§ 4.5 p.m.
§ Debate resumed.
My Lords, to return to agriculture, I am sure that the House is very grateful to the noble Lord, Lord Williams of Barnburgh, for putting down this Motion. He is an acknowledged expert on agriculture, and even though we may not agree with all that he says it is always a great pleasure to listen to him, because he says it all so pleasantly. I am a little puzzled, I confess, by one thing; and that is that at this time of the year we normally have a debate on agriculture, the Motion on which refers specifically to the Annual Review and Determination of Guarantees. This year, however, the debate is on agriculture in general. The noble Lord will forgive me if the conclusion I draw is that he finds so little to complain of in the recent Annual Review that he finds it desirable to draw the compass of his debate sufficiently wide so that at least some of the arrows may fall upon the target, even if only on the outer circles.
I am particularly glad to be able to follow the noble Lord so that I can make it clear straight away that in many respects we—noble Lords on this side of the House and those on his side—are in agreement. Noble Lords on both sides of the House believe in a strong, stable, prosperous and vigorous agriculture: there is no disagreement on that. Where, of course, we disagree is over the means by which that objective is to be achieved. I intend this afternoon to address most of my remarks to the Annual Review which has just been held. As the noble Lord has said, we have had a disagreed Review this year. We regret that it was not possible to reach agreement; but our decisions have been arrived at after full discussions with the farmers' unions on the general economic condition and prospects of the industry, and on the position of individual commodities, and we have carefully considered their views.
The basic economic data—the net income, the net output, cost changes and so on—have, of course, been agreed as usual; but it is the Government's responsibility, in the light of this Review, to determine the guarantees after taking into account all the relevant considerations.
177 Many of the factors we have now to take into account have shown vast changes over the past ten or fifteen years. When the noble Lord who introduced this Motion was Minister of Agriculture, consumers were rationed for all the main agricultural products. There was therefore virtually unlimited scope for the increase and expansion of agricultural products. His determinations were designed to achieve this end, and they were, accordingly, acceptable to the farmers' unions.
To-day, things are different. The very success of farmers, both in this country and in other countries, in increasing their output has resulted in a change generally in the Western World from a shortage of agricultural produce to one of surplus. This inevitably means that there is more difficulty for British farmers in getting a profitable outlet for all their farm produce. My Lords, because this is a fact it does not mean that there has been a failure, either on the part of the farmers or on the part of the Government. On the contrary, it is the result of success. But it is a fact which cannot be brushed lightly on one side, as is sometimes done. It is a fact which must be faced fairly and squarely; and, accordingly, it is one of the factors which the Government have taken into account in reaching the determinations required in the national interest.
Before dealing with the individual determinations I should refer briefly to the basic economic and financial data. The forecast of agricultural output shows a further increase, while farming net income is marginally down on last year. The make-up of this income figure is of some interest, and I would draw your Lordships' attention to Appendix II of the Review White Paper and to the figures in Table C of that Appendix, which gives details of the net income calculation. The table shows a substantial increase in forecast receipts for farm produce in 1962–63, as compared with the previous year. The only exceptions to this general rise in farm receipts are, first, the figure for horticultural products (the main exception), which is some £13 million below 1961–62—though one must remember that 1961–62 was a very good year for horticulture, with income at a record level—and, secondly, a slight drop in receipts on eggs and poultry. In spite of these two setbacks, on horticulture 178 and on eggs and poultry, the gross income forecast for 1962–63 is some £30 million above last year's figure.
While referring to eggs and poultry, I should like to make specific reference to one point. To me it is extraordinary that, with only five days to go before the existing policy of fowl pest slaughter and compensation ends, only about one in seven of poultry keepers in the country have taken the trouble to vaccinate their birds. In my own county of Norfolk, which has been riddled with fowl pest, only about 60 per cent. of the poultry have been vaccinated. It is very disappointing for everyone that, despite the wonderful efforts made by the leaders of the industry, so many poultry keepers should have adopted this irresponsible and apathetic attitude. I know that some noble Lords opposite are in agreement, because the noble Lord, Lord Champion, spoke strongly on that point during the Second Reading debate of the Agriculture (Miscellaneous Provisions) Bill. One can only hope that the figures will show some rapid improvement in the next few weeks.
To return to the Review, gross income is up by £30 million. On the other hand, outgoings increased by about £45 million, and about half of this sum is accounted for by increased expenditure on feeding-stuffs. This increased expenditure—which, in terms of volume, means a rise of nearly a million tons in the consumption of concentrated feeding-stuffs on farms—is perhaps not unconnected with the larger pig population which has led to lower market prices and to a rise in the Exchequer cost of the price guarantees on pigs from £36 million in 1961–62 to £65 million estimated for 1963–64. The net income figure adjusted to normal weather conditions is also marginally below that for last year. But in view of the nature of the calculation and the total sums involved, it would be quite wrong to think that the forecast figure of £407 million for 1962–63, as compared with £413 million last year, indicated a change in the long-term upward trend in farmers' incomes.
As to farmers' costs, there has in general been a continued rise in the prices of goods and services used in agriculture, and the net increase taken into account at the Annual Review was £12½ million. This 179 was mainly attributable to wage rates and rents. At the same time, there is a substantial annual gain to the industry from increasing efficiency. One cannot be too precise about this, but a figure of £25 million is generally accepted. A further element in the general background to the Review was the cost to the Exchequer of agricultural support. The Estimates put in for 1963–64—which did not, of course, take into account any changes made at this Review—showed a new high figure of £364 million, compared with an estimated £321 million for 1962–63 and with the figure of £263 million in 1960–61. There was therefore a prospective rise of about £100 million over three years.
Finally, within the framework of the Act, the maximum possible reduction in the total value of the guarantees, after taking account of the cost increases, was £22½ million. But the Government thought it right, in the circumstances of the industry this year, to leave the total value of the guarantees unchanged. But the fact that this is a "no change" Review does not mean that it is a standstill Review. Our determinations this year adjust prices where this is needed to deal with the problem of individual commodities and make important progress in the improvement of the arrangements for agricultural support.
My Lords, in coming to the individual commodities, I should like to refer first to wheat and barley, for I feel that the noble Lord, Lord Walston, who is to reply for the Opposition will be only too ready to jump down my throat, or that of my noble friend, because of the cuts in the guarantees which are being made. For he, like me, lives in East Anglia, a great corn-growing area. The facts are that during the last five years, production of wheat has risen by nearly a million tons, to more than 3½ million tons in 1962–63, while barley has increased from 3 million to 5.8 million tons. In other words, during the last five years the production of wheat has gone up by nearly 35 per cent. and that of barley by nearly 95 per cent. Total cereal imports have not shown any overall increase during this period, but the trend of market prices for home-grown wheat and barley has been generally downward. We are now, to all intents and purposes, self-sufficient in barley, and higher production would further depress the market.
180 It is in the hopes of checking this trend that the guaranteed price of barley has been reduced by 11d. Similar considerations led to the reduction of 5d. a cwt. on wheat, where a growing proportion of the crop is having to be used for feed since the milling requirements are fully satisfied. The tone of the market now tends to be set by feeding wheat rather than by milling wheat, and feeding-stuffs compounders cannot increase their up-take of wheat to an unlimited extent, since they must keep in mind the need to produce a balanced ration.
Milk raises important problems, both as regards production and also for farm incomes. In recent years we have been faced with the problem that production has been rising much faster than consumption of liquid milk. At the time of the 1961 Review the increase in production was exceeding the increase in consumption by about 140 million gallons. The national dairy herd was still expanding, and at that time it seemed that the balancing of production and consumption could not be achieved for some years. But, fortunately, there are now signs—considerably earlier than was expected—of a change for the better. The amount by which the increase in production exceeds the increase in consumption, which was 140 million gallons at the time of the 1961 Review, was down to 60 million gallons at the 1962 Review and has dropped this year to some 20 million gallons. Some of the reduction this year was, of course, attributable to the bad weather; but even with normal weather it is clear that the rise in production is coming more into line with the rise in liquid consumption. Moreover—and this is important—the returns show a levelling off in the size of the dairy herd, and the numbers of dairy heifers in calf fell quite noticeably during 1962, and the December figures for Great Britain were about 8 per cent. below those in December, 1961.
This is a healthier and more balanced situation. It could be argued that it would be advisable to leave well alone for another year. On the other hand, the level of farm income has to be taken into account, and milk is the most important single commodity to the small man. We had to weigh up these considerations, and we believe that the right balance is struck by the increase of ½d. a gallon. Any large increase would involve the risk of stimulating further 181 excess production which could only bring harm to the industry. Farmers, in fact, receive no Exchequer subsidy on milk, the retail price being fixed so that, taking one year with another, there is no deficiency or surplus arising from the guarantee. Accordingly, consumers will be paying a ½d. a pint more for one month in the coming year. In other words, the retail price will be 8½, d. a pint for eight months of the year, instead of for seven months as at present, and for the remaining 4 months the price will continue to be 8d. a pint.
Production of beef, mutton and lamb continues to run at roughly the same level as a year ago and we have made no change in the guaranteed prices. Our returns showed an increase in the sheep-breeding flock, but the hard winter has since caused the loss of some ewes, and we now expect a breeding flock of broadly the same size as last year's. With pigs, we have had to face the fact that we put too short a scale into the flexible guarantee arrangement, which was introduced at the 1961 Review and designed to regulate pig production. The scale provided for three downward or upward adjustments in the guaranteed price, as the expected number of pig marketings rose or fell. At the, time it was thought that three steps would be sufficient. But the current forecast of marketing is about 12½ million pigs a year, well above the figure of 11½ million at which the present scale ends. The flexible guarantee arrangement is therefore being strengthened by extending the scale indefinitely and making larger price changes as numbers move away from the middle band. The immediate effect of this will be to reduce the price by 2s. a score, but as the forecast number of marketings comes down the price to the farmer will rise again. 'There is no change in the basic guaranteed price, but it is now being related to a higher level of marketings—10.5 to 11 million pigs instead of the previous range of 10.3 to 10.7 million pigs—to take account of the upward trend in consumption. The market will always absorb—at a price, and this year a very low price—all the pigs which are put on it, but clearly we must disregard the increase in consumption in so far as it occurred only at the cost of much lower prices.
Although it may be true that, with present marketings at the high end of 182 the scale (between 12¼, and 12½ million pigs per year), under the new arrangements pig producers will get 2s. per score less, in fact when a more normal supply of pigs appears the farmer will be better off under the new scale than he would have been under the old one. For instance, when marketing of pigs reaches 11¼ to 11½ million pigs per year, the farmer will receive only 1s. less than the basic guarantee price under the new arrangement, whereas he would have received 1s. 6d. less under the old. Accordingly, he will be 6d. per score better off.
We are also making a number of improvements in the guarantee arrangements for fatstock, and we shall be making others in the next two or three years. The seasonal scales for cattle and sheep were fixed some years ago with the object of following variations in market prices and enabling us to pay the deficiency payment on a weekly basis. But the market now shows a rather different pattern and the seasonal scales are being brought more into line with the market. Our objective is that the pattern of production and marketing should be set by the market itself and not by the seasonal level of the guarantees. Further changes in the weekly price system will be considered for the future.
We also intend in the future to abolish the quality payments at present made on cattle and on bacon pigs. There was some justification for these payments, when they were first introduced, which, of course, was at a time when the Government themselves largely controlled the food trades. But there have always been difficulties in the system. Tastes differ over the country, for example, and the beasts preferred in the North may not be the same type of beasts preferred in the South. In the circumstances of to-day, the market must decide its preference and the producer should receive his reward in the extra price which he receives in the market rather than artificially from the subsidy. We have not altered the arrangements this year, but these quality payments will be discontinued over the next two or three years.
The separate stabilising arrangements for "bacon pigs" and "other pigs" are also to be abolished over the next two 183 years. These arrangements were introduced in conditions very different from those of to-day and when pig prices were very much lower. Moreover, they are giving rise to serious inequalities and are distorting the market. We cannot continue with them indefinitely, but we are not abolishing them all at once. The widening of the stabilising bands by 1s. this year is a half-way stage. As we have said in the Review White Paper, we are prepared to consider whether some alternative measure, not possessing the disadvantages of the stabilisers, is necessary in the interests of bacon pig producers.
The most noticeable improvement in the guarantee arrangements applies to eggs. The new arrangements are analogous to a standing quantity system, but with the standard expressed in terms of price rather than quantity. It is, of course, impossible to fix a standard quantity for eggs, because a certain amount is sold direct to retailers or at the farm gate. This difficulty has been overcome by arriving at an indicator price, which represents the price the Marketing Board would be expected to receive from a market that was not oversupplied. In recent years, prices have ranged between 2s. 10d. and 3s. 6d. a dozen, and we think 3s. 2d. is a fair figure for this indicator price. Broadly speaking, the deficiency payment will be limited to the difference between the indicator price and the guaranteed price which remains unchanged at 3s. 8½d.
There are, however, three refinements. First, if the realised price rises above 3s. 2d. the Marketing Board will be allowed to retain one-third of the difference in order to encourage it to get higher market prices. Secondly, if the realised price falls below 3s. 2d. the Exchequer will initially bear 60 per cent. of the difference, though this share will be reduced by 10 per cent. each year until it is finally phased out in 1969. Finally, the possible influence of any increase in imports has been recognised, and provision is made for an increase in Exchequer payments if the selling price is below the indicator price and if imports rise above a level based on a total of 950 thousand boxes for the year.
184 As regards production grants, the quantity of fertiliser used continues to rise. Reductions in prices have more than offset reductions in the rate of subsidy in recent years, and the reduction of £2 million will afford some relief to the Exchequer without being likely to put any undesirable check on the use of fertilisers. We are introducing new schemes of grant for the production of winter keep in livestock-rearing areas and for the renovation of permanent grassland, as foreshadowed in the 1962 Annual Review. These, as your Lordships will know, are embodied in the Agriculture (Miscellaneous Provisions) Bill, which at the moment is before your Lordships' House. At the same time, we have reduced the rate of the main ploughing grant. The case for this stands on its own merits.
The determinations reached at this Review will leave farmers with part of the gain from their increasing efficiency. In view of this increasing efficiency of the industry we hope that, given a reasonable season, we shall see farm income rising again in the coming year.
§ LORD WILLIAMS OF BARNBURGH
My Lords, the noble Earl will not leave the House in any doubt that, with £15½ million in respect of increased costs and £12½ million further costs, the farming community this year are bearing some £27½ million, compared with the Government's estimate of £25 million a year for efficiency; so that there is actually a deficit in the net income.
One can tie oneself up in wonderful knots over these figures. The noble Lord has jumped me to it, and I will tie him, if I may, with one further knot. It is sometimes said that when the Government do not increase the ceiling of the guarantees they are reducing or curtailing the farmer's ability to increase his income. But this is not so. Looking back over the past three years, for example, the Review awards of 1960, 1961 and 1962 amounted to a net reduction of £5½ million. But between 1959–60 and 1962–63, when these Price Reviews were operative, farm incomes rose by £46 million. I suggest that this is a healthy sign, because it shows that farmers' incomes are not necessarily limited by limiting 'the height of the guarantees.
185 The determinations deal with the immediate problems in a way that is fair to the consumer and to the taxpayer, and we have made a start in adapting and improving our support arrangements in the light of the circumstances of to-day. In general, our support arrangements were devised at a time of shortages and comparatively low production. To-day, production is much higher; indeed, in the countries which can afford to buy the food, the consumption does not keep pace with production. The main difficulty of agriculture in the Western countries is a simple one: that production is increasing at a faster rate than consumption. This is a simple fact. It is a strain on any type of support system and the effects of the strain have been seen in the increasing cost of Exchequer support—from £260 million to £360 million (in round figures) over the last three years.
There are two open-ends in our support system; one is the quality of produce on which we pay subsidy, and the other is the market price. The market price is, of course, influenced by the volume of supplies coming on to the market, both from home production and from imports; by the timing of supplies from both these sources, and by the prices at which they are offered. Changes are needed to bring the cost of agricultural support under more effective control, but it is still too early to say what proposals we shall put forward. I make no apology for this, because the questions involved are weighty and complex, and they will have to be discussed fully with the farmers' unions, with the agricultural industry in general, and with our overseas suppliers, before we come to any final conclusions. But our general intention over agriculture has been expressed in the words used in another place by my right honourable friend the Prime Minister, upon which I do not think I can improve—indeed, I would not dare to attempt to do so. It is simply this. Our intention is to cure the defects in our present system of open-ended subsidy, while still fulfilling our main purpose: a fair standard of living for the agricultural community, a strong and prosperous agricultural industry and one which is all the time improving its methods, both as to production and as to distribution.
§ 4.35 p.m.
§ LORD AMHERST OF HACKNEY
My Lords, I am sure we are all indebted to the noble Lord, Lord Williams of Barn-burgh, for moving this Motion, not only because it is immediately following the Price Review, but because it comes at a time when there is, I feel, considerable anxiety within the agricultural industry. We are also indebted to my noble friend for the clear statement he gave as to what lies behind the Government's Price Review. I feel that the anxiety of the industry at the moment is more in respect of the background to the Price Review than of the Price Review itself. With the constantly increasing production, farmers feel that they are not getting sufficient recompense for their success; that, in spite of a 50 per cent. rise in production since the war, there has been only a 6 per cent. rise in real income. Of course, one can overstate the case. There are many other people whose incomes have not risen. I am told that in manufacturing industry output has increased since the war by 70 per cent., and net profits in 1961 increased by only 2 per cent. But wages, salaries and incomes generally have risen, and, whether they are justified or not, many farmers, and particularly the smaller ones, feel that they are being left behind by other people.
They see, too, the tremendous increase there has been in production, with the help of the scientists, the plant breeder and the Government with all their schemes. To take one commodity alone—namely, grain—just after the war, off some 8,000 acres, we were producing some 7,000 tons, and now off fewer acres we are producing 11,000 tons. This is going on in all the developed countries in the world, and in those countries agriculture is rather like Alice, who could not stop growing, with all the problems that that created. As has been said, production is going up much faster than consumption among those who can afford to buy the produce. They are worried about the effects on the markets of imports such as of maize and things like that at harvest time, or, at the moment, Argentine beef and the effect that will have on subsidies. That is, I think, a background of considerable anxiety. Whether it is justified or not is a different question.
Turning to the Review itself, I think most farmers have found that it is 187 probably better than they had expected. One can argue about the individual commodities. One of the main worries is over milk. This is a commodity which, as has been said by my noble friend, has no effect on the question of the subsidies. There was a feeling of relief, not that there was merely a surplus of 20 million gallons, but that the increase in production was only 20 million gallons more than the increase in consumption. Obviously, if we were not to get into the same sort of trouble that we were in about two years ago, I should have thought that any responsible person would avoid doing anything which would tend to increase the production of milk. One welcomes the fact that the Government were able to put on the halfpenny per gallon, which will do a little to help the small farmer. But the milk producers are going through very difficult time indeed at the moment, particularly the smaller ones. After all, some two years ago the industry considered whether they wanted some two-tier system and a rigidity put into it. They decided against it, and therefore we really cannot do anything to alter the trend that is taking place at the moment.
In the case of bacon, there is no doubt that our pig herd at the moment is too large. It is most unfortunate that the things which helped to make the herd too large were never foreseen, and that the steps in the guarantee did not go far enough. I am sure that the right way must be to increase the steps by which the guarantee is reduced, rather than to reduce the guarantee itself. Also on bacon—and this applies also to fatstock—I welcome the fact that the Government have given notice that they are gradually removing the quality premiums from those animals and will let the market decide what quality is—that the market itself should pay for quality, which I am sure is the right method. At the moment, the only thing on which the quality of pigs is based is the measurement of bacon fat. To half the industry that is of no advantage at all, because part of the fat is cut off in any case; therefore, that quality payment is of no advantage whatsoever to the consumer.
I am glad that the Government are also widening the stabilising adjustments, because they were having the effect of distorting the market for pigs. Many 188 people deal with both bacon and pork pigs, and there is a considerable increase now in the number of carcases part of which is going for bacon and part for pork. In fact, recently it was nearly three out of seven carcases. Therefore I think the removal of these stabilising adjustments, and the removal gradually of the quality payments, will allow a much more flexible market in pigs.
I welcome, too, the new system for eggs with the indicator price, and particularly the important new principle which has been brought into that guarantee, by which the volume of imports is taken into account, and that it is accepted as right that if there is an unusual increase in imports, then the Exchequer should bear a new liability.
The most important paragraph in the whole of the White Paper is paragraph 36, which says that the Minister is to have consultations with the industry and our overseas suppliers. These discussions will be watched with great anxiety and interest by all farmers. We all know the risks which are facing us at the moment with the open-ended guarantees, but the result of these talks will decide what share of the market will be open to the home producer, and what share will have to open to imports. They will have a great effect on the pattern of farming in the future. A prosperous agriculture is an essential part of a prosperous country, and it is also a large market for industry. It is the basis of the agricultural machinery industry, which is one of our major exporters. But we have to remain competitive, and a fair balance must be struck between the producer, the consumer and the taxpayer. We hope that, in these talks which are to take place in the future, that balance will be found.
§ 4.50 p.m.
§ LORD WISE
My Lords, in the first instance I must say how pleased I am to see the noble Earl, Lord Ferrers, on the Front Bench at the Box in this agricultural debate. But I must express some sorrow—I shall do it in a very friendly way; we are very good friends—that except, perhaps, in one instance he had to stick to his brief. We all remember him when he was on the Back Benches, with his breezy, helpful, off-the-cuff speeches. The only time he seemed to go off the rails to-day and depart from his 189 brief was when he told our Norfolk farmers—at least, our Norfolk poultry-keepers—what he thought of them in regard to the vaccination of their birds. I am also in an odd position, because (I do not know whether it is by design or by accident), I am following two other Norfolk farmers. The odds are obviously two to one against me. However, I am encouraged by the fact that from these Benches in the following speeches one will be made by a farmer from Cambridgeshire and the other by a farmer from Suffolk. So, I think that, on balance, we shall hold our own from this particular side.
I do not wish to refer in great detail to the Price Review: I want to speak in rather general terms. It has been my lot for several years past to speak on the various Price Reviews in, I think, pleasant and kindly words; but I am not so sure that I can do the same this year. My pleasant and kindly words seem never to have made any impression upon the Government, and it is obvious that they are pretty tough-skinned. The present position in which we now find ourselves has been foreshadowed from this side of the House over a period of years. It was bound to come, with falling prices, lower returns and the particularly stupid marketing system which have been in vogue over many years. These have all paved the way for higher subsidies from the taxpayers' pockets; subsidies which have risen this year by an alarming extent and have caused the greatest unrest and dissatisfaction throughout the whole producing section of the agricultural industry.
Two Norfolk farmers have spoken, so I think that, in reference to what I have to say, I might call their attention to the report in the County paper, the Eastern Daily Press of Monday last, following the National Farmers' Union meeting at Norwich. No fewer than five important local branches in Norfolk sent in resolutions of protest to the National Executive, and it is interesting to notice what Norfolk farmers are thinking as a whole in regard to this Price Review. One branch, the Wymondham Branch (if I may quote the name), urged co-ordination between home production and imported supplies of all commodities—an aspect with which I shall deal later on in my speech.
One representative, one of the members of the Council, said that the reduced price 190 for barley was particularly disastrous for Norfolk, representing something like 25s. an acre off the net profit, while the small increase for milk producers in no way compensated them for increased costs. Another said that it appeared that the Government were trying to do everything they could to cut down producers in this country and were bending over backwards to help the foreigner. Then the chairman of one of the county branches said this:I have never seen our industry more moved over anything than we are over the Price Review.Yet another representative spoke of the lack of faith and cowardice of the Government—pretty strong words for anybody to use at an agricultural meeting. Another one said that he had that day found the trade for cattle most depressed at Norwich market, with first-quality beef making around 5 guineas a cwt., involving a subsidy of 55s. 6d. because it was such a shocking trade. He also predicted that, if Yugoslav and Argentine beef continued to come in, the subsidy in a fortnight's time would be greater than the market price. My Lords, this is an alarming Press report and, knowing the papers as we do, noble Lords may be sure that the report is correct.
The drifting, piecemeal policies of the Government during the last few years were bound sooner or later to bring matters to a head. That time has arrived, and the Government should take notice. It seems impossible (I think I am right in this) to amend the Price Review for the present year, and what is in store for farming in the months which follow will be borne by those actively engaged in the industry, in the hope that better conditions will be established in the future. However much farmers may suffer—and they will suffer—I do not expect that those who get rich at the expense of those farmers and farmworkers who work on the land will suffer in the least. They will still reap their harvest of profits.
As I said a moment ago, I have never spoken with greater consciousness of the Government's weakness and apparent ineptitude or unwillingness to stop the creeping decline in British agriculture. There does not seem to be any realisation by the Government of the position. This position can be remedied and rectified only by the application of 191 sensible, suitable and well-thought-out plans. The time has arrived when we must speak as we think. "Stop-go" and still more "Stop-go" directions, with a little additional production here, or a little curtailment there; an additional shilling on or an additional shilling off guaranteed prices, merely prolongs the agony and cannot possibly be a lasting solution. It is time that this annual exercise ceased. The increased efficiency of the industry is well known, but the continual reference to it by the Minister and other Government speakers is becoming monotonous. At the moment, money in the bank would be more to the farmers' benefit than words which, however applicable, may by their repetition in the difficult times of to-day strike them as being insincere.
There is a saying among countrymen that "Soft words butter no parsnips" and this seems to meet the case, so far as the Government and agriculture are concerned in present circumstances. If ever there was a time when agriculturists could look for some gleam of stability to throw light on the gloom of their industry, surely the present must be that moment. So far as farming is concerned, we have been through a hard winter in East Anglia, as have farmers in other parts of the country. The Government cannot be blamed for the weather—I give them that one point, at any rate. A depressing winter followed by a depressing Price Review, and the continual deep depressions of the future, must bring anxiety to a great many small farmers who have a daily struggle to make ends meet.
This is the picture as I see it in my own particular area, and I think my two friends on the other side will bear me out: heavy losses of over £1 million have arisen by the non-harvesting of a significant part of the sugar beet crop; fodder and vegetable crops have suffered heavily from frost, snow and pigeons; stock feeding has been difficult and expensive; hayricks held in reserves have had to be eaten; milk yields have dropped; grass keep, frozen and snow covered for weeks on end, has not been accessible for sheep or cattle; the condition generally of stock has deteriorated, with increasing casualties among ewes and young animals. And what has also affected us has been that cultivation work has been at a 192 standstill and we are now somewhat behind with drilling operations. The men have had to stand off and become unemployed.
On top of this comes this Price Review, and, what is equally deplorable, the dumping of imports and the collapse of home market prices, a combination of events that has resulted in agricultural subsidies running riot. This is not the end of the story, as there is no relief of the costs of production, which have to be met out of diminishing returns, and it is obvious that the farming community will commence the new season which is now starting under very great disadvantages as a result of what has happened in the last few months. Is there no one in the Government or among the Ministry's officials who can take stock of the present situation and devise some plan on a long-term basis to cut out these high subsidies and unfavourable and uncertain markets, to control imports, and thus bring stability to the industry and make guaranteed prices and assured markets realities and not mockeries?
I want to say a few words about cereals. Others have spoken about stock, and no doubt in later speeches we shall hear further about prices and conditions in regard to the stock markets. It is obvious that the present low prices of wheat, barley and oats hardly, if at all, cover the costs of production. According to the Civil Estimates for 1963–64 for England and Wales, the wheat subsidy in round figures will reach £32 million, barley £35 million and oats and mixed corn £7 million. That is a total of £74 million, an increase of £18 million over last year. Those are the England and Wales figures; but including Scotland the different figures are £83 million and £64 million. It is obvious that the only salvation for growing these crops lies in high subsidies. In fact farmers are living off their subsidies. Many of them could not pay their way except for the subsidies. The guaranteed prices for the 1963 harvest of these commodities are between 26s. 6d. and 27s. 5d. per cwt. If present marketing arrangements prevail, it is likely that average prices at the next harvest wilt fall below 20s. per cwt., and the difference will fall upon the taxpayer to an estimated amount of £74 million for England and Wales or £83 million for the United Kingdom.
193 If the price to the producer is to remain at a low, unremunerative figure and the taxpayer has to face a high subsidy bill, surely it is not beyond the wit of man to think out means whereby some of the difference is charged against those who handle the commodity between the farms and the householder. The noble Lord, Lord Amherst of Hackney, has already mentioned the question of consultation with the Commonwealth during the coming months, and I make this suggestion to the Government and possibly something of this sort might be considered. The noble Lord, Lord Williams of Barnburgh, and the noble Lord, Lord Henley, spoke in terms of commodity boards. The present would seem to be an appropriate time to think in terms of establishing what I refer to as a home and import commodity board, empowered and enabled, in co-operation with Government Departments, to purchase, distribute, dispose of and resell home and imported cereals in the national interest. Such a body could have a stabilising influence upon home, Commonwealth and foreign commodity markets, as they would be large buyers in bulk and thus be able to control imports, with advantage to the British economy and agricultural prosperity. An immense field of national beneficial activity would await such an organisation, and its success could be copied in other branches of agricultural productivity.
The noble Lord, Lord Henley, suggested that something of this sort might have been thought about by the Liberals, but I think I can correct that in regard to what I have to say next. I have here the OFFICIAL REPORT of the other place for October 30, 1929, nearly 34 years ago. My noble friend Lord Williams of Barnburgh will possibly remember the occasion. The date is October 30, 1929, on which date my brother made his maiden speech on the question of the dumping of German wheat; and he called the attention of the House to the advantages which would accrue by control and the setting up of an import board. He also mentioned in that speech that it had been the policy of the Labour Party in various reports before that date to consider the question of import boards. The noble Lord, Lord Williams of Barnburgh, mentioned it as being in his election address for 1931, but I hazard a guess it was also in his election address in 1929 194 or possibly the one before. It might be of interest to the House to note that in those days on consideration of these national problems my brother was the economist and I was the agriculturist.
The cycle of events has a knack of recurring and surely those days are now recurring; we are in the same position and our farmers are suffering from the same scourge of dumping of agricultural products from foreign countries. I may be thought to be old-fashioned, but I have not forgotten that not so many years ago the Ministry of Food, with its purchasing and other powers, was the best and most reliable customer British farmers ever had. In those days we were blessed with guaranteed prices and assured markets.
Let me conclude with a note on a matter which is much in our thoughts at the moment, and which was referred to by the noble Lord, Lord Henley, from the Liberal Benches. It should never be said, in days of starvation, hunger and some poverty among our own people, and millions of men, women and children elsewhere, that British agriculture was being directed towards a curtailment of production in certain foodstuffs which are essential to life. By the introduction of a board such as I have described, opportunity would knock at the door of our farmers, and our surpluses could be disposed of by sale or gift for the benefit of our starving brethren, here and overseas. I pass these thoughts on to the Government. The winds of change around the world blow even stronger now than hitherto. We can still lead in generosity and good will. Do not let us be behind in welldoing.
§ 5.11 p.m.
§ LORD SALTER
My Lords, I shall speak from a rather different point of view from that of the noble Lord, Lord Williams of Barnburgh, but I am really grateful to him for having framed this Motion in such a way as to invite discussion, not only on the questions arising from the Price Review but on the general problem of British agricultural policy. The need for a radical change in our present system of support and subsidy is, I suggest, now both obvious and urgent. The present moment is specially opportune, since we now can, and indeed must, face our problem without regard to the complications that would have arisen if 195 we had an early prospect of entry into the Common Market.
Agricultural policy must of course have regard to the interests of agriculture. True, but it must, I suggest, also take adequate and due account of the other interests concerned—of industry and of the general public, whether as taxpayer or as consumer. I shall not devote myself to the first of these interests, agriculture, for the simple reason that it will be adequately represented this evening by those who have an expert knowledge to which I can make no claim. I shall confine myself mainly to the other interests which I have mentioned. Nor shall I attempt, in general, to make a proposal or to discuss other people's proposals as to the principle and form of any alternative system to that which we now have.
I am, however, as regards this last point, tempted to turn to make one or two comments upon Lord Williams of Barnburgh's proposal of commodity boards. If I understood him aright, he desires a commodity board for cereals, for meat and, I imagine, for other forms of food. These are, as I understand, to be not international commodity boards, but national commodity boards. I do not know how far he proposes to extend that principle—whether he proposes to have commodity boards also for, let us say, manufactures of different kinds. I wonder whether he has worked out the consequences and implications of his national commodity boards upon our general economic policy, upon GATT, and upon the interests of other foreign countries on whom we depend on a different side of our economy—as consumers of our exports.
§ LORD WILLIAMS OF BARNBURGH
My Lords, if the noble Lord does not object to my intervening it might save the time of your Lordships' House. I mentioned a commodity commission only for meat and wheat, since we are discussing agriculture and not general manufacture or general industries, and I confine myself to those two commodities. What I asked for, if the noble Lord will remember, was rationalisation and modernisation of our trading relations in the light of modern conditions.
§ LORD SALTER
My Lords, I am glad the noble Lord has defined his limits 196 and that he does not propose to extend this system even to other forms of food. But the two he has mentioned are pretty important in the trade of many other countries, and I hope he realises adequately that those who export these commodities to us are also the importers of our own exports. I hope, too, that he realises and has worked out the extraordinarily wide ramifications and consequences that the adoption of his system, if it were really to be effective, would have upon the whole of our economy and the whole of our economic policy.
As I say, I do not propose to discuss the principles of alternative systems. I want, rather, to draw attention to a few of the main facts and figures which I think must be taken into adequate account in any change that is now being contemplated. In the first place, there is this fact: agriculture employs only about 4 per cent. of our working population; but it has in recent years received each year between £300 million and £400 million in direct subsidy in the form of the deficiency payments. Moreover, it enjoys other forms of subsidy in addition, at the cost of the taxpayer and the ratepayer. The opening words of the main leader in The Times of February 27 last were these:In 1961–62 the sum paid in direct support to British farmers represented half of their whole estimated net income for the year. If other forms of subsidy are included the total came to 83 per cent.It is worth recalling, too, some of the other privileges not included even in The Times second figure. In the first place, agriculture enjoys rating relief in respect of properties occupied for business purposes. There is nothing of a corresponding nature in the rating arrangements for industry in general. In the second place, in the case of pests, whether affecting animal or fowl, the animals or birds that have to be killed are paid for at the public expense. Industry bears the cost of its own similarly inherent risks. Thirdly, agriculture enjoys tax advantages in respect of death duties, and their deductible expenses, though they are not unique, sometimes go pretty far. Some time ago I remember congratulating a rich farmer who had come to a party in a new Rolls-Royce on his being able to afford that car. He said, "You must remember that this car is an agricultural 197 implement". There are also tax advantages which I will not describe in detail, because they are well known to all those who are concerned in the agricultural problem. In making, for example, certain investments in fir plantations, a great advantage can sometimes be secured, and in this case not only does the public lose financially but often it also suffers serious loss of amenities, as, for example, in the Dartmoor region in recent years. The agriculturists have also benefited, perhaps proportionately more than others, from very valuable research financed by the public. These are some—and only some—of agriculture's special privileges, apart from the direct subsidy system.
I would also add that the present support system has certain inherent defects and regrettable consequences which have now become obvious and serious. In the first place, the public now keep in production comparatively uneconomic land on a quite considerable scale. More fortunate farmers enjoy deficiency payments at the same rate per article produced on their mere productive farms—however much or little these may be needed to make their own farms profitable for them. All good farmers on good land have therefore a vested interest, increasing as they become richer, in the continuance of a system which maintains the less productive farms in existence. The result for the best, and even the average, farms is expenditure altogether out of proportion to what is required by them and what, on the ground of public interest, can be justified.
A further defect in the present system, I suggest, is that whenever natural conditions—or agricultural policies in other countries as extravagant as our own—cause a glut the general public suffer as taxpayers immensely more than they may gain in reductions of price as consumers. I need not remind your Lordships of the notorious example of lamb, and the present, and perhaps even more serious example of the cost of extra beef deficiency payments that will now be required. They justify the truth of that remark. But if nature is not kind but cruel, there are no guaranteed low prices for the public. The public have a disproportionate share in misfortune. They do not share in, but suffer from, plenty. These, I suggest, are all considerations 198 that need to be taken into account in framing a new policy.
In the fourth place, the subsidised extension of agriculture to its present scale inflicts serious injury on exports from Commonwealth countries—for example, lamb from New Zealand, and cereals from Australia. This, I suggest, is much less justifiable than the much more advertised injury that might have been inflicted had we gone into the Common Market. It also means, of course—in the case of sugar from the West Indies or Mauritius for example—a reduction in exports from underdeveloped countries, which would prefer more trade to charitable aid.
In addition, heavily subsidised cultivation of uneconomic land has deprived the rest of the economy of resources, of manpower, material and machinery, and so on, which would otherwise greatly have aided our economy in other spheres. During the years after the war, and until quite recently, this country suffered very considerably in relation to our competitors, such as Germany, because of a serious shortage of manpower, a shortage which might have been partly relieved had some people from the worst land been gradually moved over into industry. And what is true of manpower is also true of machinery and other resources required by agriculture.
Against these considerations we are sometimes reminded of the advantage of increased agriculture during the war at the time of the submarine blockade. On that point I will make only one observation. The advantage we had from increased agriculture then depended upon the fact that the last war was a long war, lasting nearly six years. It would not have been required in a short war. I ask your Lordships to consider what chances there are, in this nuclear age, of a major war sufficient to threaten us with starvation lasting for six years, for a year, or for six months. Is this consideration enough to justify the retention of an agricultural policy which is unjustifiable on other grounds? I suggest not.
My Lords, if I have said nothing of the case for agriculture to-day it is not because I do not recognise that there is a real and important case, but because this case has been adequately represented already in this House. And it is because 199 I feel that the other interests, to some extent competing or conflicting interests, are not represented with equal force and strength, that I have spoken as I have. I recognise that there is a strong case for some support for agriculture. I would agree that there should be enough support to keep in cultivation considerably more land than would result from the play of naked competition. I ask only that we should count the cost and reduce subsidies to a level at which their benefits are reasonably worth their cost and consequences.
I would also agree that any radical change should be graduated in time, so as to allow the problem of redundancy, with possibly some retraining, to be dealt with before it comes fully into effect. But the principle of any new policy and the exact method to be followed would carry me too far if I attempted to go into it to-day. I have been concerned only to urge that there must be a radical change and that it must go very far and take account of some of the considerations to which I have ventured to draw your Lordships' attention. It is surely now obvious that the least productive land in this country in cultivation ought to be allowed to pass gradually out of commission and be used for more profitable and rewarding purposes; and this applies also to the materials and manpower which are involved in such uneconomic production. It is also, I suggest, obvious that the time has come when the public as a whole—the 96 per cent. of workers who are not engaged in agriculture, the taxpayers, the consumers, the industrialists—should get some relief from the excessive burden which now rests upon them as a result of our present system.
§ 5.30 p.m.
§ BARONESS ELLIOT OF HARWOOD
My Lords, I rise to take part in this debate. Speaking on the same Bench as the noble Lord who has just sat down, I find myself more in agreement with the noble Lord opposite than I do with the noble Lord on my left on this Bench, but perhaps that is not surprising, since the noble Lord, Lord Salter, has very bravely got up, in a debate in which we are all, or nearly all, concerned with farming in one form or another, and put the case of the economist in a very persuasive manner.
§ LORD SALTER
My Lords, might I remind the noble Lady who is now speaking that she has just been appointed—and I congratulate her most sincerely—to a very important position? I trust she will now bear in mind the point of view of the consumer which she will be defending in that new appointment.
§ BARONESS ELLIOT OF HARWOOD
My Lords, I was not considering at that moment the fact that I am now about to undertake a very important job, because although consumers certainly enter into agriculture, we are all consumers, whether we are farmers or whether we are not farmers, just as we are all taxpayers. Sometimes people think that because farmers are given a certain amount of help, that help is not also shared by the consumer. In point of fact, however, although the support prices and the subsidies which are given to farmers appear very often in the newspapers as being given to farmers, they are in fact given so that food prices shall be kept as low as possible. That is the point.
I do not dispute with the noble Lord when he says that we must have a practical policy in all this. I do not dispute that practicability is very important. Nevertheless, the fact is that if the price of food in this country was the same as it is in, say, Germany or other parts of Europe, where the system of support prices is not practised, the British consumer would pay far more than he does to-day. Therefore it is in fact a shared responsibility, shared by the consumer, shared by the producer, and paid for by both; since, although farming is derated, farmers do pay taxes in exactly the same way as other members of the public. We do pay rates in the sense that we pay rates on houses and so on, and therefore we also share in the burden.
§ BARONESS ELLIOT OF HARWOOD
My Lords, I do not want to quarrel with my noble friend Lord Salter, because, as I say, we are sitting on the same Bench. It is with the Opposition that we normally should be in conflict, but I do not find myself so much in conflict with the Opposition at the moment because I always appreciate very much indeed the 201 presentation of agricultural policy by the noble Lord, Lord Williams of Barnburgh. I disagree in detail with some of the things he says, but as someone who has been engaged in this industry for quite a long time I realise what an enormous impetus he gave to agriculture when he was Minister. I always appreciate very much taking part in these debates when he inaugurates them.
It is lucky that this debate is taking place at this date. Had it been a month ago, most of the farmers in your Lordships' House would have been almost in despair, with the temperature at very low levels, with degrees of frost varying from 24 to 30, everything frozen up, and the hay stocks diminishing with great rapidity. Unless we had had a miraculously quick thaw, which we did have, and which brought such welcome relief to all of us, I do not know what many of us would have done. The extent of the damage as a result of ten weeks of storm is still not really known. In the North of England and in the Border hills, where lambing has not yet started or is only just beginning, we shall not know how much damage has been done until a little later on, when the lambing has really been completed. But we are hoping for the best.
Here I should like to say how grateful I am to the Minister and to the noble Lord who represents agriculture in this House for the help which is being given to the hill ewes. The hill ewe subsidy is going to be a great help. I notice in the Price Review that there always appears the same phrase about "normal weather conditions". I do not know what normal weather conditions are. The weather never is normal. Last winter was the coldest for over 100 years. It is three years or more since we saw the sun in any strength, or had a warm and dry summer.
Take the recent weather conditions—anyway, in the North and in the East. I am always very surprised when I listen to the broadcasting of the weather conditions and learn, for instance, that the County of Kent, which in my childhood it used to be considered had a very mild climate, is for ever suffering from the most appalling snowstorms and frosts, which must do an immense amount of damage there. It is the same in the West Country, for, as we know, that has been very severely damaged this 202 winter; I think as severely as the part of the world in which I live—the Borders. So I am grateful for this help. But I am sceptical when I read in the Review of "normal weather conditons", because I simply do not know what they are.
The Review speaks about costs and efficiency, and every year it says the same. Of course I agree that we must try to bring down our costs; we must be as efficient as possible. No industrial activity—and here I agree entirely with the noble Lord, Lord Salter—should be kept going if it is not efficient. But efficiency is hard to judge on the livestock rearing farms. We cannot modernise our production, since it is not a mechanical production; it is a biological production. However much you like to speed up the production of lambs, there is really nothing you can do about it. Nevertheless we have to meet increased costs, whether they be in feeding stuffs or in wages, out of a livestock return which at the best fluctuates and at the worst goes down. This is not really easy. With the best will in the world one cannot reduce overheads by the kind of efficiency shown by grain growers, with new combine harvesters, new methods of bulk handling and all the big investment which they and big arable farmers can put into farming, so reducing their labour force and putting an enormous investment into machinery. That really is not available to the livestock rearing areas of the country. We cannot do it; it would not be suitable. Therefore, our costs remain considerably higher than those of people who have been able to cut down their costs by making improvements.
One cannot willingly cut down the shepherds. Sometimes one has difficulty in getting them, and that happens to many people. But in the winter which we have just come through, I am sure that in hill and livestock rearing farms sheep losses would have been greater but for the magnificent way the shepherds looked after the flocks. No one who was not there can imagine what is was like, fighting one's way out, day after day, to the hill sheep with hay, either dragging it on a sledge with a horse, or putting it on the back of a horse and walking out in blizzards and in freezing, Arctic conditions. A dead sheep is a total loss to the flock for two years, even if you buy in stock; and if you breed in stock it is three years at least before you can replace it. Therefore, to 203 keep the sheep alive is the first aim of any shepherd. I do not believe there is any economy in not having enough shepherds in the hills. However, there are new systems in the way of feeding pellets, for instance, and inoculations, which help flock masters, and to that extent one can take part in the efficiency campaign. But in the livestock rearing areas the costs are fairly constant and, with the yearly increase in charges, unless prices in the stock market rise the net result is on the wrong side of the ledger.
I was interested in Appendix IV in the Price Review where the University Agricultural Economists' Data are noted. Under the paragraph which deals with Scotland, upland rearing farming has the lowest return, although it is simply essential to the production of both mutton end beef. I am sure that the winter keep proposal, which the Minister has put into the Review, is a very good one. As regards the land renovation scheme, this, I am sure, is going to be a great help, end it will benefit the upland areas very much indeed.
In The Times newspaper recently there appeared three articles—I do not know whether your Lordships read them, but I did, with some interest—entitled, "Towards the Basis of a Positive Policy" for agriculture. At the end of the second article there appeared the following words:What concerns them"—that is, the British farmers—will continue to be the size of their share of the home market and the terms on which they may expect to enjoy it ".That is the crux of the matter. What is to be our share? I think that would also meet with the approval of the noble Lord, Lord Salter. Of course, we must trade with our Commonwealth countries and with our European friends. But how much? Are we to utilise our hill land and our in-by pastures to the full, and produce all the mutton and beef we can? Or are we to accept so much from other countries and cut down on our own production? I agree with The Times article, the third of the series, which said:No national policy can be considered either viable or realistic which does not put some effective limit to the taxpayer's liability.That, again, I am sure Lord Salter would agree with. But, as I said before, 204 we are not only farmers; we are also taxpayers, and we, too, do not want to pay out huge sums in taxation in order to support ourselves because our production is uneconomic. So I, too, feel that here is a point which the Minister and the agricultural organisation will have to face.
Others have spoken about the meat situation, but it is not really sensible to be importing meat at the same time as our farmers are supplying the market efficiently. But here we have the complication of the GATT arrangements, and so on, and I fully understand the difficulties in which the Minister is placed. This, my Lords, is a problem, and it is a problem which is not easy to solve, but I think it is urgent for us to know what is to be the size of our share in the home market. It has been calculated that for every ten persons at present engaged in farming in Britain, there are 25 others working in industries directly or indirectly ancillary. The noble Lord, Lord Salter, spoke of 4 per cent. of the population. That may well be 4 per cent. in agriculture only.
§ BARONESS ELLIOT OF HARWOOD
Of the working population. But if you include the ancillary trades, which are now very great in view of the enormous consumption of machinery and the vast export of agricultural machinery which we also have, it runs into a considerably greater proportion of the population. If we include—and I think that, as members of the industry, we are entitled to include them—those ancillary trades which are essential to the agricultural industry, it is today a large figure, and I personally hope it will not be necessary to reduce this. Agriculture is a way of life, and a grand way of life, and I should like to see as many people as desire that way of life able to live by it. I am not suggesting that anybody who does not want to go into the industry should do so, but we should be able to provide a living, though not an extravagant living, in the industry. I was very much surprised to hear the noble Lord, Lord Salter, talking about rich farmers with huge motor cars which they are allowed to run on their farm accounts. The tax inspector in the area in which I live would not countenance that for one 205 moment. In my area farmers either have small motor cars—Austins or other small, ten or fifteen horsepower motor cars—or Land Rovers, and nobody I know would be allowed to run, or, indeed, does run, a motor car such as Lord Salter has suggested.
§ BARONESS ELLIOT OF HARWOOD
I am afraid that my knowledge of Norfolk is confined to that gained from listening to the speeches of the noble Lord, Lord Walston, the noble Earl, Lord Ferrers, and others in that area. My knowledge of farming, such as it is, is gained from experience in the upland areas of the country. But it would be a thousand pities if we were to allow these areas to go back to derelict conditions; to cut down the important breeding areas. I say that because that is where all the breeding stock come from and where we get the finest beef in the world. It is then taken down to these other areas, where it is fattened. I think it would be a thousand pities if that were allowed to go back to derelict land, because I am quite sure that it is possible to produce efficiently the best mutton and the best beef in the world, and on that I hope that the policy of Her Majesty's Government will continue to be in the interests of both the farmer and the consumer.
§ 5.46 p.m.
§ LORD SAINSBURY
My Lords, may I, at the very earliest opportunity, offer my congratulations to the noble Baroness, Lady Elliot of Harwood, on her appointment as Chairman of the Consumer Council? I think the whole House will agree that it is a really happy choice. There are so many farmers and agricultural experts on both sides of the House that it might be considered that one who claims to be neither is at a disadvantage when talking on the state of agriculture. But, as a large retailer of food, one is in close touch not only with the consumer but also with the agricultural producer, both at home and overseas. I should therefore like to make a few brief comments arising from the Annual Review and the deficiency payments system of agricultural protection.
The deficiency payments system is often criticised, and it may be of interest 206 to recall that a GATT panel of experts in 1958 considered the relative merits of the two systems of agricultural protection—the price support system, which raises the domestic price level above the world market price by restricting imports, and the deficiency payments system, which allows domestic prices to remain at the world level and subsidises home producers at the taxpayers' expense. As is known, Continental countries and the United States have adopted the price support system while this country operates the deficiency payments system. The GATT panel found the deficiency payments system preferable to the price support system, chiefly because it keeps down food prices to the consumer and, consequently, increases demand. This increase in demand is obviously of much greater importance now than it was after the war when we were suffering from food shortages, as opposed to the food surpluses of today.
I know that there are those who will challenge the statement that deficiency payments keep down prices to the consumer; who feel that the deficiency payments system does not ensure that the benefit of a decreasing import price or a decreasing market price is passed on to the consumer. Immediately there is an increase in imports or an increase in the amount of the deficiency payment for a particular product, we get the parrot-like outcry that low prices are not benefiting the consumer, although no factual evidence is produced to support this generalisation.
§ LORD SALTER
Forgive me for interrupting, my Lords, but will the noble Lord compare the cost to the taxpayer of the present glut of beef with the saving to the consumer—and I admit there is some—of the lower prices that result from that glut?
§ LORD SAINSBURY
I certainly should require a very long time to work out that sum. But, to continue with my remarks, in regard to the 1961 controversy, one of the few objective estimates as to what happened at that time to the additional deficiency payments for the meat is that made recently by Mr. G. R. Allen, of the University Agricultural Economic Research Institute at Oxford. Incidentally, his evidence to the Verdon Smith Committee is referred to in to-day's Times. He estimates that, of the £67 million 207 by which the fat stock deficiency payments exceeded the original estimates, £52 million was due to the fact that market prices were below the original forecast. He calculates that, of this £52 million, between £36 million and £48 million were passed on directly to the consumer.
To-day, we have a similar situation to that of 1961. As noble Lords will surely be aware, there has been an increase in the imports of Argentine chilled beef, a considerable drop in the value of English and Scotch beef and, consequently, a large increase in the deficiency payments. However, the slump in beef prices is not solely due to imports. A severe winter's interference with transport has caused cattle to be held back; and the accumulation of animals thus created is now coming forward and is accelerated by lack of food. As farmers, particularly in Scotland, will know, large quantities of roots are frost-damaged; grass, too, is late. It may well be that when grass does begin to grow, home slaughtering of cattle will decrease. Nature is a big influence in these matters, particularly with regard to the timing of marketing.
Once more it has been suggested that the consumer is getting no benefit from these low prices. I do not in any way wish to advertise my own firm, but in view of the fact that it is one of the largest retailers of meat in this country, I should like to say to the House that since November of last year we have reduced the prices of our Scotch beef by an average of 6d. per lb.; with rump steak as much as 1s. 4d. per lb. cheaper. In the case of Argentine chilled beef, again since November, the reduction is an average of 4d. per lb., with rump steak as much as 1s. a lb. cheaper.
My Lords, forgive my interruption. As one of the noble Lord's satisfied customers, may I say that that applies, of course, to his own marketing. Can he say that corresponding reductions have occurred elsewhere among the butchers of this country? I do not believe that they have.
§ LORD SAINSBURY
My Lords, that, of course, is always a question of opinion. Personally, I cannot believe, and would not for one moment say, that our prices are unique, any more than I 208 can believe that, in a very competitive world, our retail prices have no influence on those of other retail butchers. What I do want to ask is this. Are the many grave problems facing agriculture really helped by trying to make the retail trade or distributive system the scapegoat for the difficulties?
Although I believe that for Great Britain, as the largest importer of food in the world, the deficiency payment system is the best system of agricultural protection, we have to face the fact that it can be wrongly applied; for example, if the level of support is fixed too high so that it encourages uneconomic and sometimes unwanted production. I feel that it is because of this danger that the Government in recent years have moved towards extension of the principle of tying the deficiency payment to a given level of production. The increase in the price of milk to the farmers in the latest Price Review is a subject that requires examination in the light of that principle. I wonder whether Her Majesty's Government are not unduly optimistic in thinking that this increase of ½d. per gallon will not add still further to the burden of milk that can be used only for manufacturing purposes.
I recently came back from a visit to New Zealand, where I had the opportunity of meeting not only farmers but also the leaders of the dairy and meat industries. For every 1-1b. of butter fat the English farmer gets something of the order of 7s., whereas the New Zealand farmer gets something of the order of 3s. These figures surely reflect, among other things, the natural advantages enjoyed by the New Zealand milk producer; but they also highlight the cost to the country of an unnaturally high production of milk, a heavily increasing amount of which has to be made into butter or cheese. This is illustrated by the following figures. In 1962, we made 56,000 tons of butter; the average for the previous five years was 32,600 tons, and for the five years previously only 17,000 tons. In the case of cheese, the increase in production during the last five years is not very great; but when compared with ten years ago it is considerable. The figures are: in 1962, 112,000 tons; the previous 5-year average, 104,000 tons; and in the period 1952 to 1956, only 78,000 tons.
209 Also while I was in New Zealand I saw fat lambs bought on the farm at 45s. each, a price which the farmer himself told me was satisfactory. It is equivalent to about 1s. 6d. a 1b. dressed carcase weight. The guaranteed price for 1962–63 and for 1963–64 is 3s. 2d. No one, let me hasten to assure the noble Baroness opposite, is going to suggest that Scotch or home-produced lamb should be sold at 1s. 6d. a lb. Fresh lamb will always make a substantial premium over frozen. But surely the present disparity is too great. Moreover, I learned in New Zealand that, with more hill land continuously being brought into production, they could economically increase the number of sheep carried. Can Britain really afford to do without good-quality meat at this price? Certainly New Zealand would be gravely injured by any restriction on her meat exports. Incidentally, she is already having to restrict her imports because of balance-of-payments problems.
Whatever evolves in future from the main political Parties in the way of agricultural policy, it will obviously be necessary to arrive at a fair and just division between what should be produced in Great Britain and what should be imported from the Commonwealth and the rest of the world. We are surely not rich enough to ignore either the true economic cost of production or the natural advantages that some overseas countries enjoy.
§ 6.3 p.m.
My Lords, I should like to congratulate the noble Baroness, Lady Elliot of Harwood, upon her new appointment, which has already been referred to. I would also join with her in congratulating the farmers and shepherds in her part of the country for the way they have met the great hardships throughout this winter. I was a little disappointed that my noble friend who spoke on behalf of the Government could not spare a little sympathy for them. Possibly their hardships have not been much worse than those in some other trades, but I would remind my noble friend Lord Salter that the farmers and their men have not finished their work yet. It has not until recently been possible to get on to the land to do anything since the last day of 210 December, and now all the work that has to be done must be squeezed into a fortnight or three weeks. But it will be done, and men will be labouring night and day, with all the machinery and efficiency we have heard so much about, in order to see that the land is tilled and the stock fed.
It is always a pleasure to hear the noble Lord, Lord Williams of Barnburgh, speaking on agriculture, and it is a privilege to take part in a debate which he initiates. I must advise my noble friend, who will be winding up on behalf of the Government, that up and down the country the farmers and their men ate thinking very much in terms of what the noble Lord and his friends on the other side of the House are saying; there is no doubt about that. I take note of the facts and figures which my noble friend put forward so eloquently, and I take heart from what he said, that, as the result of a reasonable season and of the Price Review, farmers incomes will rise and that there will be what he considers a fair standard of living for those working in agriculture. Time will show.
I am sure the Minister is aware that there is a great difference of opinion as to what is a fair standard of living and what is a fair return from investment in agriculture. My noble friend Lord Salter has no doubt an accurate idea of what is a fair return from an efficient business. Farmers also have an accurate idea of what should be a fair return from an efficient farm. But there is no doubt that their account books show that returns upon capital invested in agriculture are nowhere near in line with those of industry to-day, especially those industries which are so efficient and in which no doubt my noble friend is involved.
Millions of pounds have been invested in agriculture to bring about its present efficiency, and an internal turnover of trade worth £1,700 million has been built up. That is of some value to this country, and I should like my noble friend Lord Salter and those who think like him to consider that point. The agricultural machinery industry has been built up, possibly in the shortest time ever, from practically nothing before the war to second or third place in the world.
The noble Lord Lord knows more than I do with regard to that. I believe that the argicultural implement industry is one that will spread throughout the world the benefits of tilling the soil in the most efficient way; and that must be worth something to our country. I would ask my noble friend Lord Salter to bear that in mind, too. The Government of noble Lords opposite, and especially the Conservative Government, have put large amounts of money into the agricultural industry to make this possible, and the industry is grateful for it. Nevertheless, the returns on capital are not sufficient to enable farmers to replace expensive machinery or to give a fair interest on capital invested or sufficient spending money to farmers, in comparison with industries with similar capital.
In spite of the figures which my noble friend put forward, showing that incomes have gone up, the fact is that costs have gone up even more; and the receipts on the other side of the book do not go up enough to cover these extra costs. My noble friend must know, from his expert accountants in the National Agricultural Advisory Service, which does so much good for farmers by helping them to increase their efficiency, that no matter how much figures may show that incomes are rising, they do not cover the increased costs. One must congratulate my noble friend and the Minister and the unions who settle these negotiations, but I should like to compare their forecast with that of a really good astrologer looking into his crystal ball. It is remarkable how accurate some of the astrologers are able to get with a long-range forecast. I should certainly like to know that my noble friend has consulted the American long-range weather forecasting device which on this occasion proved so accurate.
It does not need expert forecasting, however, to know that wages will be up again next year. Our men are asking, whether rightly or wrongly, £15 a week. I suppose that the union will offer £10, and the result will come out at somewhere around £12. That is not difficult to forecast. Whether fuel will go down one would doubt; but it may. It will depend on the Chancellor of the Exchequer in his Budget. There are precious few items on that side of the account that will go down. I go all the 212 way with the noble Lord, Lord Sainsbury, in saying that we must have imported food. And here I would say what a privilege it is to hear him in your Lordships' House. It is all too seldom that we hear the noble Lord, and others of his great merchanting profession; and I only wish there were more speaking in this debate. Nobody has ever pretended that this country can live on its own food alone. However, I believe that nothing like enough attention has been paid by the Minister of Agriculture, Fisheries and Food and his right honourable friend the President of the Board of Trade to the timing of these imports, to which the noble Lord, Lord Sainsbury, and my noble friend Lady Elliot of Harwood referred.
How is it that just at this time, when, after such a season as we have had, it must be obvious that large amounts of cattle come on the market, a new and presumably unexpected importation of beef reaches this country? The noble Lord, Lord Williams of Barnburgh, his noble friend Lord Shackleton, and other noble Lords on that side, have repeatedly warned the Board of Trade how only a small shipment of a particular commodity can completely upset a market for weeks, or even months, to follow. I do not know whether the market has yet been upset; it is a little early to see. But if it has—and we shall see shortly—it is fair to say that the upset will last for probably three months or more. And that is after the most expensive winter that has ever been known, when every animal has eaten twice its amount of food. Therefore, I cannot see how the noble Lord can claim that farmers' incomes are on the increase.
We have been encouraged by the Price Review to turn out animals in the winter season and at the end of the year, rather than put them on the market in the autumn. This must therefore be the wrong time of the year to import large amounts of foreign beef. By all means bring it in; but a little later. It was apparently the view that there was very little Argentinian beef left to reach this country, and it must have come as a great surprise to many of your Lordships to hear of these shipments. I wonder that my noble friend did not take the oportunity to ask the noble and gallant Earl, Lord Mountbatten of Burma, who has just been widely advertised as taking a trip round South America (he must be 213 the only member of Her Majesty's Government who would be able to ride an estancia pony: and, if I may say so, he looked extremely well when he was doing so), to send back a dispatch saying that there was a great deal more meat in the Argentine than was expected. Possibly there is a dispatch locked away somewhere in the Admiralty to that effect. I think that our intelligence must have slipped up somewhere in this recent shipment.
It is the same story with barley and wheat. For three years the silos have been filled with imported wheat just as the harvest is running at its hardest with the English combines. First, it was the Canadians; then it was Algerian barley; and this season it has been American maize. This is bound to come, and we know it; but not I should have hoped, just at the time when the English market is almost saturated with the home-grown product. I ask the noble Lord who is to reply, and I ask all members of Her Majesty's Government, given that they have an eye on the next Election (and there was a pretty sharp sting in the tail of the speech of the noble Lord, Lord Williams of Barnburgh, with regard to politics), to make it quite clear that the Conservative policy is to go for home-grown first; then to take the produce of our friends in the Commonwealth; then that of our trading friends in various parts of the world, and to let the others come on to supply what else we need.
Furthermore, I would ask the Government, the Minister of Agriculture, Fisheries and Food and the Board of Trade to remember to take into their confidence and under their wing those such as the noble Lord, Lord Sainsbury, who are involved with the merchanting, in fact, all those who are in the baking trade, in the milling trade for animal feeding-stuffs and in the meat trade; to bring them under one umbrella for a meeting to discuss and decide the amount of imported foodstuffs that will be needed. That goes for animal foodstuffs and for home consumption. I cannot see how, when farmers have an imposed or an agreed price system, imported foodstuffs can be allowed in ad lib off the world markets, subsidised, or possibly dumped, with no tariff and no quota, unless most complicated machinery has been brought into action. Unless we can get our im- 214 porters together to help the Government to work the subsidies, I cannot believe that the present deficiency payments system can continue.
Many of us were thinking in terms rather the opposite of those outlined by the noble Lord, Lord Sainsbury: terms much more on the Continental style. However, I hope that the Government will pay close attention to the suggestions put forward by the noble Lord, Lord Sainsbury. Possibly the importers and merchants in this country will be able to impose voluntarily—or possibly it may need to be compulsorily, in the same way as is done with farmers—some system of timing, so that imports reach us when our own harvest or livestock is running at its lowest. As it is now, there is an everlasting drain, of which we have heard, to the taxpayer. It brings no credit to the Government; it brings no credit to the farmer. Indeed, it is a most unfair and unjust criticism of him to say that such payments are required, when in fact, if only the imports can be timed to the benefit of the market, they are not.
§ 6.19 p.m.
My Lords, I should like to join with those noble Lords who have expressed appreciation of the opportunity the noble Lord, Lord Williams of Barnburgh, has given us to discuss the state of agriculture, not only with regard to the recent Price Review, but with regard to the wider and longer-term implications as well. I have been listening with considerable respect to those noble Lords who have spoken about the state of agriculture in Great Britain, and who, I may say, are infinitely more qualified to do so than I am.
With your Lordships' permission, I should like to confine myself to making one or two general points about the state of agriculture in Northern Ireland. Your Lordships will recall that the system of agricultural support is the same for Northern Ireland as it is in the rest of the United Kingdom, and the same rates of subsidy are determined at the Annual Price Review. The one exception to this is our remoteness grant of £1¼ million, whose purpose is to offset the extra costs that we have owing to our remoteness from sources of raw material and our markets. Though Ulster farmers sometimes doubt that this grant is quite sufficient to make up the extra cost they have 215 to meet, it would be fair to say that Northern Ireland agriculture gets the same deal from Her Majesty's Government as does the industry in the remainder of the United Kingdom.
In common with the English, the Scottish and the Welsh farmer, we have for some little time been feeling that a certain trend is becoming apparent in this deal. The Ulster farmer fears that it may be the policy of Her Majesty's Government gradually to increase the pressure on him; to make him absorb higher costs each year, and to leave him to do this by struggling to increase his efficiency without the prospect of any reward in the shape of an increased income. From both my own observation and the remarks of several noble Lords during the course of this debate, I think there can be no doubt whatsoever that this trend is causing considerable concern among the farming community in the United Kingdom. It may be that this apparent trend does not indicate the policy of Her Majesty's Government, and I sincerely hope that it does not. But if the farmers' apprehensions are justified, I feel I should draw your Lordships' attention to the significant effect that such a policy would have with regard to Northern Ireland. Although I am a farmer, I have tried—as I am sure other noble Lords who hold the same union card as I do have tried—to look at this in an unbiased manner from the point of view of Northern Ireland's economy as a whole, and not just from the farmers' point of view.
To get the picture in perspective, your Lordships will recall that, whereas the proportion of employed persons directly engaged in agriculture in Great Britain is 4 per cent. the proportion in Northern Ireland—and I quote from the Committee Report—is 13½ per cent. In fact, agriculture is our largest single industry, accounting for 14 per cent. of the Provinces' income, as compared with 5 per cent. for the United Kingdom as a whole. It is therefore clear that any change in the agricultural industry will have a proportionately greater effect on the overall economy of Northern Ireland than it will have on the rest of the United Kingdom.
If your Lordships will bear with me, I should like to quote one more statistic. Whereas the proportion of farms in Eng- 216 land and Wales containing less than 50 acres is 10 per cent., the equivalent figure in Northern Ireland is 80 per cent. It is therefore clear, I think, that in Ulster's largest industry there is an overwhelming majority of small units which lack capital reserves, and which are financially in the least favourable position to withstand economic pressure. From the agricultural economist's point of view, there is certainly a plausible case that these small units should not be regarded as being viable; that under today's conditions they should be made to resolve themselves into fewer and larger units, which would be better equipped to withstand the changes and chances of world crisis and government policies.
While this may be possible on paper, what would it involve? I have made a rough estimate that for every 10 per cent. by which the number of these small farms was reduced, approximately 5,500 people in Northern Ireland would be thrown on to the labour market. What jobs would these people go to? This might not be so great a problem in parts of the South of England, but, as your Lordships I am sure are aware, it is certainly a problem in Northern Ireland. We heard some good news the other day. We heard that our unemployment figure for March was 9.3 per cent. I do not think that would be good news in any other part of the United Kingdom, but it was good news for us, because our February figure was 11.2 per cent.—a serious situation, but I am sure your Lordships will appreciate just how much more serious it would be if, in addition to our present unemployed, there were a further multitude of displaced small farmers to be absorbed.
Our Government at Stormont are making prodigious efforts to provide more jobs in Northern Ireland. A considerable amount of money is being spent every year, both in paying unemployment benefit and in providing incentives for new industries to start in Ulster. It would be a sad thing indeed if the purpose of this expenditure were to be nullified by an attempt to economise on agricultural support. The small farmer in Northern Ireland is not looking for charity. He does not expect it, as he has never had it. All he asks for is a fair deal in the shape of an assured economic price for his products. Many 217 of these small farmers have had faith that they would receive this, and they have acted on that faith by taking the advice of the Ministry of Agriculture and investing in new buildings and machinery. Thousands of them have had such faith that they have borrowed capital. Of course, they have very small reserves and little security, but they have borrowed capital in order to do this.
There has indeed been a marvellous response to the Small Farmers' Scheme in Northern Ireland. Since the war there has been an almost revolutionary increase in the efficiency of small farms as a whole, and holdings like this have been completely transformed all over the country. Given the right conditions, I believe this trend will continue and, indeed, probably accelerate. But what will be the prospect for these farmers if they are denied an opportunity of repaying their loans, let alone of receiving a return on their investment? Their faith will be shattered and their efforts will have been wasted, and they will simply have to sell up and get out.
Even if there were alternative employment for them to go to, it is hard for a life-long farmer suddenly to turn himself into a factory worker. I am not suggesting for a moment that the status quo should be artificially preserved, for I believe the situation will solve itself in time.
The average size of the Ulster farm is steadily increasing, and the number of farmers is proportionately decreasing. Quite a number of small farmers' sons, when they reach the age to leave school, seek employment elsewhere. When their fathers die, the farm is either sold or amalgamated with a farm belonging to another relative. But if the pace is forced I believe it will bring more hardship and suffering to rural Ulster than there has been since the potato famine in the last century.
It was my intention to speak purely in general terms, but I feel I should perhaps mention two particular commodities which have much greater significance for Northern Ireland than they do elsewhere: eggs, and pigs for bacon. Both of these, incidentally, form an important part of the small farmers' production, and bacon in particular is a higher factor in the economy of Northern Ireland as a whole. To illustrate this, I 218 would remind your Lordships that approximately one-third of the total United Kingdom bacon output comes from Northern Ireland, and that this accounts for between a quarter and a third of Ulster's total agricultural income. In addition to this, the bacon-processing industry provides a valuable source of employment, unlike other commodities such as pork or meat on the hoof, which leaves the country in an unrefined state. I am aware that both bacon and eggs have been a matter of deep concern to Her Majesty's Government, but I would stress that any further deterioration in the prices of these commodities would be of absolutely vital concern to Northern Ireland.
As the noble Earl, Lord Ferrers, said, there is in paragraph 18 of the Price Review White Paper a sentence which says:The Government will be prepared to consider before the next Review whether, when, the separate stabilisers are finally abolished, some alternative measure, not open to the same objections, is necessary in the interests of bacon pig producers.I should like to put it to Her Majesty's Government that such an alternative measure is not only necessary but well-nigh essential to Northern Ireland. the state of the industry being such as it is, and I should be very glad to learn from the noble Lord who is winding up this debate on behalf of the Government that some further consideration has been given to this matter in the light of Northern Ireland's special position.
We in Northern Ireland share with all thinking people, and I think we should be more than short-sighted if we did not, the concern at the enormous cost of agricultural support to the Exchequer, but, in common with quite a number of noble Lords who have spoken to-day, we do not see how this can be avoided while huge and untimely shipments of cheap imported commodities are allowed to enter this country, and if, at the same time, Her Majesty's Government are going to maintain a fair standard of living for the agricultural community, as the Prime Minister promised in another place on February 11. I do not, however, intend to pursue this point, as it has already been dealt with most ably by those noble Lords who have spoken on the subject. I would merely confine myself 219 to saying that we in Northern Ireland most sincerely hope that it really is the intention of Her Majesty's Government to strive for what the Prime Minister, on the same occasion, referred to as a "strong and prosperous agricultural industry".
If this is to be done I, personally, think that it should be a matter of the first priority to give the closest possible attention to our marketing system. This is, I think, in many ways lamentably primitive and highly inefficient. The Danes are laughing at us where our marketing technique is concerned, and by the look of things the Italians will also be laughing at us before long. I do not think this can be regarded purely as a farmers' problem, as it concerns the taxpayer as a whole. Large sums of his money are being wasted every year owing largely to poor marketing systems. This is not, either, a problem that can be tackled locally by groups of farmers getting together in small cooperative bodies. I think that it must be tackled in a big way by the entire agricultural industry.
I think that the various Governments are to be congratulated on the way in which they have helped the industry to increase its efficiency of production since the noble Lord, Lord Williams of Barnburgh, introduced the 1947 Agriculture Act. But if the present Government would now exert their influence to bring about a similar increase in the efficiency of marketing, I am sure the results would be no less significant. I am sure, too, that any information that the noble Lord who is going to wind up this debate can give us of positive thinking on the part of the Government concerning this matter will be greatly welcomed by the farming community.
My Lords, if it is the Government's intention—and I sincerely hope it is—to strive for a strong and prosperous agricultural industry, I can see no reason why this great industry should not go from strength to strength. If, however, there is any doubt about it whatsoever, the faith of the small farmer, to which I have previously referred, will be shaken, confidence will be lost; the confidence that gives him the incentive to invest in productivity, for the future will be gone; and this, my Lords, would mean bad, black times ahead in Northern Ireland, 220 not only for the farmer but for everyone in Northern Ireland. I am hoping that when I get back to Belfast to-morrow I shall be able to tell my farming friends that they need not worry, that the Government is going to back them up, and I sincerely hope that the noble Lord who is going to wind up will give me the assurance that will enable me to do that.
§ 6.37 p.m.
THE EARL OF LYTTON
My Lords, before I make a very short speech I should like to add a postscript to the remarks made by the noble Baroness, Lady Elliot of Harwood, in relation to those parts of the farming community which were particularly exposed to the ferocious winter we have had. I farm in the middle of a traditional farming area on Exmoor, though not quite in the traditional manner. I do not suppose that our conditions were as bad as some others on Exmoor; and possibly Dartmoor was in a worse position than we were. Nevertheless, it froze with us for 72 consecutive days, except one, St. Valentine's Day, when there was no frost but plenty of slush for the birds. During that period, although we had our horses and skis and sleighs, my own bulldozer—not a small one, but not one of the biggest—which never broke down, was reinforced by some seven others. We were cut off by drifts from communications on the main road for 53 consecutive days and no bulldozer was capable of tackling that particular job. And I am normally the person who takes an informal contract for keeping eight miles of that road open.
I mention this to illustrate the nature of the drifts that accumulated in that part of the world, which cut off farmsteads and sheep and frustrated us in all our normal methods of rescue. But the people who came to our rescue in a most notable manner, and, I believe, on a scale that has not happened here before, were those in the helicopter service. It is quite something, when you are in difficulties, and wondering how many of your neighbour's sheep are going to die because it is impossible to get at them, to have a helicopter head straight for your house through the swirling snow; land within rotor-blade-distance of your door the supplies you have run out of, all without the smallest damage or dent, and then rise like a dragonfly into the gathering 221 darkness and disappear. I felt that I should like to take this opportunity, as nobody else has done, to express the gratitude that many of us must feel for the freedom from anxiety and fear which has been provided by the helicopter service on a very considerable scale.
Now for the short speech on agriculture in general which I have composed while listening to the noble Lords who have spoken so far. I take my copy of the Agriculture Act: it has been by me so long that it is falling to bits, not through my study of it but, I think, because a mouse has had a go at it. I should like to read what we all regard as the charter of modern agriculture bringing prosperity in the 101st year after the abolition of the Corn Laws. It is contained in only eleven lines, which set out the charter by which we have come to the position we are at now. Section 1 of the Act 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, 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.That seems to me to provide a pledge for all the factors of production on the land. I want to draw attention to its implications.
In the first place, the moment you start guaranteeing prices and assuring markets you have tampered with the free play of economic forces, supply and demand. Those who talk about restoring the free play of economic forces to agriculture should, I feel, always look (and I am not sure that even those who represent the farming industry look sufficiently) at the other side of the picture of our protected industry. The noble Lord, Lord Williams of Barnburgh, referred to a drop in the price of meat of 25 per cent. and to what would have happened had that occurred in the motor industry. I feel inclined to retort: what would have been the position had there not been something like 33 per cent. duty on imported machines, motors, every sort of thing for some thirty to forty years? Would 222 they ever have been at Dagenham if there had not been this protection? The noble Lord says, "No": and I agree with him. So that really what has been done with regard to the farmers is to protect them in such a way that they are politically exposed as mendicants in the time of Lent every year. And it is an unfortunate position which has been arrived at, because, though it was held to have certain advantages, the context in which this Act works is that of a country producing nothing like all the food it requires to eat; having nothing whatever to export, and being obliged to import; and having in some respects a very small—but, of late, growing—proportion of its production at home.
What are the advantages? As lately as July, 1962, the National Farmers' Union, in one of their publications resisting entry to the Common Market, made the following statement:The British system has two distinct advantages as compared with that adopted by the Six. First, the consumer is allowed access to the widest possible range of foodstuffs at low prices. Secondly, producer prices may be maintained at a reasonable level without having an adverse effect on the level of consumption.The system chosen for support of agriculture—I am not referring to the many forms of subsidy and grant for this, that and the other, but the general system of support in the matter of prices so that the farmer may be insulated from catastrophic drops in price—is the deficiency payment; and that provides for the farmer what the State determines annually shall be his fair remuneration. That having been decided, he gets it, whatever the fall in price is from outside. A large proportion of imports come in at prices which, from a year or two after this Act was passed, have been below prices which are considered remunerative. I will not attempt to suggest or discuss whether they are dumped prices or whether they are due to some kind of subvention in which we have heard every Government indulges, in some form or another. It is a tangled story. All I am trying to emphasise is that the Act represents as of interest to the British consumer that he should have cheap food.
And the extraordinary thing is, especially after two debates in this House on the economics of want, in which I have taken part, that there should be what the 223 noble Lord, Lord Williams of Barnburgh, described as "alarm and despondency" at events which make the price of meat 25 per cent. lower than it has been for some time. Why speak no longer of advantage to the consumer? Surely that was the whole purpose of the Act. If the advantage to the consumer is being swallowed up by intermediaries, why has it taken sixteen years to find it out? If it has only just been found out and we are focusing our attention upon that point, surely that is the point where the pinch should be alleviated by attending to those who swallow up on its way what should go to the consumer.
I do not know enough to recommend one system rather than another. All I do point out is this: that the deficiency payment is something which is supposed to be of great advantage to the consumer. Why is there a public outcry however low the price goes? The idea was that whatever was the cost to the taxpayer would occur under the progressive system of taxation which is ours, and that the consumer would be insulated from the regressive aspects of a tax on food. That was the principle as everybody understood it. It may be a wrong principle. But what I feel nobody has done to convince any thinking person in this debate to-day is to explain why there is such widespread dissatisfaction at cheap food, which was the whole object of this scheme.
However, may I leave all that aside and say I am not committed to one way rather than another. But I have heard with dismay one noble Lord talking lightly, as the economists do, about letting agricultural land go back out of production. Our agriculture seems to me to have developed in two ways: there is the intensive side and the traditional side. I personally would not argue that the intensive side—much of it—is a way of life. The creatures, or some of them, do not see the brown earth or the green grass, and some never see the light of day. It is a matter of concrete and steel, machinery, electricity and so forth. In conversation with the noble Earl, Lord Ferrers, I agreed with him that it was a natural, logical development. But it is not a way of life. It is investment. It is just as much entitled to this pledge under the Agriculture Act as anything else— 224adequate return on capital invested in the industry".I am more concerned with aspects of agriculture which are a way of life. I see people emerging from the agricultural squalor of generations. They still have a long way to go. There are all sorts of things wrong with the structure of the land, the layout of their houses, the way in which their women, their wives and daughters, have to work. And we are not out yet. I have only one thing to ask. Whatever system is adopted—and one feels in the air that a change is coming, a belief that has been more or less endorsed on both sides—I would ask everyone concerned with laying down what is to be the next system, to attend to the final words which I have already quoted from section 1 (1):proper remuneration and living conditions for farmers and workers in agriculture, and an adequate return on capital …Let all that be considered at the level we have reached, and for Heaven's sake ! do not let us have to go into reverse and put ourselves out of cultivation. That is all I wish to suggest.
§ 6.52 p.m.
§ LORD ALLERTON
My Lords, when the Annual Price Review is published opinions are always divided, and in some cases are sharply divided, between those who think that the farmers have had too much, those who think that they have had too little, and also those who think that the Price Review is just about right. I believe that this year—I emphasise, this year—the Price Review is about right, and I hope and believe that that is the view of the majority of the people of this country. To those who consider that farmers have had too much, I would stress the enormous contribution which agriculture makes to industry and to urban life. This is in addition to its primary function of producing food. For example, agriculture supplies £600 million worth of raw material to industry for processing and manufacturing. Farm machinery, on the foundation of a home market of £73 million, has become our fourth largest exporting industry, with exports worth £128 million. In addition, farmers spend £600 million on seeds and fertilisers. Their bill for oil is enormous. Nor does transport fail to benefit. I trust that those figures will convince those who regard the cost of agricultural support as being 225 too high, that agriculture makes tremendous contributions to our economy while, at the same time, producing our food. Indeed, one may say that money spent in supporting agriculture is certainly indirectly also supporting industry.
To those who think that the cost of agricultural support is not high enough, I would say that farmers have got as much as they can reasonably expect, and that it is possible that those taxpayers would welcome a reduction in taxation, which should be possible were the support costs of agriculture not so high as they are at present. My noble friend Lord Ferrers put so ably and so clearly the case for the Price Review's being about right that it would be presumptuous of me to go into that side of the argument any further.
As usual, I greatly enjoyed the speech of the noble Lord, Lord Williams of Barnburgh, and, as usual, I am unable to agree with quite all of it. There are but few who would begrudge farmers adequate financial support, especially in view of what the right honourable gentleman the Minister of Agriculture recently described as the high degree of human endeavour and ingenuity which they showed in getting supplies of food off the land during the recent dreadful winter. We should all be most grateful to those who work on the land. But many people will agree that the cost of support is now high enough, even if it is not too high.
This Price Review is virtually the same as before. The changes are not drastic, and such reductions as this Price Review imposes should not hurt much. For example, the ploughing up subsidy has been reduced from £7 per acre to £5 per acre. In my view, this is still generous. By now, most old grass which should have been ploughed has been ploughed, and to get £5 an acre for ploughing up worn out leys which would have to be ploughed in any case in the ordinary course of farming practice and good husbandry, seems to me to be generous. This reduction is surely compensated by the new grants for grassland renovation and the production of winter keep. It must be remembered that the cost of guarantees has risen by about £100 million in three years; in fact, they are now running at about £1 million a day. Such a rate of increase cannot continue indefinitely; nor does it tend to improve the public relations of the farmers. But, as I read 226 the Price Review, it seems to pave the way for discussion with the National Farmers' Union, the Commonwealth and other food suppliers, which may tend to less open-ended, and therefore less vulnerable, systems of support.
There is evidence already of new thinking on longer-term policy in this Price Review. The more flexible use of guaranteed prices for pigs and eggs seems to me to be indicative; but if the cost of support is to be kept at a level which is economically acceptable, some rise in food prices would seem to be inevitable. Should this happen, it would be compensated by lower costs to the taxpayer—and that really means everybody, because even in the few cases where direct taxation is not paid, practically everybody in this country pays taxes through indirect taxation.
In my view, some form of limitation of imports of foodstuffs may be essential in order to maintain a high selling price for the farmers, for a quite small surplus can break the market. If it does, under our present system the burden is then thrown on to the Exchequer. There are countless difficulties in ensuring against an over-supply of the market through a glut either in home production or in imports. It may be that a switch to the European system, whereby imported food prices are kept high enough to ensure proper rewards to the home farmers, is part of the answer, but the whole thing is so complicated that it can be only part of the answer.
The increase in the imports of Argentine and Yugoslavian beef are a case in point. It seems that they have risen to an extent which has thrown the meat market into chaos. They have risen by approximately 50 per cent. compared with the first quarter of 1962. This has resulted in the weekly guarantees for the four weeks ending March 4 being nearly double those of the corresponding period in 1962. I understand that the Government have approached the Argentine about the need to have regard to our market when planning their meat exports. It would seem that these approaches are not enough and that some more positive form of control may be necessary. The noble Lord, Lord Williams of Barnburgh, referred to the "love letters" to 227 the Argentine. It appears that they have been unproductive.
In addition, in my view some form of cereals marketing board may be necessary. At the present time producers of cereals and fatstock are completely insulated from market prices. The Potato Marketing Board has, by and large, worked very well. Although I and many other farmers may dislike controls and resent having to pay £3 an acre for the privilege of growing potatoes, most of us would have to admit that the Potato Marketing Board has worked very well. It may be that a cereals marketing board would work equally well, and that it could be a solution to some of the problems. The problems are complicated by the embarrassing fact that there is likely to be a surplus of food production throughout the Western world for some time to come.
When Europe becomes fully mechanised and generally adopts farming methods which are as efficient and up to date as are our own, it is only reasonable to expect that this overproduction will intensify and the surplus will become more difficult to handle. It is clear, however, that the Government are considering all these problems very carefully, and I have every confidence that some workable plan will be devised, It is a sad thought that there may be a surplus of food in the Western world while so many people in other parts of the world are starving. But this dreadful condition arises from poverty, and it is not economically possible to trade with people who are unable to pay, however desirable it may be from a moral standpoint.
If economies are to be made in the national bill for food support there are not many ways in which they can be made, unless they are further to reduce the flow of farm incomes. However, some farmers feel—and, in my opinion, with some justification—that the difference between the prices at which they sell and the retail prices is too great. This is a situation which should be watched carefully but a situation against which it is difficult to legislate. It could even be that some economies could be made within the Ministry of Agriculture itself. However, even if 228 some reduction were made in this direction, it could not amount to very much against a total expenditure of £364 million. On the other hand, few private businesses would send out two copies of the same circular, one for retention and one for transmission to the Ministry, in separate envelopes. I refer to the Agricultural census for March 4, 1963, which reached me in this way. The Ministry may not pay postage, but they do have to pay for the envelopes and for the staff who put them into the envelopes. This would not seem to be a very good example of business efficiency, nor a very good example to the farmer.
I have both heard and read complaints that increased farm efficiency is not getting its proper reward in this Price Review, and that too little is being done to compensate for higher costs. That costs are higher I am well aware, especially those relating to labour. And it must be remembered that very few agricultural workers get paid the minimum wage. But much of this increased efficiency and higher output stems from generous Government help in recent years in regard to grants for farm improvements, land drainage, et cetera. These schemes have been very considerable and have done much to increase output and to reduce costs. Admittedly, the Government have only borne part of the cost of these improvements, but, for once, even the Inland Revenue are helpful in their approach to this form of expenditure and a good deal of the cost is recovered by the private individual in this way. Moreover, the capital values of farms have increased and, in my view, the success of these schemes is most satisfactory and reflects great credit on the Government.
The scientists who have produced new and better fertilisers and new and better varieties of seed are also deserving of our thanks. They have done much to increase output, and at no greater cost to the farmer. The new varieties of wheats, which have increased yields so enormously in recent years, do not cost any more to cultivate, nor do they require any more fertiliser. In conclusion, I would suggest that the picture is not quite as black as it is sometimes painted, and that the Government have given agriculture a good deal in the past and are giving agriculture a good deal now. As 229 long as we continue to have a Conservative Government, I am sure that agriculture will get a good deal in the future.
§ 7.10 p.m.
My Lords, I always enjoy a debate initiated by my noble friend, if I may so call him, Lord Williams of Barnburgh. Another accomplishment that lies at his door is that he is the man who has taken agriculture out of Party politics. If that is possible, I think he has done it, and if it gets back again it will have nothing to do with him. It is much too late to-night to get involved in details of the Price Review, but I should like to make a few brief remarks in more or less general terms. The first thing is that, whatever are the merits of Her Majesty's Government's pronouncements, the fact remains that the Council of the Scottish National Farmers' Union passed very recently a vote of no confidence in the Government's agricultural policy. That is not a light-hearted body, and they do not do these things unless they think, rightly or wrongly, that there are certain grounds for disquiet. Without placing any more emphasis on it than that, I wanted to mention that fact. Basically, it was probably brought about by the dissatisfaction at no action being taken by Her Majesty's Government, after repeated warnings of the effects of uncontrolled imports. Those warnings have been completely ineffective. They have been warned by the unions, they have been warned by everybody; and everybody agrees that agricultural support costs must be kept down.
What we agriculturists complain about is the apparent gross inefficiency on the part of Her Majesty's Government in administering these supports. We all know that the slice of the cake is limited, but we want it to be administered where it does the most good to those who desire it. You cannot really blame the farmers for taking this view—and I am not talking about the farmers in Rolls Royces and so on; I am talking about the kind of farmer I know well in my own district, the small upland farmer who has a pretty tough time, not only in bad weather but normally. He looks around and he sees doctors getting a 14 per cent. rise, he sees his own farm servants getting roughly an average rise of 5 per cent. every year, he sees the teachers getting a rise, and he sees coal- 230 miners getting a rise. You cannot blame him if he says, "What about me? And what about the 1947 and 1957 Acts?" Apart from the letter of the law, are Her Majesty's Government carrying out the spirit of the law with fair remuneration for capital and work? That, I think, is the real antipathy this time against the Price Review. I know that there are great difficulties for Her Majesty's Government, but it is wrong just to say that there is nothing you can do about them.
One of the big troubles is the necessity of averaging. An average obscures just about as much as it reveals. The size of farm is one of the difficulties. You get whole areas, certainly in Scotland, where the size of farms is, relatively speaking, very small; there are awkward sizes, and so on. That causes very great discontent, in spite of the generosity of the Government. And they are generous; I am not trying to say they are not. The support is generous, but, as it is based on an overall average, those with small units for which the average is made up really feel the pinch. I have often said that I would consider much more favourably some kind of differential subsidy, rather than an average subsidy, it being taken back in surtax payments from the man who does not need it. That is one of the big difficulties, and I think some attention will have to be given to that.
Another difficulty in the upland rearing areas—as was mentioned by the noble Lady who has now gone—is that mechanical efficiency and capital investment are not applicable to that type of farm and to that production. The noble Lady remarked that biological efficiency was between the beasts—she did not use those words, but she implied that fact. She is not quite right there. The scientists are doing a lot of work on "twinning", and there is also a great deal of work proceeding on nutrition, which increases the output of your land, if you are lucky with your weather. So it is not absolutely true to say that the upland farms get no increased efficiency. They get a very small proportion of it, but a great deal lies in the future and not in the present day.
The size of the farm is not a complete criterion; it is only part of the problem. If the farm is of such a size that it requires a man-and-a-half to work it fully, 231 you are in a very difficult position in some of these remoter places where you cannot get casual labour. Either you must employ two, which is inefficient, or you have to employ one, the farmer himself. He works very hard indeed and he cannot fully get the benefits out of his farm, because it is not the right sort of unit size. What happens then, if he is wise, is that he is advised, and if it works out at a one-and-a-half-man farm he balances up his grazing, balances up the amount of fodder crops and winter keep he can produce, and produces all the beasts he can on that farm. He is left with a balance of, say, a hundred man days or so to fill in.
There is no more food on that farm so he turns to pigs and poultry, although very little of their food is produced on the farm. That balances out the time, and can balance an awkwardly shaped farm and produce an efficient answer. But the efficient answer depends on increasing the number of pigs going to market, which is happening. Then along comes a Price Review which says that he is producing too many pigs, and it cuts down the price. As a result, there is very great difficulty because, in order to make these units more viable, that is about the only thing he can do. But if he does it, then he is upsetting the pig market. That is the sort of detail which is difficult.
As regards the controlling of imports, I would suggest that all the statistics collected for the Price Review would give Her Majesty's Government an adequate basis, not on which to control home production in that particular year, but to control the imports, in order to provide a balance with very little variation. All the figures are there, so far as I can see, but the Government do not appear to make any use of them, as I think they might.
At the same time, you can canvass the farmers and say, "Look here, it is all very well this year, but you really must not increase your production any further". That could be done; and it would be fair enough if it were a viable farm. Nothing of this kind is done, however, though I think it should be. Some people talk about increased home production of calves without, it seems, realising that to produce an extra calf takes somewhere between four and five 232 years You have first of all to breed a heifer calf; you have to keep that heifer calf until it is two years old and put it to the bull; you have another year before you get a calf; and then, before you sell that calf you have a further year. Facts of this sort make it ridiculous to say that the farmers are pushing this, that or the other on to the market. Only a limited amount of culling is done, where it suits the farmer; and he cannot be blamed for that. It is lack of control in these things, I think, which we are often grumbling about.
I should like here to mention a point on the size of farms, the structure, which is often not mentioned. I am not trying to make a Party point, but the fact is that the landlord and tenant system has resulted in a large number of painless amalgamations of unviable holdings into viable holdings—for instance, when the tenant has given up as an old man, or for other reasons of that sort. I do not deny that there have been some unpleasant evictions, and cases of that sort, but the number has been very limited. On the whole, the landlord and tenant system has resulted in a far better structure in agriculture than has been produced anywhere else by any other system. It is a point which is very seldom made, and I think landlords should be given a little credit for that.
The actual size of a farm, I suggest, should be related to the basic income which it can produce, and not to its physical size. All types of farming are tabulated by the unions, and also by the Government. The different types of farms are tabulated to give a yield of so many pounds per acre, and so on and so forth, ranging from about £2 per acre for a sheep farm and going up to £10 and £12, or figures in that order, for grain and mixed dairy farms. It is quite easy to do a sum to show that if a man is to have an income of so many pounds per year he requires so many acres of land, according to the type of farming he is doing. I should have thought that, apart from social considerations, that would be a much better basic way to look at the size of a farm than merely to regard a given number of acres as being a small farm and another number as a large farm. I think that the actual, physical size of the farm has really not much to do with it.
233 As regards earlier retirements, I believe that the idea must be carefully considered, and I should like to throw up the following suggestion for the economists to play with. Suppose a retirement grant were made available to an elderly farmer so that he could build a house. Suppose we give that man £1,000 to build a house. The actual cost of building a house, in my part of the world, is of the order of £2,500, or thereabouts. Most farmers have about £1,500 stored by them. Suppose that that house, at the end of 30 years, were to revert to the local authority. The local authority would then get a house after the 30 years, during which time they would be getting their rates, for £1,000, as against the present system of borrowing, money when, from first to last, the average cost of a local authority house is £5,000. What is wrong with that idea? There is a possible way of encouraging the retirement of elderly farmers who at the present time are unable to retire.
If subsidies in general are paid through prices, then the stability of those prices must be controlled: otherwise, we have the fluctuations which we all know only too well. It would be interesting to know the proportion of home-grown grain to imported grain used by the food compounders. Because when a producer sells grain this sort of thing happens—and it actually happened to me. In December, I was offered for a sample of oats 18s. per cwt., a figure which bears no relation, of course, to the controlled price. At the end of January, about six weeks later, for the same sample of oats I was offered by the same merchant 20s., which I accepted. That means that the merchants have a difference, a margin, to play with of between 9s. 6d. and 7s. 6d. per cwt., for reasons quite unconnected with the farmer. That is not price stability, and I do not see how, unless the problem is tackled at the merchants' source, we shall overcome it.
I thought that the speech by the noble Lord, Lord Salter, who is not here now, was most interesting, inasmuch as it showed to what extent a really biased view can go. I had hoped he would be here, because I wanted to say that in front of him; but unfortunately he is not. It is, of course, a very difficult problem, and I would not contend otherwise. Farmers' prices are held down here in aid of cheap food; and, of 234 course, this country is able to import food surpluses off the world market. The world prices in such cases are said to hear no relation to the cost of production: these surpluses are said to be sold at about 70 per cent. of the cost of production. Now we are cashing in on that, and good luck to us ! Nevertheless, we should not then turn round and hold that against the farmer. My authority on that is a Frenchman, M. Pisani, who was the French Minister of Agriculture. Of course, I cannot vouch for these figures, but, generally speaking, I think they are not far off the mark.
With reference to the remarks of the noble Lord, Lord Salter, on labour being better employed elsewhere, he should realise—although apparently he did not—that the drift from the land is something of the order of 10,000 a year. That is as fast as the people can be absorbed in industry, and it is being done, so far as I know, without difficulty. The differential between the wages of farm servants (as we call them in Scotland) or agricultural labourers and the wages of industrial workers is now closing very rapidly, and I have a feeling that the drift may not go on quite so fast. And I do not think that that is a bad thing.
The noble Lord made another remark about its being unlikely, or inconceivable, that any war in the future would be a long war. This point is quite invalid. He neglected to state that a nuclear attack could put the home-grown food supply of an entire country out of action for five or six years, which would mean that a neighbouring country which was a little luckier would probably have to support that country with its own food. I think that such facts ought to be rammed down economists' throats.
The feature that I particularly welcome in this Price Review is the reference to the forthcoming discussions on the whole structure of support marketing and so on. That is the really constructive thing in this Review, and I am prepared to swallow the whole of the rest of it. When all is said and done, 11d. per cwt. off the price of grain, when I suffered a 2s. difference on the price purely on the date (though this has nothing to do with the Price Review), is something one can swallow quite easily. I would suggest that the action of the Farmers' Union about this Price 235 Review and the scream they put up after the passing of the 1957 Act is completely at variance with their scream about the question of going on to any other form of support in the Common Market. Nevertheless, I would end these remarks by telling the noble Earl, Lord Ferrers that I am reliably informed that the road to Hell is paved with good intentions.
My Lords, might I ask the noble Viscount to expand a little on what he said. By that remark does he mean that I am going to Hell?
No, my Lords: I think perhaps I was introducing a slightly Party angle, and I had suggested that this Price Review indicates, not very urgently, that there may be an Election.
§ 7.30 p.m.
§ LORD WALSTON
My Lords, I do not wish to enter into any discussion between noble Lords on the opposite side as to the intentions of the noble Earl, good or bad, or as to whether he is heading towards Hell or otherwise: in fact, I do not know where Hell is or if it exists. But that a more philosophical argument than we should be entering into at this late hour. The noble Earl, Lord Ferrers, in his very orthodox speech, mentioned that on this occasion my noble friend Lord Williams of Barnburgh had not tabled a Motion specifically concerning the Price Review but that the wording actually was "to call attention to the state of agriculture". I can assure the noble Earl (and I have no fear of contradiction from my noble friend behind me) that this cannot, and must not, be taken in any way as being an implicit and complete acceptance or approval of the Price Review. What my noble friend wished to do, as has been amply proved by his interesting speech, is to say that agriculture certainly is in a state. What he also wished to do was to make it clear to your Lordships that we cannot discuss the Price Review in isolation from the general state of agriculture and the general agricultural policy. It is all part of the one thing.
Extending from that, I would endorse the remarks of the noble Lord, Lord Henley, that we cannot discuss United 236 Kingdom agriculture isolated from world agriculture. It has been made abundantly clear by the speeches of noble Lords throughout this interesting debate that what happens in this country is concerned very closely with what happens in other countries, and vice versa. Here, I would take issue with my noble friend Lord Wise on his suggestion that agriculture itself might be having a bad time but the rest of the country could go on being happy and prosperous. In fact, his words were—and I wrote them down—"Others will reap their profits, even though the farmers and farm workers suffer". That, my Lords, I would suggest is quite untrue. The prosperity of this country, in all its phases, is closely tied up with agriculture. We cannot have agriculture which is sinking slowly down into despair and at the same time expect to have the rest of the country prosperous. I hope that the noble Lord, Lord Salter, had he been here, would have agreed with this. In common with other noble Lords I am disappointed he is not here, for there are many things he said with which many of us disagree. But there is one minor point he mentioned and that was the case of the Norfolk farmer and his Rolls Royce. I hold no brief for Norfolk farmers, but no Cambridgeshire farmer has a Rolls Royce.
My Lords, I am sorry to interrupt, but I think the noble Lord is being a little unjust. It was I who brought in the Rolls Royce farmer. I must take the responsibility for that.
§ LORD WALSTON
My Lords, that is very generous. Wherever a farmer happens to farm, if he is on a large scale, if he is efficient, why should he not be entitled to an expensive motor car, just as much as a prosperous and successful manufacturer or stockbroker, newspaper proprietor or anybody else? There is an extraordinary idea prevalent among a large part of the non-farming population that, while it is reasonable, right and proper for the industrialists, the bankers and the rest to have outward signs of affluence, as soon as farmers do anything like that there must be something wrong. I am sure that noble Lords who persist to the end of this debate will need no persuading on this, but, I hope that other 237 noble Lords, not so directly concerned with agriculture, will take that point.
This debate, up to a point, has been to my mind a somewhat gloomy one: there has been an air of depression hanging over it. The same depression is pervading the whole of agriculture, and I believe that it is doing agriculture harm. The noble Earl, Lord Bathurst, was an exception. His admirable speech consoles us for the fact that he is no longer on the Front Bench. He can speak from his present position with much independence and authority. He spoke of the good job that farmers do, and in my view people do not speak sufficiently about that. I do not think that people in this country, in or out of agriculture, have a full realisation of what farmers have achieved. It is time that some of us, farmers or not, should speak up for farming and farm workers.
Just let me give a few figures to bear this out. I was lunching to-day with an American friend of mine, a farmer from Missouri. I asked him the price of wheat at the moment on his farm near Kansas City. He said that it was 2 dollars 22 cents per bushel. If my mathematics are correct, that means he is getting 28s. 6d. per cwt. for his wheat. Efficient American farmers are always held up to us as models of what we should be. What is our price in the Price Review? It is 26s. 11. In other words, the British farmer to-day is receiving less for his wheat than this highly-efficient, highly-mechanised and modernised American farmer, and we ought to be proud of it and realise it. Other people should realise it, too.
Then there is the question of sugar. I asked the noble Lord who is to reply to-day the price of sugar from homegrown sugar beet. He thought that there was a catch in the question, but I simply wanted to know the answer. And I wanted other noble Lords to know the answer. The answer was that sugar today is £53 9s. 2d. The price of sugar on the world market to-day is just over £62, admittedly an exceptional price, a higher price than there has been for a long time. But the fact remains that the cost of sugar from home-grown sugar beet to the British housewife is lower than what it would be if she had to rely on buying her sugar on the world market at to-day's 238 prices. That is another fact which should be remembered.
Then let us look at barley. The noble Earl, Lord Ferrers, said that we have now reached self-sufficiency in barley and he implied that, as a result of that, we should call a halt in our barley expansion. Why should we? Why should we not export? We are exporting barley. East Anglian barley leaves King's Lynn, Lowestoft and Yarmouth for Europe. We can export. We should not have this inferiority complex, feeling that the Continentals and the Americans are always better than we are. We can beat them without subsidies and we can export to the Continent at lower prices, so that buyers are willing to buy.
Let us have a look at agriculture in comparison with other industries. How efficient are we? There is a lot of talk about the efficiency of agriculture. There are so many definitions of efficiency. I would suggest a fairly simple definition, one possibly not satisfactory to economists but I think a practical one from the paint of view of ordinary people. I suggest to you that an efficient industry is one which can deliver the goods at a constant price, or, if possible, at a decreasing price and which, at the same time, is able to pay every-increasing wages to the people who work in it, because that is the way of raising the standard of living. If we accept that as a definition of efficiency, from a social point of view, it is interesting to see how industries have fared over the last five years.
If we look at railways—rather topical at the present time—we see that in the last five years railway wages have risen by some 20 per cent. and railway fares by some 41 per cent. In other words, the ratio between the two shows that, by our definition, their efficiency has declined by 17 per cent. In the building industry, wages have gone up by 22 per cent., building costs have gone up by 40 per cent.: a decline in efficiency of over 14 per cent. In the baking industry, wages have gone up 17½ per cent., retail prices by 26 per cent.: a decline of 7 per cent. In electricity, wages have gone up 18½ per cent., retail prices by 25 per cent.: a decline of 5½ per cent. All these important industries have had to pass on, not only the whole of their wages increases to the consumer, but more.
239 Now let us look at some industries which have increased their efficiency. In motor vehicles, wages have gone up 15 per cent., prices by only 6 per cent. They have absorbed some of their increased cost and increased their efficiency by 8 per cent. In the furniture industry, the figures are just about the same. I have selected these figures from the official statistics as the easy ones to take out, more or less as a random sample. In the men's clothing industry, wages have gone up 20 per cent., retail prices by only 8 per cent.: an increase of efficiency of 9½per cent.
Then we find that in agriculture wages have gone up 25 per cent., a higher increase in the last five years than in any other industry, and prices have not gone up at all, but down by 8 per cent. In other words, agriculture is the only industry where not only has the entire cost of wages not been passed on to the consumer but the consumer has actually got the product at a lower price. I think that this is something of great importance which the world should know, and of which everybody who is engaged in the agricultural industry should be extremely proud.
Why has this happened? I believe it has happened because of the foundations laid by my noble friend Lord Williams of Barnburgh in his Agriculture Act, because the security of guaranteed markets and prices has given the farmers an opportunity to get on and do their job. But I am afraid it cannot continue. We cannot look forward to that sort of future for the industry, with things going as they are at the present time. As we know, the present bastard system of the 1947 Agriculture Act has resulted in the cost to the taxpayers going up £350 million, food prices going up to the consumer and farm profits coming down.
There are many figures to prove this. In the Farmers Weekly last week, Mr. George Houston, a lecturer in economics at Glasgow, gave some interesting figures. For the 1956 to 1961 period, he gave for agricultural productivity, as he described it, an increase of 30 per cent., for agricultural prices a decline of 5 per cent.; for agricultural net income a decline of 5 per cent.; while the retail food price index went up 7 per cent. Only this morning I received from the Department of Agricultural Economics at Nottingham Uni- 240 versity interesting but disturbing figures, disturbing in that they confirmed what I already know. They are in graph form, showing the various costs of agricultural production and output, net farm income and what they describe as management and investment income. Over the past ten years, the period they take, the graph rises steadily for all costs and for output, and falls steadily for net farm income and management and investment income. Just to take two examples from their sample of farms in their area, in the ten years' period, gross output of arable farms increased 4 per cent., while net farm income went down by 12 per cent.; gross income of livestock farms went up 7½ per cent., net farm income went down 20 per cent.
This emphasises the point that the noble Baroness, Lady Elliot of Harwood, made in her admirable speech. I should like to say how glad I was that she paid tribute to the work of her stockmen through this difficult weather. Not only the shepherds of Scotland but also the stockmen of our more pampered dairy cattle in the South and East of England, as I know personally, have had a difficult time. These figures are completely in accord with the official figures in the White Paper, Appendix II, page 14, to which my noble friend Lord Williams of Barnburgh has referred. Taking the figures in Table A of farming net income, comparing 1952–53 with 1962–63, we see that the actual rise in pounds sterling over that ten year period is one of 15 per cent., but during that same period the purchasing power of the pound has dropped by 30 per cent. In other words, whether we look at the Government White Paper, at the figures prepared by agricultural economists in different parts of the country or at the farming Press, or simply take our own experience in our own countryside, we come to exactly the same result: the farming industry to-day is steadily and very surely having its profits decreased, and the actual amount of spending power and the standard of life of the people engaged in it is becoming smaller, hand in hand with a rise in output.
What do we need now in order to put this problem right?—because we must put it right, for the sake of the country, as well as the agricultural industry, the farmers and the farm workers. We certainly do not need any more pious hopes or any more talk 241 about the need for a healthy and well-balanced agriculture, and the rest. You cannot perform with words, and you cannot perform with hopes. What we need is a very clear, objective, honest and courageous re-thinking of the whole problem. We have many things to go on, and a lot of past experience. The needs that were there in 1947 are still here to-day.
We must (and I think even the noble Lord, Lord Salter, would agree with this) have an agriculture which recognises that it has only one duty, and that is to provide the people of this country with the cheapest food that they can get, and not to expect prior claim on the market for more expensive food. Agriculture, in other words, must serve the economic needs of the country and not be put in a glass case and kept alive artificially because it happens to be our oldest industry, or for any other reason. We must be able to produce competitively. When noble Lords ask, and many of them have, what share our home agriculture should have of the home market, that, surely, is the answer. Its share must be that amount of food it can produce competitively; and it is the job of the Government, whatever Government we have, to do what they can to see that British agriculture can produce competitively. I hope that the figures I have already given make it clear that the farmers and farm workers of this country can, given the right circumstances, do just that.
In order to do that—and we need not waste much time on this point—what we need are guaranteed markets and guaranteed prices, as my noble friend has so often told us; and we need, also, some form of regulation of imports. That is perhaps the most difficult thing. How can we achieve this? Here I would say to my noble friend Lord Sainsbury that we are not confronted solely with the choice between a support price system or a deficiency payments system. I believe that we have one more course open to us. Perhaps I may at this stage make one comment on Lord Sainsbury's interesting and well-informed speech—and it was most valuable for us to have the view of somebody with his experience in the retail trade, instead of having simply the views of people directly con- 242 cerned with production. While I would certainly agree with him that we cannot, and should not, make the middlemen the scapegoats of the present situation, the figures he quoted from Mr. Allen, of Oxford, did not seem to me quite so favourable to the middleman as I think my noble friend thought they were. My recollection is that Mr. Allen said that the total amount of extra deficiency payments needed for meat during 1961 was £52 million, and that something between £36 million and £48 million found its way back to the producer. The gap between £36 million and £48 million is very wide, and if one takes a halfway figure of £42 million, that still leaves £10 million which did not find its way back to the producer. In other words, it presumably found its way to the one in the middle.
§ LORD WALSTON
Yes, I do mean the consumer. Therefore, something like 20 per cent. of this extra amount did go to increase the margins of the middleman. That is not as bad as 100 per cent., but I do not think it is an entire whitewashing of the people who come in between the producer and the consumer.
I will leave that and come back to the important point of how we can set about regulating imports and what is the best way to do it. I would strongly support the views which have been expressed in all parts of the House this afternoon: that something in the form of commodity commissions is the right answer. I do not think it would be right to go into any details, because clearly the details of how these things, which are highly technical, should be operated, should be worked out with all the interests concerned—not only the farmers themselves, but the trade, the millers, the butchers, the importers of meat, the importers of feeding-stuffs, and so on—profiting from their experience, but not, while profiting from their experience, allowing ourselves to be overruled by any one-sided interest that may arise.
In operating this system of commodity commissions, I personally (and I speak here purely personally) have a strong preference for a system of long-term contracts. I believe that we should do our best to base the whole of our supply of food for this country, in so far as we can 243 do it, on long-term contracts, not only with the home producer but also with the producer overseas. That would in no way run counter to GATT, as the noble Lord, Lord Salter, was questioning. We could undoubtedly offer contracts to our old suppliers on what they have been providing in the past, and if they did not want to enter into the long-term contract business, then we should be open to make the contracts with other people. That would not be, as I understand it, an infringement of GATT.
The benefits would be not only to this country and the farmers of this country, but also to the primary producers throughout the world. In this particular period, when we are so conscious of the Freedom From Hunger Campaign, I do not think we can be blind to the importance of raising the standard of living in so many of the primary producing countries and enabling the people who live there, often in adject poverty and suffering from malnutrition, by the security offered of these long-term contracts, to earn more money and to buy more food. At the same time as doing that noble act we should, as it happens, be benefiting our own industry enormously, because by enabling these people to have a fixed and assured income from the long-term contracts that we should offer them we should be opening up ever-widening markets for our own industry in this country. So the system of commodity commissions, regulating our home purchases and our overseas purchases, coupled with long-term contracts, seems to me to give not only the security and just treatment that the home producer desires and deserves, but also benefit to those abroad and to our own industry at the same time.
I should like to deal briefly with a question which I believe only two noble Lords raised, though I was rather surprised that only two did. I refer to the noble Lord, Lord Dunleath, who made, in my opinion, a most admirable speech setting out the problems of Northern Ireland, but not in any way in a parochial manner, and the noble Viscount, Lord Stonehaven. They both referred to the problem of the small farmer. The noble Lord, Lord Dunleath, said that the situation will solve itself in time—I think those were his words. He also mentioned, significantly and rather sinisterly, I thought, the fact that farmers' sons are 244 now leaving many of the farms in Northern Ireland. I am sure that that is true, and it may be one of the reasons for the very high rate of unemployment in Northern Ireland, with young men coming on to the labour market away from the farms and swelling the already oversupplied labour market that exists. He also said that this situation will solve itself in time by means of this sort.
That is perfectly true, but I do not think it is a situation that he can happily allow to solve itself in time, and it is a situation which is not confined to Northern Ireland. The Farmers Weekly had an interesting table of this, headed: "Over 300 Acres—Up; Under 300—Down." If you look a little more carefully, you will see that in the last eleven years there has been a decline of 16 per cent. in the number of farms under 20 acres; of farms of 20 to 50 acres, a decline of 14 per cent.; and of farms of over 1,000 acres, an increase of 46 per cent.
That is a process which is happening, and it is not appropriate at this stage to say whether that is a good state of affairs about which we can be happy, or a bad state of affairs. It is something which economic forces are causing. Ought we, as a nation, ought the Government of this country, to take any steps about it; or ought they to allow it to happen without any action being taken? The present Government take the view that they ought to do something about it. That is why we have so many of these special hill farming schemes, small farmers' schemes, winter keep schemes, and all the rest of it, in a vain attempt to arrest this trend. I, too, think we should not allow it to happen in an entirely free manner, although we must accept that it is an inevitable movement.
There are various things which, I believe, we should do. Some of them have already been done. We should, for instance, so organise our agricultural marketing that the small farmer is at no disadvantage as compared with the large. The Milk Marketing Board has done that in a valuable fashion, and it does not matter whether you are selling 10 or 500 gallons of milk a day, you get the same price for it. In a slightly different manner, the British Sugar Corporation has done it. If you are growing 20 or 245 200 acres, you get the same price. But if you come to the other commodities, particularly meat, cereals and potatoes, the small farmer is at a great disadvantage. I know perfectly well in my own case that as a large grower of barley I can invariably get a higher price for my barley than my smaller neighbours can, even though my barley is no better. In order to put that right we need more marketing boards, cereal marketing boards, and so on. We should assist and encourage co-operative efforts, and the Government are doing that to a certain extent. As your Lordships will remember from the debate we had the other day on the Agriculture (Miscellaneous Provisions) Bill, there was a clause dealing specifically with that.
It is only a minor point, but I should like to return to the suggestion made by the noble Duke, the Duke of Atholl, which was turned clown, in spite of my support, by the noble Lord, Lord St. Oswald, who is to reply. It was the suggestion that the grants for buildings should be extended from the housing of machinery to the housing of livestock. I do not think I am misrepresenting the noble Lord—I certainly do not wish to do so—but I believe he said that this was not to be done because there was no demand for it, the case has not arisen, but, of course, if somebody asked for it it might be considered at some stage. I will quote to the noble Lord, and to your Lordships, an article in the Farmer and Stockbreeder of March 18, headed, "Cowtels"—I do riot know what the noble Lord, Lord Conesford, would say to such a word if lie were here. The article says:Cowtels—a co-operative set of buildings for two or three farmers to house, milk and feed dairy cows—are one possible way of reducing overhead costs in milk production in West Wales. This was suggested by Mr. Philip Peachey, N.A.A.S., senior district advisory officer, at Narberth, Pembrokeshire, during a series of meetings on 'Cashing in on costs'.Such units, he said, had existed in Sweden and in America since 1944.The Ministry of Agriculture employ admirable, far-sighted, wide-thinking advisory officers, but I wish they and the Minister would listen to some of their officers, even if they do not listen to noble Lords in this Chamber, and not say, "We will do nothing about it because nobody wants it". After all, it has been going 246 on for nearly twenty years in America, and we should not be all that far behind. That is one way.
But I think that most important of all is some scheme on the lines which the noble Viscount, Lord Stonehaven, outlined, for a form of pensions for farmers who are thinking of retiring, a purely voluntary scheme. There is no suggestion that farmers should be told, "You are too old. Get out". But if any of them think, with the schemes which are going on and the difficulty of keeping up to date, "It would be nice to get out, but I cannot afford it", then I believe the Government should come in and make it possible, by some form of scheme such as the noble Viscount outlined, for them to retire and let their farms he either taken over by young people or amalgamated into larger holdings. It is too late to develop that theme, and I apologise for having detained your Lordships so long.
I would say only this. If the Government had a policy for agriculture, one could truthfully say that that policy was in ruins. But they have no policy. It is thanks only to the farmers and to farm workers that agriculture to-day is not in ruins. But it is fast losing the post-war gloss, and only the efforts of all those engaged in it can preserve it, as they have hitherto preserved it fairly successfully, from the big axes of the Government demolition squad.
§ 8.7 p.m.
LORD ST. OSWALD
My Lords, I have enjoyed this debate, as I should expect to enjoy any debate opened by the noble Lord, Lord Williams of Barn-burgh, and wound up for the Opposition by the noble Lord, Lord Walston. I should have enjoyed it a little more if the noble Lord, Lord Walston, had trotted out his hobby cow, as he normally does on every occasion. When he mentioned cowtels, I was quite sure he was going to put his hobby cow in them. However, the noble Lord enjoyed the debate less than I: he found an air of depression hanging over it, which was quite impalpable to me. Noble Lords opposite may have been depressed by the lack of any real rods with which to beat the Government. Imagined rods cause little pain, and the rods they were able to find were in their own imaginations.
247 The noble Lord, Lord Walston, drew attention to the efficiency of British farming, and that is something in which we all take a pride, whatever our connection with agriculture. He asked specifically why we had to restrict barley growing, instead of exporting barley. As he and I are well, aware, had the Common Market negotiations gone otherwise there would have been a considerable opening there. He said that we exported some. I wish that it were more. My own information is that it is of the order of 250,000 tons of malting barley, possibly some of it the noble Lord's. We should be delighted if more of it could find a market abroad. In the meantime, our aim in reducing the guaranteed prices for wheat and barley has been to check the remarkable expansion of production of these commodities which, if it were to continue as at present, could only serve, as the noble Lord will agree, to depress the market.
The noble Lord commented on my noble friend's statement that we are already largely self-sufficient in barley. Indeed, our exports of barley are at present of about the same order as our imports. As for wheat, a lame part of our crop now has to be used for feed. The millers and compounders have accepted the need to use as large a proportion as possible of home-grown wheat and barley, but there are certain limitations. Most of the wheat produced in this country is of the soft variety, but the millers prefer to make the sort of loaf which can only be made with a high proportion of hard wheat in the grist.
§ LORD WALSTON
May I interrupt the noble Lord? I wonder whether he meant what he said? I hope he did. He said that the millers prefer to make bread out of hard grain. Is it simply a preference on the part of the millers—because that could easily be overcome—or is there a more serious reason?
LORD ST. OSWALD
My information is that they assess the market as preferring the type of bread which is made with a larger proportion of hard wheat flour than soft wheat flour. As regards barley, this is to some extent interchangeable with maize, but there are limits to the degree to which one grain can be substituted for another in a balanced ration.
248 The noble Lord, Lord Walston, also mentioned in a critical tone the middleman. Certainly our distributive system has its imperfections, but they have not been created by our present system of farm support. No distributive system is perfect, either in this country or elsewhere, and we are anxious to secure any practical improvements we can. The butchers are, of course, the easiest target because of their practice of averaging prices, but the Committee of Inquiry under Sir Reginald Verdon-Smith is making a thorough investigation into fat-stock and carcase meat marketings and distributions, and they will be reporting whether changes are desirable. While our distributive system is not perfect, I see no sign that its efficiency has declined. In many respects it has visibly improved and there is enough competition to prevent anything like profiteering. Of course, it is up to the housewife to see that the shop which offers the most competitive prices is the one which gets her custom.
My Lords, I wonder whether the House will allow me to say why this is a somewhat poignant political moment for me. Some years ago, when I was beginning to feel my way delicately into political life, I made what must have been my first speech in public. It was made to the Barnsley Branch of the National Farmers' Union, and the other speaker, the principal speaker, was Mr. Tom Williams, the former Minister of Agriculture. Little did it occur to me then—in fact, it did not enter my head at all—that one day I should be debating with him from one Dispatch Box to another, across one of the Houses of Parliament. I might say that it was about the first thing that did occur to me on July 16 of last year, when I was appointed to my present post. The sense of privilege which I felt then, and feel now, will not, I know, be dimmed by the passage of years.
However, to-day is one of the happily rare occasions when I have to regard the noble Lord, for a space of hours, first as an opponent and only secondly as a neighbour. That exercise requires something of an effort, because the closer men live to the noble Lord, the greater and warmer their regard for him is apt to be. To live, as I do, in the West Riding of Yorkshire is to share that warmth of 249 regard with the noble Lord's other neighbours. At this point, paradox takes over. I am this evening at even closer quarters than when at home, but I hope that the feelings I have described will not dull or adulterate the spirit of my debating; because at the outset it is right for me to tell the noble Lard that I have been surprised by his reception of this Price Review and that I find that reception utterly illogical. My task is to convince the noble Lord of his own illogicality, without embarrassing him too painfully.
The noble Lord, Lord Williams of Barnburgh, has referred, with righteous pride, to the 1947 Act of which he was the author, and by which he will be remembered. But among all the virtues by which that Act will be remembered, perhaps the most characteristic and the most farsighted was that definition of the purpose of the price guarantees, incorporated—one might say enshrined—in Section 1 of the Act:… to promote and maintain a stable and efficient agricultural industry capable of producing such parts of the nation's food and other agricultural produce as in the national interest it is desirable to produce …"—and I stress the last words.
I must confess that I was greatly surprised at the dissatisfaction which emerged in the speech of the noble Lord, Lord Williams of Barnburgh, on this year's determinations. I had hoped that he would be commending this year's awards to your Lordships, because the central purpose of the Review determinations this year has been the effective carrying out of the principles which I have just cited—in fact he made one or two remarks which I thought might be a preface to such approval. He said that means must be found to avoid gluts as well as scarcity. He also said that it is inevitable that the more farmers produce of certain commodities, the less they will get. Those are two of the facts of agricultural life to-day which this Review has taken into account. But, having recognised and advertised them, the noble Lord then went on to attack the means that we have taken of dealing with them.
§ LORD WILLIAMS OF BARNBURGH
My Lords, I think that the noble Lord, quite unintentionally, is misrepresenting what I said. I do not remember having objected or protested against the formula that has been applied, either to eggs or 250 to bacon. I said, in fact, that it was almost inevitable.
LORD ST. OSWALD
But the noble Lord's general criticism of the Price Review, I thought, embraced virtually the whole approach represented in this Review.
§ LORD WILLIAMS OF BARNBURGH
My Lords, let me make my position quite clear to the noble Lord, and I promise that I will not intervene again. I said that I was not going to deal in detail with commodities, items, formulæ and what-not, which I would leave to my noble friends, but that I would deal with the wider issue of the long-term view of agriculture. If I did not make myself clear, I apologise to the noble Lord and to the House.
LORD ST. OSWALD
I am sure that the apology is due from me. But the point I was trying to make was that it is the long-term view represented in this Price Review that we think carries forward the foresight involved in his own Price Reviews, and I find it rather hard to understand why he should now have any quarrel with the steps we have taken to gear production to the nation's requirements. This has been the general theme for the Review determinations, and it seems to me very different from the "Stop-Go," "Shilling-on, Shilling-off," rather haphazard methods described by the noble Lord, Lord Wise, behind him. It develops a continuing theme from its predecessors, in the series of Annual Review White Papers.
The guarantee for sugar beet has always been limited to an authorised contract acreage. Some years ago, in 1954, a standard quantity of milk was introduced, and the figures for this year's increase in milk production in relation to the increase in consumption of liquid milk have shown the effectiveness of this earlier innovation. In 1959 the guarantee for potatoes was related to the amount sold for human consumption. The flexible guarantee arrangements for pigs, brought in at the 1961 Review, have had to be tightened this year, and now we have introduced an indicator price for eggs, analogous again to a standard quantity.
To-day, only for cereals and fatstock does the guarantee apply to an unlimited quantity. And with two main 251 cereals, wheat and barley, we have had to cut the existing guarantees as a disincentive to over-production. All these measures are designed to bring the production of these commodities into better relationship with consumer requirements.
This was the sort of future necessity, it seems to me, which the noble Lord foresaw; and this is what he now (and I trust that I am not misrepresenting him) appears to me to disregard as being the virtue of this White Papr. His Bill was designed in a time of scarcity but by a man able to prophesy a time of plenty. It seems to me that it is as if Moses, though no longer in office, it is true, having arrived in the Promised Land with his people, though with milk and honey and other agricultural commodities plainly and plentifully in evidence, had then exerted all his immense gifts and prestige to influence and persuade them that they were still in the desert.
In order to convince them that they were still in the desert the noble Lord introduced one or two facts. He said—which is true—that farm incomes have fallen slightly this year. But I do not believe that the assumption he made from this is true: that it is in any way a sign of a reversal of the long-term upward trend. The details of the income calculation show, as my noble friend pointed out at the beginning of this debate, that one of the main elements in this slight decline was a fall in horticultural receipts of about £13 million from the very high figure reached a year ago. Another important element was the heavier consumption of feeding-stuffs. My noble friend has already drawn attention to the fact that this increased use of feeding-stuffs is linked with the higher pig population, which is, in turn, affecting the price of pigs. At the same time we must not forget that the industry's efficiency continues to increase, and that this year's award will leave farmers with a reasonable share of the £25 million which they may expect to gain from increased efficiency on Review commodities.
My noble friends Lord Bathurst and Lord Lytton, and the noble Lord, Lord Wise, all spoke on this subject of efficiency. They spoke first of the great difficulties caused by the weather—for 252 which Lord Wise did not blame the Government—and the other factors that farmers have had to overcome.
Despite these factors, the general picture is one of increasing yields, and anyone would wish to pay proper tribute to the farmer's initiative and ingenuity in this achievement. It is always a pleasure to pay tribute to the enterprise, ability and hard work on the part of the farmers and farm workers which makes possible this continuing increase in the industry's efficiency. But, my Lords, there is some satisfaction also in remembering what the Government have done, and are doing, to help farmers to increase their efficiency. Very considerable resources are provided by the Exchequer each year with the direct aim of strengthening the industry's competitive power. In addition to the grants to occupiers which enter into the calculation of the total value of the guarantees, there are also the grants, such as those in the Farm Improvement Scheme, which cover matters that are a landlord's responsibility. As your Lordships' know, the current Agriculture (Miscellaneous Provisions) Bill is adding a further £35 million to the amount available for these capital grants, making a total of £90 million for this Scheme.
The Government also gives farmers free technical advice, through the National Agricultural Advisory Service, the Agricultural Land Service and certain other specialist services dealing with many aspects of farming, ranging from land drainage to animal health. The costs attributable to the advisory work of the National Agricultural Advisory Service and the Agricultural Land Service can broadly be put at about £3 million a year. Many would say that the help they give to increased efficiency is out of all proportion to that cost. This Government contribution towards the industry's efficiency adds even more strength to the case for expecting the industry to use part of the gain from increasing efficiency 'to meet the rise in costs. This is, after all, no more than must be done by other industries. Indeed, every industry which desires to maintain or improve its competitive position must seek to increase its efficiency year by year and to use this increase in part to meet any rise in costs.
The noble Lord, Lord Williams of Barnburgh, said that there had been no 253 rise in real incomes between 1948–49 and 1962–63. As he spoke I wondered why he had particularly picked the year 1948–49. I think I know. I have looked up the Review White Paper issued by the noble Lord in 1951, and it describes it as a period when…farmers' aggregate incomes … included £40 million per annum injected mainly by additions to farm prices, in order to provide, by a quite exceptional method, a part of the large amount of new capital required in the initial period of agricultural expansion launched in August, 1947.That White Paper continued:… the need for this addition to income to finance capital expenditure is regarded by the Government as having diminished.… The Government therefore concluded that the special capital injection should now be progressively reduced.Things look different to the noble Lord now.
LORD WILLIAM, OF BARNBURGFI
No. What was meant, surely, by the sentence just quoted was that the £40 million injection year by year should be reduced.
LORD ST. OSWALD
I read it as signifying that the noble Lord thought that the necessary fillip had been given to agriculture and that a fillip of that intensity would become less and less necessary.
My noble friend Lady Elliot of Harwood was grateful for the hill ewe subsidy, but she said how difficult it was to increase efficiency on hill and marginal land. We hope that the winter keep grants included in the Bill at present passing through your Lordships' House will assist in that, and I hope it will also bring some encouragement to my noble friend Lord Stonehaven.
The noble Lord, Lord Williams of Barnburgh, and many others emphasised the pressure of overseas supplies and suggested that the real and serious problem of co-ordinating imports and home production could be solved by setting up commodity commissions. Other noble Lords in other parts of the House, as one would expect, paid great attention and great respect to this suggestion. But he abstained from giving us any indication of how these commissions would work in practice, and when asked by my noble friend Lord Eccles how they would affect the various trade agreements which we have with our overseas suppliers, his 254 reply, as I understood it, was that this would be a matter for the Board of Trade.
Great as is the weight of the noble Lord's opinion in all matters concerning agriculture, I should like to see this rather vague suggestion about commodity commissions spelled out in far more specific terms before I or anyone could say how it might affect the real questions which are at issue, questions about the effect of changes in our import arrangements on our trading agreements and other international commitments, on the economic position of our overseas suppliers, on their ability to continue to buy from us, and on our balance of payments position and foreign and Commonwealth relations generally. In our consideration of future policy we shall be approaching these questions without being committed in advance to any doctrinaire solution. I suggest that the prospects of success would be diminished, rather than enhanced, if we were to start with a determination to establish commodity commissions which would be largely irrelevant to the practical and complex issues which lie before us.
The noble Lord, Lord Williams of Barnburgh, and others drew attention, as was expected, to the level of imports of meat and to the effect that they have had in recent weeks on prices. The noble Lords, Lord Henley and Lord Bathurst, also pointed out the difficulties which result in periodic high rates of imports at a time when home production of particular commodities is also at a high level. The noble Lord, Lord Williams of Barnburgh, seemed, I thought, unfairly to imply that the action which the Government were taking would not be of any effect.
In this matter I do not think that can do better than reiterate what my right honourable friend has said this afternoon in another place. It is true that the higher level of beef imports over the last three months has contributed significantly to the present weakness of our meat market. Moreover, the higher level of imported supplies has coincided with a somewhat higher level of home supplies. The Government called the attention of the Argentine Government and the Yugoslav Government, as our principal overseas suppliers of chilled beef, to the situation and urged them in planning their exports to take account of the state of the United Kingdom meat market.
My Lords, with great respect to the noble Lord, what is the use of calling the attention of our Argentine friends and the Yugoslav exporters to our situation? Surely that is putting the cart before the horse. The noble Lord must consider this point of the people who import from such places. Can we not persuade them (the noble Lord, Lord Sainsbury, made the point, and I endeavoured to support it) to bring this meat or feeding-stuffs in at a time when our production is not running at its full extent? The noble Lord has the cart before the horse here, and so has his right honourable friend at the Board of Trade.
LORD ST. OSWALD
My Lords, I was about to explain to my noble friend the point of our action. In fact, if my noble friend is right this horse is pulling the cart quite effectively. Because, so far from putting these business letters, rather than love letters, into the wastepaper basket, as suspected by some noble Lords, both Governments have replied recognising their interest in the stability of our market and indicating their willingness to discuss the problem with us.
The Yugoslavs have informed us that it is not expected that their exports this year will exceed 30,000 tons, as against nearly 40,000 tons in 1962. We have arranged talks with the Argentine Government, the major supplier, about the future levels of their supplies. Clearly, it is in everyone's interest that stability should be restored, and I am confident that we shall receive the full co-operation of our overseas suppliers. But I would make it clear that the Government are determined to bring about arrangements which will ensure reasonable stability in the United Kingdom meat market.
The noble Lord, Lord Williams of Barn-burgh, while not saying that these efforts would be in vain—although I think he said that some of the "love letters" would go into the paper basket—contends that in any case the Government have been dilatory in taking action. When I have told him what I have to say I think he will accept that this criticism is not justified. There was no evidence of any real weakness in the beef market until the middle of January, and representations were made to the Argentine Government on February 1 and to the Yugoslav Government a few days later. We did not receive a reply 256 from the Argentine Government until March 14, and from the Yugoslav Government until March 25. But we have now arranged for discussions in Buenos Aires with the Argentine Government to take place next week.
§ LORD WALSTON
My Lords, may I interrupt to ask the noble Lord this? What form of marketing intelligence do Her Majesty's Government have, for instance, in Argentina?—because it takes quite a long time for meat to cross the Atlantic. Surely, long before the market weakens we ought to have in this country some intelligence that a large consignment of meat, which is going to weaken the market, is about to leave. Is not that the time to take action?
LORD ST. OSWALD
My Lords, if that market intelligence were in fact placed before me, I should be able to tell the noble Lord; but I am afraid that, at the moment, I do not know how far ahead we have this intelligence. The noble Lord, Lord Sainsbury, quoted prices charged in his own chain of retail butchers to refute criticisms which have appeared in the Press that the fall in wholesale prices has not been passed on to the consumer. I can say that my Department receives regularly the retail price lists of a number of leading firms of multiple butchers which confirm that substantial reductions in beef prices have been made since the beginning of the year. In addition, I have been told by the National Federation of Meat Traders' Associations what returns from a selected sample of their members show the average reductions in the price of home-killed beef to be since the end of January. I do not think that at this hour your Lordships would wish me to read out a list, but the reductions are quite noticeable.
I think that nobody has mentioned milk. I am surprised that nobody has paid any attention to that. At this late hour I do not think I should be thanked for introducing or developing that theme. My noble friend Lord Dunleath asked me about separate stabilisers for pigs. This is a matter of such infinite complexity that, again at this hour, I hesitate to attempt to outline it, still less to satisfy him. But what I will say, as briefly as possible, is that they were introduced in conditions very different from those of to-day and when pig numbers were much lower. They are giving rise to serious 257 inequalities and are distorting the market, too. Pigs sold grade and deadweight to bacon factories have, generally speaking, benefited from upward stabilising adjustments, whereas pigs sold for pork and manufacture have suffered downward stabilising. But pigs which have had upward stabilisers need not necessarily be made into bacon; the factories may resell them in competition with pork and other pigs which have not had the same subsidy advantage, and which may actually have suffered a downward adjustment. This must inevitably lead to market distortions. It puts a brake on the efficiency of the industry generally, and the pork side of it is put at a particular disadvantage.
For these reasons we have decided that we cannot continue the stabilisers indefinitely. But we are not abolishing them all at once. The widening of the stabilising bands by Is. is a half-way stage. We have said that we are prepared to consider whether some alternative arrangements, not possessing the existing disadvantages of the stabilisers, are necessary in the interests of bacon pig producers. My noble friend's words will be carefully read, as they have been carefully listened to, and I will write to him to keep him in touch with our thinking on the subject.
Almost every noble Lord who has spoken has made reference to the share of the market which is properly due to domestic producers and Commonwealth and foreign suppliers. Many of them have referred to the need for a regulation of imports. My noble friend Lord Stone-haven welcomed the talks that are going to take place. The nature and scope of these discussions on future agricultural policy have to be seen in the right perspective. There is no question of scrapping our present system of support. Our system is basically still the right one, and it suits us well. The noble Lord, Lord Sainsbury, said that what we need to do now is to modify it to meet the changed circumstances of to-day. We have seen how the erratic marketing of supplies can depress market prices and lead to a heavy increase in the sums to be paid out from the Exchequer by way of deficiency payments.
What we have to do is to adapt our present arrangements so that pressure of supplies from home or overseas sources 258 is not such as to undermine our market. This will involve discussions over the coming months with our Commonwealth and other overseas suppliers, as well as with the leaders of the farming industry. As this process of consultation will be a continuing one, there will be no specific timetable and we do not envisage any formal statements of the positions reached until the Government are able to announce their decisions and the results of the consultations as a whole.
My Lords, I have taken longer than I intended but may I say, in closing, that, as a member of the Government and as a countryman, I should like to echo the words of my noble friend Lord Amherst of Hackney: that a prosperous agriculture is an essential part of a prosperous country, and certainly of this country. For the reasons given by him, by Lord Allerton and others, it is that prosperity which this Government are determined to maintain.
§ 8.40 p.m.
§ LORD WILLIAMS OF BARNBURGH
My Lords, I should like to express my profound thanks to all those noble Lords who have taken part in this debate. I never expected, of course, that every noble Lord would agree with everything I said. I should particularly like to express my thanks to the noble Lord who has just wound up by making a fairly effective reply to a speech I did not make. The figures to which he referred I have mentioned in two or three different debates, in which I have said that all the signs are that this Government, as were their predecessors, are aiming at holding the value of the agricultural community's net income to the 1948–49 level. Well, I challenged them on that two or three times previously, and I repeated that challenge again to-day. The noble Lord has not told me whether my figures were correct or incorrect. I will repeat them. I do not ask for a reply to-night. In 1948–49 the net income was £297½ million; in 1962–63 it was estimated at £408 million. But as the pound of to-day compared with that of 1951 is worth only 14s., then that £408 million is worth only £284 million, based on 1951 values. Can the noble Lord answer that right away? Am I wrong or am I right?
§ LORD WILLIAMS OF BARNBURGH
Well, it is in mine. I would rather have a negative answer of that description than no answer at all.
The noble Lord referred to the intervention of the noble Lord, Lord Eccles. I said then that I was astonished that he should put such a question. Everybody knows that if a commodity commission were set up to help the Board of Trade in regulating imports after rationalising and modernising our trade relations in the light of the 1963 situation, then clearly they must work in close harmony with the Board of Trade who, with the Ministry of Agriculture, would set up any such commission. However, if the noble Lord or his Department really require information on what is meant by a commodity commission, I would recommend them to read the Lucas Report, since it was a recommendation they themselves made after having outlined the whole situation.
I do not propose to delay noble Lords further. I am thankful, however, that we have had a reasonable debate, and if the Government feel happy because of the Argentine or Yugoslavia reply on March 14 to a letter sent, I think the noble Lord said, in January, while prices are slipping and deficiency payments are increasing, I can only say that there seems to me far too much satisfaction in that sort of thing. 260 If this were the first time we had had this influx of large quantities and a depression of prices and outsize Supplementary Estimates, the noble Lord would be perfectly right, but it happened last year, and there is a repetition of it this year. It could go on "for ever and ever, amen", unless some means were found of smoothing it out. The basis of my suggestion is that we should avoid these periodic collapses and crises. Even if the present Government stayed in office for ever, I should still like to see them ironed out.
I think I have made the best suggestion that could be made, However, I am delighted with the debate, and I hope that some other noble Lords will take over from us very shortly, so that the advice can be continued. I beg leave to withdraw my Motion for Papers.
§ Motion for Papers, by leave, withdrawn.