EGGS (GUARANTEED PRICES) ORDER, 1963 (Hansard, 6 May 1963)

THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (LORD ST. OSWALD)
My Lords, this Order has been made under Section 1 of the Agriculture Act, 1957, and so far as hen eggs are concerned it revokes and replaces the Eggs (Guaranteed Prices) Order, 1957, as amended in 1960. It gives effect to changes in the arrangements for providing guaranteed prices for eggs sold through the British Egg Marketing Board, changes which were agreed with the Farmers' Unions at this year's Annual Review discussions, and announced in the Annual Review White Paper.
The previous subsidy arrangements for eggs were very complicated, but the idea behind them was that of a deficiency payment system under which the Government bore the difference between a guaranteed price and the market price. We found in practice that those arrangements had certain faults. For example, changes in the farmer's return did not necessarily match changes in the guaranteed price because the rate of subsidy depended not only upon the guaranteed price, but upon a conventionally estimated market price derived from the market prices obtained in earlier years. But, apart from various practical difficulties in the previous arrangements, it had become clear that they were ceasing to be appropriate to present-day circumstances. For some time now there has been a danger of production outstripping demand—or outlaying demand, if my noble friend Lord Conesford will permit the expression—bringing about low market prices and heavy subsidy bills. Production reached a new record in the 1961–62 subsidy year. But for a recent check due mainly to heavy fowl pest slaughterings—and also to some extent to the very cold winter—the situation last year might well have been even more serious, with obvious over-production and very low market prices throughout the year.
We are therefore introducing, with the agreement of the unions, new guarantee arrangements incorporating features analogous to a standard quantity system. It would not be practicable to adopt a standard quantity system similar to the 423 one we already have for milk, because a varying proportion of our eggs are sold outside packing stations and do not attract subsidy. We have adopted instead what is called an "indicator price". Noble Lords will see from Article 4(b) of the Order that this is the price the Egg Board might be expected to get, on average, if there were neither too few nor too many eggs being produced at home, and if imports were at their normal level—that is, the sort of level we have been used to in recent years. The essential idea is that subsidy payments should be limited to the difference between the guaranteed price and the indicator price, which has been set at 3s. 2d. a dozen. I should add that it is not intended to change the indicator price every year, although it is always open to review in the light of changing circumstances, and that the level of 3s. 2d. is based on actual market experience over the past six years and is recognised by the unions as a fair determination.
That is the idea behind the new scheme. In fact there are some elaborations upon it. In the first place, we have not gone straight to the position where the Board must bear the full effect of any fall in prices below 3s. 2d. We shall move very gradually to that position between now and 1969. Should there be any deficiency between the indicator and market prices, the Government will bear—by way of additional subsidy—60 per cent. of it in 1963–64, 50 per cent. in 1964–65, and so on by diminishing steps of 10 per cent.
Secondly, if the market price is above the indicator price, the rate of subsidy will not be reduced by the whole of the excess—as would be the position in a simple deficiency payment arrangement—but by two-thirds of it. This gives the Egg Board an incentive to obtain the best market prices possible, because it means that they will get something more than the guaranteed return if prices go above the indicator price.
The third possible adjustment to the basic rate of subsidy is of a somewhat different nature from those that I have just mentioned, and can be considered separately from them. It is dealt with in the proviso to Article 4, and enables Ministers to reduce the indicator price—thereby, of course, increasing the rate of subsidy—if they are satisfied that 424 during any part of the year imports have risen above a normal level, and having regard to the Board's average selling price for hen eggs both during the part of the year in question and over the year as a whole.
My Lords, I have explained to the best of my ability the main points. The Government believe that these arrangements on the egg subsidy meet present circumstances. The Farmers' Unions have agreed both to the principle of the Scheme and to the major points in it. I ask noble Lords to approve the Order.

§ LORD WISE
My Lords, I did not think that so much could be said on the subject of eggs, but who am I to enlarge upon it? At any rate, the noble Lord has given us a very full explanation and I am certain that we shall read it with great interest and will understand it. The Order has been commended by the Special Orders Committee; it has been approved by those associations interested in the production of eggs, and it has certainly been approved by the Minister himself. So there is nothing much more that I can do from this side of the House, except, I think, to commend the Order because it deals with a period as long as up to 1969. So between now and then we shall probably not be troubled again with this particular Order.
There is one paragraph to which I should like to call the Minister's attention, and that is the last paragraph in the Explanatory Note, on the last page of the Order, which says: Provision is also made by the order to enable adjustments to be made in the event of the market being disturbed by abnormal imports of hen eggs from abroad. I hope that will not happen, and I hope that we shall be able to produce good fresh English eggs sufficient to feed our own people. I beg to commend the Order.

§ EARL ALEXANDER OF HILLSBOROUGH
My Lords, I have two thoughts about the Order, one of which I share with a colleague on my Bench, that every morning now the hens will not cackle; they will choke. Since this is an official explanation, probably with copies circulated to the industry, I 425 think that any young man proposing to go into the poultry industry who tries to make an estimate as to whether or not he is likely to make a profit, will be very highly disturbed in mind.