Deb 15 March 1962 vol 238 cc331-40

4.16 p.m.


My Lords, with your Lordships' permission I should like to make a statement similar to that which my right honourable friend the Minister of Agriculture is making in another place, about the results of the Annual Agricultural Review. I will use his own words:

"I am glad to say that the figures show a continuing and substantial rise in the industry's net income. The forecast of actual net income for the year ending 31st May, 1962, is £431½ million, compared with the revised estimate for 1960–61 of £389½ million. When adjusted for normal weather, the forecast net income for 1961–62 is £413½ million, compared with £387 million for last year and £361 million for 1959–60. The forecast for net output for 1961–62 is also higher than before.

"The cost of agricultural support has also risen substantially. The estimate for 1962–63, put in before this Review, is £339 million.

"To come to the individual commodities. A feature of last year's weak market for beef was the number of lower quality animals in the market. Consequently, while we are not changing the guaranteed price, we are making the following alterations in the guarantee arrangements. We are raising the general standard at which cattle are accepted for the guarantee and reducing the maximum weights on which the guarantee is paid. We are also introducing a new standard for lighter, young beasts of good conformation. In order to strengthen the pull of the market we are also widening the stabilising limits which apply to the guaranteed price.

"Where sheep are concerned, the output of mutton and lamb in 1961–62 is expected to be about 10 per cent. above the record figure of 1960–61. There has been a significant increase in the breeding flock, and the prospect is of continuing low market prices and a heavy subsidy. We are therefore reducing the guaranteed price by ld. per lb, and here again we are reducing the maximum weights on which guarantee is paid and widening the stabilising limits. There will be no change in the guaranteed price for wool.

"For pigs we have the flexible guarantee arrangement which we introduced last year to promote a steadier rate of production. Under this arrangement, the guaranteed price came down by 6d. per score in February, and if the forecast number of pigs reaches 11 million there will be a further automatic reduction. The basic guaranteed price will be left unchanged.

"Egg production in the coming year is expected to be significantly higher than the present record level, which satisfies virtually the whole of the demand for shell eggs in this country. There is a real danger that production will exceed demand, and we are reducing the guaranteed price by 1½d. per dozen.

"The guaranteed price for milk was increased last year by 0.8d. per gallon in the expectation that the industry would devise a payments system which would bring home to the individual producer that output beyond a certain level fetches only the manufacturing price, which is unremunerative and reduces the pool price. The industry has not as yet found an answer to the problem, and in view of this and the continuing increase in production there has been no option but to reduce the guaranteed price. The reduction will be 0.4d. per gallon, and the effect of this, together with the continuing increase in output, will mean a reduction of about 1d. per gallon in the pool price which the farmer receives.

"The method of fixing retail milk prices is not, of course, an Annual Review matter. But before I leave the subject of milk I would mention that we are arranging for the retail price of liquid milk to cover in future the full cost of the guarantee. In recent years the general milk subsidy falling on the Exchequer has averaged £8 million to £9 million a year. Taking one year with another, there should be no cost to the Exchequer in future. The retail price of milk will actually need to be increased from 8d., to 8½d. a pint for some six or seven months of the year; about half of this increase is attributable to the decision of which I have just spoken, and the rest is due to other factors such as the rise in distribution costs resulting from the wages award of some while ago.

"The general prospects for cereals, potatoes and sugar beet do not call for any changes in the guaranteed prices of these products.

"As regards production grants, we are extending the upper limit of the Small Farmer Scheme from 450 to 500 standard man-days in order to give special help and encouragement to those small farmers who, because of their rather higher level of cropping and stocking, are at present outside the scope of the Scheme.

"We shall be introducing lower rates of subsidy for fertilisers, which will reduce the subsidy bill by an estimated £2½ million.

"Finally, I come to the need for improved marketing. We welcome the increasing emphasis which the industry are placing on marketing, and are anxious to help in this regard. We have worked out with the unions a scheme of grants to encourage marketing research and development, and the Government will make available up to £1½ million over three years to this end.

"The total value of the guarantees for the year 1961–62 was £1,351½ million. After taking increased costs of £19½ million into consideration, the maximum reduction of this figure within the Agriculture Act, 1957, is about £14 million. The effect of this Review is to reduce the value of the guarantees by just under £11 million."

My Lords, full details of the Review will be found in a White Paper which, I understand, is now available in the Printed Paper Office.

4.24 p.m.


My Lords, because it is always extremely difficult to follow a detailed statement such as the one to which we have just listened, I hope your Lordships will forgive me if I miss the mark while taking an odd shot here and there by asking one or two questions. The first question relates to the figures in the first paragraph of the noble Earl's statement, where it refers to forecasts—estimates—of net income. If I took the figures down correctly, the estimate of net income for 1961–62 is thought to be £431 million, compared with an estimate for 1960–61 of £389½ million.

If those figures are correct, I should like to know why they have been used and, particularly, why they have been embodied in this statement. I raise the point because the Minister in another place, when asked by a Conservative Member on the first of this month, only two weeks ago, whether he would state the figures of net output and net income for each year since 1950, stated that, for 1960–61, the aggregate farming net income was £359 million, whereas in the statement which the noble Earl has just read to this House the figure given was £389 million. The Government have therefore discovered an extra £30 million between March 1 and March 15, when this statement has been read. Perhaps the noble Earl will tell us where they picked up this odd £30 million in those two weeks.

With regard to the question of the various commodities, it would be nonsensical on my part to do more than ask one or two questions. On milk, for instance, I notice that the Minister, to rid himself of any possible subsidies for milk, is insisting that the retail price of milk be increased by a halfpenny per pint, so that in future the consumer is going to bear the burden. May I ask the noble Earl whether the Minister has included in his calculation a possible reduction in the consumption of liquid milk because of the increased price during those six or seven months; or, if that were the case and milk output continued on a level line, the fact that there would be more milk for manufacturing purposes at an extremely low price compared with liquid milk prices? Should we not "meet ourselves coming back" if that unfortunate contingency arose?

With regard to the question of mutton and lamb, I suppose we shall just have to see how the scheme works out—and similarly with eggs. I understand the proposition, and I make no comment today. But I should like to ask the noble Earl a final question: is this an agreed settlement with the National Farmers' Union?


My Lords, perhaps I could answer the noble Lord's last question first. I regret that it was not possible to reach agreement with the unions this year, but I should like to say that the basic economic data—net income, net output, cost changes and so on—have, of course, been agreed with the unions as usual.

The first supplementary that the noble Lord asked me was in relation to net income. The noble Lord knows more about this matter than I do, and he did not give me the reference in Hansard to my right honourable friend's remarks, but I will look them up afterwards.


I am sorry if the noble Earl missed what I said. I said March 1 of this year.


I am much obliged to the noble Lord. But he did not give me notice of this question, naturally, and I shall therefore have to look it up. I have not got all the copies of Hansard on the table here. I think that the only possible explanation, if there is a variation in the figure, is this. The noble Lord asked me if my figure was correct—and, of course, it is correct; he will find the figure of £431½ million in Appendix 2 of the White Paper, of which I have the draft here. But he will know as well as I do that there are two sets of calculations which have been published from time immemorial, or whenever it was that they began to be published. The first is called the D.N.I.C.—the Departmental Net Income Calculation—which comes in Table A; and then there is the Raised Sample Calculation, which comes in Table B. These are estimates of income derived in different ways and from different sources. We have always used the two. But I must clearly stick to my guns. He will find that in the White Paper the departmental calculation, which is the one that we always quote first, shows a forecast actual net income for the year 1961–62 of £431½ million. As he knows, we then adjust to normal weather conditions. And when we adjust the figure to normal weather conditions, we bring it down to £413½ million. That is the answer to his first question.

The noble Lord's second question was whether we take into consideration any possible falling off in sales owing to a rise in the retail price of milk. The answer is that that is, of course, taken into consideration. But the estimates we have made are as I have given them.


My Lords, I should like, first of all, to say that I listened to the beginning of this statement with very great relief, because after we had heard the earlier statement I was wondering whether we were going to hear now, in view of the difficulty of arriving at an agreed settlement between the Union and the Ministry, that the responsibility for handling this matter would be transferred to the Board of Trade and that we should no longer have the noble Earl speaking to us in the pleasant way he always does. After that relief, I must confess that very little has happened which has cheered me up. I should specifically like to ask the noble Earl one question. So far as I can make out from these prices, broadly speaking the arable farmers have got off pretty lightly. In other words, their prices have not been reduced. Admittedly, their costs and wages bills have gone up substantially, but, so far as I can see, there has been no reduction in the price of cereals, potatoes, sugar beet, or the main arable crops.

The entire burden has fallen on the livestock farmers by a very substantial cut in the price of milk, which is the mainstay of the majority of the small farmers; a substantial cut in the price of eggs, which is similarly the mainstay of a very large number of small farmers; a potential reduction in the price of pigs, which is to some extent a small farmer activity; and a reduction in the price of mutton, which if not necessarily the mainstay of small farmers, is certainly the mainstay of many marginal farmers on the Welsh hills and elsewhere.

Would the noble Earl agree with me that this Price Review is undoubtedly a further step toward squeezing out the small farmer? Is it part of a deliberate Government policy to do this? If it is, I would further ask the noble Earl whether, following upon this apparently deliberate action of squeezing out the small farmer and the marginal farmer, with the very modest marginal farm assistance which has been mentioned, any further steps will be taken to make this squeezing out a less painful process than it is at the present time?


My Lords, as the answer to the first supplementary is "No," the second supplementary does not arise. It is not a deliberate policy of squeezing out the small farmer. When one sees that we have increased the scope of the Small Farmer Scheme in order to include more farmers in the Scheme, I should have thought that made the position quite clear. As the noble Lord must well know, commodities have to be considered one by one in the light of the market and the supply position. We have, we feel, got the balance in the cereals about right. But there is this dangerous or potentially dangerous situation of over-supply in eggs and milk, and in mutton and lamb. Therefore, there was no alternative but to make the reductions and the adjustments we have made in these livestock products. I would just add that we are, of course, reducing the fertiliser subsidy, and I believe that when the noble Lord comes to read this White Paper which describes the Review in detail, he will say that, on balance, it is a just and fair Review for all sections of the industry. That is the endeavour, and that is what I believe it to be.


My Lords, may I ask the noble Earl what he means by "a dangerous situation" of "an oversupply of food"? Is it dangerous from the consumers' point of view, the people who eat food and want to buy it cheaply? May I also ask him whether he can explain to me, as one who has no technical knowledge whatsoever of this problem, why it is that, after these vast sums in subsidy are paid out every year, the price of food still remains very, very costly for the housewives and for others who need to buy it in the shops?


My Lords, we are having a debate at a later date about these things, when this point will no doubt be brought up. But perhaps I can use, as an alternative to the words "dangerous situation", the words now hallowed by the 1960 White Paper on Agriculture, and say that it makes no sense to produce more of any commodity than the market can absorb. I think that must be the answer to the first question. Food is dearer than it was when it was highly subsidised several years ago. The food subsidies have been removed and the consumer now has his free choice, and that is the reason why certain articles of food may be dearer in the shops to-day.


My Lords, might I ask the noble Earl a final question, referring to the figures which have already been mentioned? There is reference to a "forecast" an "estimate", and a "revised estimate", and the figures are extremely large. I imagine that it is just possible that there will be "highlighting" in the national Press to-morrow of these figures, although they are just forecasts, estimates, and revised estimates, and may not come within many, many millions of pounds of the actual subsidy received by the farmers. I am not complaining, except that it may be misunderstood in the country that these are merely forecasts, estimates, and revised estimates, which may or may not be wide of the mark.


My Lords, might I point out that food in Britain is far cheaper than anywhere else in Europe? It is not the farmers who have caused the price of food in this country to go up slightly; if it is anyone, it is the shopkeepers.


My Lords, perhaps I might reply to those two questions. I do not think the noble Lord, Lord Williams of Barnburgh, need have any fear. These figures have been given in this form for many years now. It has almost become a liturgy. We put them in exactly the same way, and I do not think people will misunderstand the fact that some are estimates. Indeed, if the noble Lord looks at the tables again, he will see that since the days he was in charge of the Department these estimates have often been quite close to the result.


But, my Lords, when the noble Earl puts in a White Paper two estimates which are £30 million apart within a fortnight it does make one think.


My Lords, I have not put in a White Paper two estimates £30 million apart in a fortnight. We must agree to differ on that point.


My Lords, could the noble Earl explain what this means in terms of increase in the cost of living? For instance, in terms of points, would it be possible for him to say whether these increases to the consumer mean a rise of so many points in the cost-of-living index? Could he also say to what extent the differences between the Government and the National Farmers' Union can be attributed to particular items in the Price Review, or have they rejected the whole thing?


My Lords, I am sorry, but I shall not be able to answer either of those two questions. I have not in front of me in detail the amount that the cost of living index will be affected by the six or seven months' increase of one halfpenny per pint on milk. I do not know the answer to that question.


Would the noble Earl be able to answer it if I put a Question on the Paper?


My Lords, I imagine that it is perfectly possible for me to give the noble Lord information as to what one halfpenny per pint on milk means in terms of the cost of living index. As to the extent of the differences between the National Farmers' Union and the Ministry, I cannot say what parts of the Review were agreed, or potentially agreed, and what parts were disagreed. I am sure the noble Lord, on reflection, will realise that it would be most unwise for me to do that, and I should not care to do it.


My Lords, the noble Earl gave a number of figures, but I think he omitted one. I wonder whether he could give it to us. He said that agricultural subsidies were going to be cut by £11 million. Can he say how much the cut could have been under the Act?


My Lords, I said that it would be about £14 million. With great respect, I would remind your Lordships that we are having a debate on this matter at an early date, and perhaps I could continue my viva voce examination then.