AGRICULTURE AND HORTICULTURE BILL

HL Deb 13 April 1964 vol 257 cc277-316

2.40 p.m.

Report received (according to Order).

Clause 1 [Price stability of imported products]:

LORD HAWKE moved to leave out Clause 1. The noble Lord said: My Lords, in moving to leave out Clause 1, I do not by any means oppose Clause 1 on principle; in fact, I am strongly in favour of it. On the Committee stage we found it rather difficult to understand exactly what Her Majesty's Government had in mind in the machinery of operation, and it appeared to be a little disquieting that grain trade merchants, and so on, should not be given some clear idea of how this is to operate. For that reason, I have put down this Amendment to leave out the clause, and I will ask a few questions of my noble friend, hoping that he will in due course answer them.

So far as one can make out, the system is going to be that certain countries will agree to limit their sendings of grain to this country, and they have been called the "co-operating countries"; the rest of the world will be called "non- co-operating countries"; and one would like to know which of the principal grain suppliers in the past are "non-cooperatives".

There is apparently going to be a levy to bring the local prices up to minimum import prices prescribed in this country. It appears that there may be two sorts of levy. One does not know what grains are going to be concerned. Will it be all grains or just the grains we grow in this country? I presume, at any rate, it will be all the grains we grow in this country, plus the flour made from them. Will the levy be worked out on a price level ascertained from individual countries, or will there be some collective average, or will there be a different system for the non-co-operators and for the co-operators? Will the levies be altered daily, in conformity with the fluctuations of the market, or weekly or monthly or yearly? On the answer to that question, of course, depends whether trade is going to be feasible or not feasible in parcels of grain from the non-co-operating countries. At what stage will the levy be payable? Will it be at the conclusion of the bargain, the date of the entry of the steamer into port, or of the landing of the cargo? Will it be the first part of the cargo or the last part of the cargo, because if the levy varies day by day there will probably be a difference.

I have told my noble friend in advance about these questions, and the answers will be of great interest to many British and foreign merchants who are in the habit of selling parcels of grain to this country. In this country there are, practically speaking, only three big consumers: Ranks, Spillers and the "Coops". But there are numerous merchants throughout the world who can and do keep them supplied with parcels of grain and flour. I am looking forward to my noble friend's reply, which I hope will be clear and concise. I beg to move.

Amendment moved—

Leave out Clause 1.—(Lord Hawke.)

EARL FERRERS

My Lords, I should, first of all, like to apologise for the fact that I am standing here and not my noble friend Lord St. Oswald who has up to now been in charge of this Bill. Unfortunately, he is suffering from an indisposition and is not here. I am glad to hear from my noble friend Lord Hawke that he does not really want to omit Clause 1 at all, because were that not the case I am quite sure my noble friend Lord St. Oswald would take quite a long time to recover. What my noble friend Lord Hawke wants is an explanation, and I will endeavour to give to your Lordships an explanation as to how Clause 1 will work. It is, if I might say so, a necessarily complicated procedure; it is complicated to understand and extremely complicated to explain. So, in view of that proviso, I hope your Lordships will bear with me while I do my best to explain this clause.

The object of it is to put into practice the Government's intention of providing minimum import price arrangements for cereals and cereal products, which, together with the standard quantity arrangements which were announced in the Annual Price Review, will, it is hoped, introduce a greater measure of market stability and help to close the open end of the Exchequer liability.

The Government have been in consultation with the main suppliers of cereals, and reached agreement in principle with them some time ago. Four countries, Australia, Canada, the United States of America and Argentina, in fact supply 80 to 85 per cent. of the cereals and cereal products which we import, and we hope that a number of our smaller suppliers will also be able to conclude agreements with us. Those countries who agree to co-operate with us will be exempt from any general levy which we may place on imports when necessary to maintain our minimum import prices, and it will be the responsibility of the Governments of those countries which have been in agreement with us to see that, so far as practicable, sales from their countries will not fall below the minimum import prices which we set.

If for any reason the level of offering prices of a particular commodity from a particular co-operating country should fall below our minimum import price and imports were coming in from that country below this figure, we should reserve the right to impose a levy, called a country levy, on imports from that particular country. For instance, if the minimum import price of barley were £20 but one co-operating country was sending it in at £19, then we should reserve the right to impose a country levy of £1 per ton on imports of barley from that particular country. But I must emphasise that we very much hope that this will not be necessary, because the whole object of the arrangement is to avoid precisely this: imports coming in at prices beneath the minimum import price. We are expecting the agreements with the four major suppliers (Australia, Canada, the United States of America and Argentina) to be signed this week, and a White Paper will shortly be presented to Parliament giving the texts of these arrangements. But the Government, as I have already said, are ready to conclude similar agreements with other exporting countries who are also prepared and able to give undertakings to observe our minimum import prices.

May I turn to the method of dealing with imports from countries who, for one reason or another, do not sign agreements with us? There will be a general levy imposed on all imports from those countries which will be related to the difference between the lowest representative prices on the world market and the minimum import price. The world prices of a particular commodity will, of course, from time to time vary, and so also will the levy, and I think it right to point out that the levy will not be altered to take account of minor day-to-day fluctuations, but only when there is a significant movement in the level of world prices. In other words, we should not anticipate altering the levy when the world price moved a few shillings either way, but only when there was a definite shift in one direction.

To give your Lordships an example, if the minimum import price of barley is £20 per ton and the lowest representative world price is £18, we shall impose a levy of £2 on all barley coming into this country from countries other than those with whom we have an agreement irrespective of the price at which the individual consignments are purchased. If the levy is £2 a ton and a particular consignment from a non-co-operating country is purchased at £19, the total cost to the purchaser will be £21. The order which will set out the levy arrangements, and which the Government will present to Parliament, will also provide for the imposition of a consignment levy. This may be imposed on any individual cargo which is priced, when imported, below the minimum import price. But the intention is to use this power only in exceptional circumstances.

Now, my Lords, importers often buy forward, and an importer may wish to buy in April some barley for delivery in, say, September; and for this situation there is special machinery. This system of placing forward contracts is, of course, an essential part of the cereal trade; an importer may contract several months forward for his imports, and it is with this in mind that the Government intend to provide these special arrangements. An individual importer who concluded a firm contract to import goods, which are not, however, to be shipped to the United Kingdom until, say, three months later, may register that contract with the Ministry of Agriculture at a maximum rate of levy which will take into account the offering prices quoted for the month in which the goods are to be loaded on to the ship in the exporting country.

Thus, assuming the arrangements were already in force, an importer buying to-day for shipment in July could register his contract at a firm maximum rate of levy related to to-day's offering prices for shipment in July. When the goods were eventually imported, the levy payable to Customs would not exceed the maximum rate that will be quoted on the certificate which will be issued when the contract is first registered. This means that, if offering prices had fallen between the time of purchase and the date of import, the importer who had bought forward and. registered the contract would be protected against paying this higher rate. These arrangements, which have been subject to detailed discussion with representatives of the trade, will enable traders to continue to contract forward in the firm knowledge that they can, if they wish, register their contracts at the quoted forward rate of levy.

The Customs and Excise authorities will be responsible for the collection of these levies, and they will be made, not at the time of purchase, but at the time when the clearance papers are handed to the Customs authorities at the ports in the same way as for Customs duties. The levy will be paid by the person who at the time of presenting the papers is the owner of the consignment. I apologise for having taken up so much of your Lordships' time over this rather complicated and confusing matter. I can only hope that I have succeeded in throwing some rays of light on it and not confusing the issue yet further.

2.55 p.m.

LORD STONHAM

My Lords, I join with the noble Earl in regretting the absence of his noble friend Lord St. Oswald, and particularly the reason for that absence. I hope he will soon be back with us fully restored to health. I would also thank the noble Earl for the most valuable and clear answers he has given to the questions addressed to him by Lord Hawke, to whom we are indebted for having put them. The noble Earl has now given a good deal of information which I think may be most useful to the people chiefly concerned. The only other comment I would make is that the fact that these questions have to be asked, and that the noble Earl himself had to admit, before he started to answer them, that this clause was extremely complicated to understand and to explain, reinforces all the arguments which in Committee we on this side of the House adduced against this particular clause. In my belief, it will not only fail in its object but will cause a great deal of concern and, in some ways, disruption in this industry.

There are two points, however, arising from the noble Earl's answer that I should like to put to him. The first is: What is the safeguard in the arrangements against the possibility of secret discounts or some kind of secret drawing-back which, if it were possible to arrange, would completely nullify the arrangements explained by the noble Earl? The second question is: Do I understand him aright with regard to the arrangements for the non-cooperating countries? He explained that the general levy to be imposed would be the difference between the lowest world price and our import price, and that it would be imposed on the imports of a non-co-operating country, irrespective of the actual price at which the grain was being imported into this country. If so, that could well mean that a non- co-operating country could be exporting grain to this country (to quote his example) at £20, or even £22, a ton for barley, yet would still incur the import levy of £2 if the lowest world price at that time was £18 a ton. If that is correct—and I notice that the noble Earl nods his head—it would seem to be a most unjust imposition on the non-co-operating country, which is not cutting prices or attempting to sell below our import price; and indeed an imposition on importers in this country and on housewives and consumers, who presumably would have, unnecessarily, to pay much higher prices. Perhaps the noble Earl will deal with those two points.

2.58 p.m.

LORD HAWKE

My Lords, I am most grateful to my noble friend for his extremely clear and concise answer—if I may say so, much clearer and much more concise than sometimes emanates from the Ministry of Agriculture. But there are one or two points that arise out of it. First of all, in the cooperating countries how does a non-totalitarian Government arrange that its citizens do not sell grain below a certain price to this country? I do not understand that. Then, when it comes to deciding on an average world price for the non-co-operating countries, I think it will be difficult to get anything like a true price, because the grains from different countries vary so much; there are different types, different qualities, and, indeed, different dirt-contents, all of which has to be taken into account. I have no doubt that in discussions with the trade some way out will be found.

The noble Lord, Lord Stonham, made a point about what he called "secret discounts". I should say that under this arrangement one would be at a considerable advantage if one has buying houses abroad and a home firm in this country; because, presumably, the places abroad will always invoice the grain at the British minimum price; so nobody will pay a levy. However, what my noble friend has said has thrown a great light on these matters, and I have no doubt will be studied with great interest by the people who have to try to make their living by working under them. I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Clause 2 [Grant for improving efficiency of small production businesses]:

3.1 p.m.

LORD STONHAM moved, in the proviso in subsection (6), after "Provided" to insert "(a)". The noble Lord said: I hope that it will be to your Lordships' convenience if we take with this Amendment the Amendment to line 34 which is on the same related point. It will be recalled that I moved precisely the same Amendment in Committee stage, when there was considerable discussion which took up some ten columns of Hansard. I make no apology for coming back to the discussion now, because the noble Lord, Lord St. Oswald, agreed at that time that there was misunderstanding on the point and he invited further discussion.

This Amendment is cast in quite wide terms. At one end of the scale it includes the single programme which might be no more than the sum of one, two or three individual programmes which could equally well have been submitted separately. The noble Lord, Lord St. Oswald, dealt with this in Committee in these words [OFFICIAL REPORT, Vol. 256 (No. 53), cols. 988–9]: I understand that he"— that refers to me— assumes that two or more growers with separate businesses may put forward a plan jointly for purposes of grant, while continuing to be separate for all other purposes, and that these businesses as a whole shall not cease to be regarded as small horticultural businesses because they are above the maximum limit for a small business that may be prescribed in the scheme. Then the noble Lord, Lord St. Oswald, went on: I cannot see that such an arrangement would be of any advantage to growers eligible under the scheme, for they would be perfectly free, without this Amendment, to put forward proposals for joint co-operation with any other growers as part of their business plan and, provided these proposals were approved, they would each be entitled to the business grant. I think that I can underline this for the noble Lord by saying that, if in the separate plans they put forward there were an element of co-operation with another grower, this would not exclude them.

That makes it clear that the Bill as it stands covers the type of production scheme where there is virtually no surrender of sovereign rights over tenancy or ownership of land. It is a case where each small man obtains a grant and then a number of them club together in some sort of joint: production purpose.

I understand that the Bill does not need amendment to cover that kind of co-operation. That is satisfactory, but it is not nearly as much as I am asking for in the Amendment which, if accepted, would cover even a large-scale co-operative production effort involving the surrender of the tenancy or the ownership of the land which each member contributed to the co-operative effort—not the whole of a tenant's land, but such part of it as he contributed to the whole effort. It is precisely this type of cooperation, which I regard as full cooperation, which is likely to produce the biggest progress in production, the highest returns and, in all probability, the lowest costs. But unfortunately, according to my understanding of the remarks of the noble Lord, Lord St. Oswald, in Committee, this highly desirable full-scale co-operative production scheme would not be eligible for grant because it would be regarded as big business, although it would comprise a number of small businesses each of which of itself would be eligible for grant if put forward separately.

The position is that, unless the Government accept the Amendment which I am now moving, we shall be presented with the anomalous position that growers will be discouraged from doing in combination what they are being encouraged to do as individuals. Surely that is an absurd and deplorable state of affairs. It becomes more anomalous when one considers that under a number of Acts, including the 1960 Horticulture Act, the Government are providing financial aid to assist the farmers to act in combination in processing, grading, distribution and marketing of produce. For example, what I am now asking for in production schemes is already being done in the provision of grain-driers, where the Government are providing grants even in cases where as many as twenty growers come together for the provision of a grain-drier. We are now asking in these Amendments for the same thing, not for the co-operative use of apiece of machinery, but for the co-operative use of a piece of land in a common productive effort.

During the Committee stage the noble Lord, Lord St. Oswald, justified the refusal of grant when growers combined their holdings into one business and thus brought it above the maximum qualifying acreage, on the grounds that his Department had been obliged to refuse grant to other partnerships formed before. Yet the same afternoon, half an hour later, he used precisely the contrary argument when refusing, my plea for a grant to the Gloucestershire Marketing Society. He argued that when a co-operative had already spent its own money, on purposes which will be grant-aid-able under this Bill, they had no complaint if they did not now get a grant.

As I understand it, there is only one point of substance in the Government's case against this Amendment. It is that in the 1960 Act which I have mentioned, and in the case of the arrangements for the co-operative provision of grain-driers, there is no special small producer grant as there is in this Bill; and that a co-operative with many members in a production scheme is a big producer and therefore ineligible for the special small producer grants which are a special feature of the present Bill. That is at least an arguable point, although I do not accept it, particularly as the benefits likely to flow from co-operative production schemes will be not only far greater than anything which can be achieved individually, but far greater than the collective packing and distribution schemes which are already approved.

It seems to me that what the Government are shying away from is cooperative ownership or tenancy of land. Therefore, I should like the noble Earl to tell me the position, under the Bill as it now stands, in respect to grant for a co-operative production scheme where there was no surrender of tenancy but where the total of land committed voluntarily to the scheme exceeded the maximum acreage for grant. I have in mind a scheme whereby, for example, a number of smallholders who are strawberry and fruit growers on more or less adjacent land wish to get together in a joint production scheme which offers grant advantages not only in production but in enabling them to undertake collectively their own packing and distribution.

Therefore, I should like to know whether that kind of scheme—which is a scheme where any number of producers, each of whom qualified individually and each of whom retained the ownership or tenancy of his land, nevertheless contracted to devote all or part of their land to an approved collective purpose, which could be a joint or cooperative production scheme—would qualify for grant if what they proposed to do was reasonably certain to improve the productivity of their land and the viability of their holdings? The noble Earl will appreciate that I am assuming a scheme where the total amount of land committed to it was above the maximum acreage laid down, and I was precise in my definition of the kind of scheme I have in mind. In my reading of the present Bill, such a scheme would be covered in the Bill as it now stands, and if the noble Earl can confirm this it will go some way to meet my point. I still hope that, in addition, the noble Earl will accept the Amendment and thus take what I think will be a decisive step towards making the advantages of co-operative production freely available to small producers throughout the country. My Lords, I beg to move.

Amendment moved— Page 5, line 29, after ("Provided") insert ("(a)")—(Lord Stonham.)

3.12 p.m.

EARL FERRERS

My Lords, I am grateful to the noble Lord, Lord Stonham, for putting so clearly the precise purpose he has in mind in moving this Amendment. He explained in Committee that his intention was to assist and encourage co-operative production. The noble Lord also said—at least I certainly gathered this from him—that he felt that the Government were not assisting co-operatives in this respect. I should like to explain the purpose of this provision. This particular clause is designed to help the small horticultural producer, and if he can produce a scheme for improving his farm business which it is considered by the Ministry, and by the National Agricultural Advisory Service, will be an improvement to his existing business, then he will be eligible for a grant as a small producer. If the small producers join together and, as it were, surrender their rights, to become one big co-operative unit, then they are no longer small producers and will not be, individually or collectively, entitled to the grant.

Where, however, they are small producers, and retain the identity of being small producers, but in the course of their production take part in co-operation, then they are still small producers and will accordingly be eligible for the grant. In that respect, I think I can give the noble Lord, Lord Stonham, the assurance which he seeks—namely, that if a group of growers retained the ownership or the tenancies of the land they occupied, even though they contracted with one another to devote it to a collective production scheme, they would qualify for grant if they were individually eligible and if the common production pattern would contribute to increasing the efficiency of their individual businesses. I hope that that explanation will satisfy the noble Lord.

LORD STONHAM

Yes, my Lords. I am most grateful to the noble Earl. The explanation entirely answers the question I put to him. In my view, it will be of considerable value to the small producers and, I hope, of some assistance in getting them to work together for joint production schemes in co-operatives. In that belief, I ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 6:

Supply of produce to co-operative marketing businesses

6.—(1) A grant under section 4 of this Act or section 1(2) of the Horticulture Act 1960 (as amended by section 5 of this Act) shall not be made to an association whose business comprises the marketing of horticultural produce grown by its members unless the appropriate Minister is satisfied that the constitution of the association contains provision designed to secure that a sufficient proportion of the horticultural produce grown by a member is made available by him for marketing by the association.

3.15 p.m.

LORD STONHAM moved, in subsection (1), to leave out "is satisfied that the constitution of the association" and insert "having regard to the purposes of the association is satisfied that its constitution". The noble Lord said: My Lords, I beg to move Amendment No. 4, which proposes to modify the terms on which the Minister has to be satisfied with regard to the constitution of a co-operative. Here again I am taking a second bite at the cherry, in the hope that this time I can convince the Government of the need for this Amendment.

During the Committee stage, when we discussed the same point, we gained some comfort from the Government reply to my request for a definition of the words "sufficient proportion of production". The noble Lord, Lord St. Oswald, said [OFFICIAL REPORT, Vol. 256 (No. 53), col. 1004]: I think the answer is that the society itself would decide and would have to define it, and of course the definition would have to be approved by the Minister. But I do not think this is a very difficult achievement to imagine. The Minister has no intention of requiring all co-operatives to have the same kind of constitution. Moreover, granted the constitution as a whole satisfies the Minister, he has no intention of insisting that any or all sanctions shall be applied in every case. I think that that last sentence from the noble Lord, Lord St. Oswald, makes the whole case for the Amendment; because in nine cases out of ten what would be submitted to the Minister would be a provision empowering the society to enter into agreement with its members, even though the power exists without the necessity of specially providing for it.

What would be wholly unreasonable, and what the Bill as it stands seems to require, is that detailed marketing arrangements, which may run to a good many pages and may need to be modified several times—perhaps half a dozen times—during a single season, would have to be laid before, and approved by, a special general meeting of the society; and, also, that every change would have to be approved by the Minister—at least, that is my interpretation of the clause as it now stands. Yet this is apparently what the noble Lord, Lord St. Oswald, envisaged when he said, in col. 1005: It requires merely the agreement of a special meeting of the association.

The noble Lord used the word "merely" —for something that will be required half a dozen times a year!

It will be necessary for each society to send out notices to all the members, with the required number of days' notice, then to call a meeting to approve a provision regarding a modification of the marketing arrangements, and then to submit it to the Minister! That would be an intolerable situation, not only because by the time they had called the meeting and got the provision through the need for the change which they wanted to approve would probably have gone, but also, because it would be intolerable for the society and its members and, I should have thought, for Ministry officials if they were to be given responsibility, however small, for intervening in the commercial arrangements between a society and its members. The Government must surely agree that the extent to which agreements are to be enforced, and the circumstances in which they may be waived, are matters for the society alone. The noble Lord, Lord St. Oswald, said during the Committee stage, that we had read rather more into the clause than was envisaged. That is some comfort, but I would gladly exchange that comfort for a form of words which leaves less doubt of the Government's intentions in the minds of those who wish to set up producer cooperative market schemes.

It is not only the wording of the clause hut also its intentions which are obscure, and I hope the noble Earl will be able to tell us precisely what the Government hope to achieve by it. They can surely scarcely be regarding the clause in its present form as a means to underwrite Treasury grant, because if that had been the case, they would have introduced it in the original Bill and not have brought it in at a comparatively late stage. Or perhaps the Government feel that the societies would like to be a little tougher with their members in the matter of agreements than they can at present afford to be, and that this clause will give them the chance to adopt a stricter policy. If that is the case, it would be somewhat unusual because, although legislation often creates a stick, Governments do not often give other people the power to wave it. I hope the noble Earl will be able to clear up these doubts during his reply; and, best of all, that he will finally remove all doubt by accepting the Amendment. I beg to move.

Amendment moved— Page 7, line 44, leave out ("is satisfied that the constitution of the association") and insert the said words.—(Lord Stonham.)

EARL FERRERS

My Lords, I should like to accept the first part of the noble Lord's olive branch, even if I cannot accept the whole of it. I shall certainly do my best to explain what the Government's intention is, but I hope, nevertheless, that at the end of my explanation he will feel he can accept my views and my explanation, and not press his Amendment. Of course, the noble Lord has spoken with obvious understanding about the range of co-operative activities and the complexities of some of the cooperative associations, but I think I should first of all repeat what my noble friend Lord St. Oswald said previously: that we, too, fully recognise that there are many differences between individual societies. It was because of this that the clause was worded in a way which leaves quite open the kind of provision that might be required in the constitution of an individual association. The clause says that there must be a provision in the constitution designed to secure that a sufficient proportion of the members' produce is made available to the association, and that the Minister must be satisfied with that provision. That is essential. But the form and scope of the provision are left open. As I have said, this is because there are such differences in individual circumstances, and it allows the sensible administration of the clause in the kind of cases which the noble Lord has in mind.

My right honourable friend will be satisfied, in practice, with the existence in the constitutions of co-operatives of clauses which will empower, but not necessarily require, them to discipline their members in one or other of the ways necessary to secure sufficient produce. He is prepared, for the time being, to rely on the willingness of the co-operatives to take sensible and vigorous action to implement those clauses of the constitutions. In other words, my right honourable friend feels that initially he can rely on the co-operatives to give effect, in one way or another, to the intention of Parliament, that normally their members shall have positive and definite incentives to treat the cooperatives loyally. I hope that, with that assurance the noble Lord will feel satisfied.

LORD STONHAM

My Lords, I am indeed grateful to the noble Earl because I feel he has been able to go a good deal further in the assurances he has given than was possible for his noble friend during the Committee stage. I think the assurances we have just heard will give considerable satisfaction to the present and prospective producer cooperatives, and in that belief I would ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 9 [Grants towards fulfilling guarantees of bank loans]:

3.25 p.m.

LORD STONHAM moved, in subsection (1), after "to such" to insert "general". The noble Lord said: My Lords, I beg to move Amendment No. 5, which is to Clause 9, which sets out the conditions under which the Government will provide £100,000 a year towards expenditure which the finance corporations may incur in guaranteeing loans which the banks may make to producers. It will be recalled that during the Second Reading of the Bill the noble Lord, Lord St. Oswald, made the welcome announcement that, as the result of representations which had been made in another place, the Government had altered their original intention of making the entire sum of £100,000 available to the Agricultural Credit Corporation, and had decided instead that 10 per cent. of it should be available to the Agricultural Finance Federation as cover for expenditure or losses on guarantees which they may give on loans to horticulturists. He made it clear that the two bodies, the A.C.C. and the A.F.F., would have the same status and would be grant-aided bodies acting in parallel under the same conditions—and I would ask the noble Earl to note those actual words: that these two finance corporations would be grand-aided bodies acting in parallel under the same conditions.

That is all very satisfactory, but, unfortunately, in replying to an Amendment which was moved in Committee by my noble friend Lord Peddie, Lord St. Oswald used words, in column 1010, which appeared to indicate that the funds available to lie Finance Federation could be used only in connection with guarantees of loans to cooperatives. Indeed. I understand that, whereas the Agricultural Credit Corporation will be allowed to guarantee both individual growers and co-operatives, the Finance Federation will be restricted to guarantees to co-operatives only.

If that is so, it would be quite wrong because it would be contrary to the promise that both bodies would be acting in parallel under the same conditions. It would be unfair to the Agricultural Finance Federation and contrary to their current business practices, which are by no means confined to co-operative business. I understand that the Finance Federation do considerable business with growers other than co-operative producers; and it is imperative, surely, that no artificial obstruction should be placed in the way of growers who may wish to use their services under the Bill. I submit that the insertion of the word "general", which this Amendment proposes, would achieve the desired object because it would make it difficult, if not impossible, for the Minister to impose one set of conditions in one case and another set of conditions in another. In other words, we are anxious (and I hope the Government are anxious) to avoid any semblance of discrimination between these two bodies, which the Government have already said should have the same treatment and work under parallel conditions. I point out that the Amendment, if accepted, would not prevent the imposition of different conditions where the circumstances themselves justified the difference, but the power to discriminate would no longer be exercisable in an arbitrary way, as it can be as the Bill stands at present.

If the noble Earl tells me that the Amendment is unnecessary because he can give an assurance that I have been misinformed, and that it is the Government's intention that both the Agricultural Credit Corporation and the Agricultural Finance Federation shall be free to guarantee both the co-operatives and the individual growers loans, then I will withdraw my Amendment with pleasure. But if he cannot give me that assurance, then I would insist that the Amendment is very necessary indeed because it would, in my view, limit the Minister's powers to act arbitrarily and, as I think, wrongly and unjustly. I beg to move.

Amendment move Page 8, line 27, after ("such") insert ("general").—(Lord Stonham.)

EARL FERRERS

My Lords, I should like to start by reiterating the promise given to the House by my noble friend Lord St. Oswald on both the Second Reading and the Committee stage of this Bill. This was that the Government recognise that the Agricultural Finance Federation, catering particularly for the financial needs of co-operatives, has a part to play in these arrangements and that the Government have consequently decided that 10 per cent. of the funds available shall be allocated to the Federation. This offer will naturally be subject to conditions aimed at protecting public funds, but the main conditions will be on a par with those already accepted by the Agricultural Credit Corporation. But I must make it clear that the Government's offer to the Federation will extend only to grant-aid towards the honouring of guarantees extended by the banks in respect of borrowings by co-operatives—that is, co-operatives as distinct from individual growers. The noble Lord, Lord Stonham, implied in his remarks that the sum of £10,000 per annum would be insufficient for the Federation's dealings under these arrangements—

LORD STONHAM

My Lords, I must interrupt the noble Earl. I did not say anything that could possibly be interpreted in that way either by implication or otherwise. I made no reference to the amount in my remarks. I solely drew attention to the right of the A.F.F. to be able to guarantee loans both to co-operatives and to growers.

EARL FERRERS

I apologise if I have misrepresented the noble Lord; that is the last thing I would wish to do. But I think he would not differ from me if I say that this sum as such, the 10 per cent., should be quite sufficient if the Federation is to deal with co-operatives only, because about 6 per cent. of horticultural marketings are marketed or at present handled by the co-operatives. We accept that there is some need to provide an alternative channel for those co-operatives whose affairs incline them towards dealing with the Agricultural Finance Federation. It seems to me sensible and equitable that 10 per cent, of the funds should go to the Agricultural Finance Federation. It would be true to say that co-operatives consist of members and the main part of the Federation's dealings have up to now been directly with these members. But, of course, I think it will be fair to state that the majority of the Federation's dealings has been through co-operatives.

What the noble Lord has not pointed out is the very great difference between the sort of business for which this clause has been designed, in backing bank credit to horticulture growers, and the existing operations of the Agricultural Finance Federation which is to provide hire-purchase finance for growers. Those two things are very different. The noble Lord implied that this is not the only business of the Federation, but I think he will agree with me that it is the major part of the Federation's work to provide hire-purchase finance for growers, whereas the purpose and function of the Agricultural Credit Corporation is to provide general bank backing to horticultural growers.

The other difference, which seems to me to be a telling one, is that there are not normally any direct contacts between the Agricultural Finance Federation and the individual growers. I understand that the Federation's point of contact in dealing with the growers is through the cooperatives and in general it relates only to the particular piece of equipment which the co-operatives are supplying. The House would wish to compare this with the case of the Agricultural Credit Corporation, where there is direct contact with the growers and where the contact does not relate to one particular requirement but extends to the whole of the grower's business. It is an essential condition of the Corporation's arrangements that the grower must submit and obtain approval for a business plan covering the whole of his activities, present and future; and I am sure the House will appreciate that not only are the Corporation obliged because of this to go further than the Federation in their inquiries, but they are employing an entirely different approach and a more elaborate expertise which the Federation's operations have not up to now required.

Although noble Lords opposite may still feel disappointed, I hope they will give my right honourable friend full credit for what he is already proposing to do: to recognise the Federation in respect of their dealings with the co-operatives. There is full scope for activity by the Federation in this considerable and important sphere. We expect much new business to arise from the new grants being offered to the co-operatives under Clauses 4 and 5; grants which will, in turn, induce demand for credit, since the co-operatives will have to find their share of the cost. The same applies to the Horticultural Improvement Scheme in which the co-operatives will participate. The Federation should, in practice, find their hands more than full over the next few years in dealing with the cooperatives only. I hope that the noble Lord, Lord Stonham, will realise that the Government have recognised the part which the Agricultural Finance Federation has to play and that the difference of operation between the Federation and the Agricultural Credit Corporation is substantial. Nevertheless, we are preparing to help and encourage the Agricultural Finance Federation to carry out the type of work for which they are best suited.

LORD WISE

My Lords, I am sorry to hear the noble Earl turning down this Amendment. We have had a very happy afternoon; he has been very reasonable up to the moment. Amendments which we have discussed have been more or less acceptable to the Government. Here is an Amendment which is based entirely on fair play between two organisations. The Government are discriminating between the Agricultural Credit Corporation and the Finance Federation. It is obvious that in the future there will be a good deal of co-operation between the growers in regard to the carrying out of this particular Bill. It seems to me that it is right and proper that both finance organisations which will deal with the matter through the banks should be on an equal footing. The Government are discriminating between the two sets of growers in this matter and between two sets of organisations which are catering for the growers. Therefore, I hope that the Minister will take the matter back and agree to do what we have asked him to do.

LORD STONHAM

My Lords, I hope that the noble Earl will accept my noble friend's suggestion of taking this matter back. It seems to us to be unjustifiable discrimination. I feel also that the noble Earl is not fully informed of the background of the Agricultural Finance Federation and of the kind of work they do and are capable of doing. The noble Earl said that his right honourable friend the Minister was entitled to credit for the fact that in making the change of the original intentions, and in giving 10 per cent. of this guarantee money to the Agricultural Finance Federation, he was acting justly and recognising the part they have played. I would remind the noble Earl that his right honourable friend changed his mind only after considerable pressure in another place and after evidence had been brought forward to prove that the information on which he based his original decision to place the whole sum in the hands of the A.C.C., was wrong. I submit to the noble Earl that his information also is wrong, in the sense that it is incomplete, and that there is a sound case for saying (again I emphasise that I am not talking about the proportion of the money, because that does not really matter) that it is the Government's intention to preclude the A.F.F. from using this guarantee fund to guarantee loans of individual growers. That is what I understand the noble Earl to say. Therefore, I hope that he will accept the offer to look at this again between now and Third Reading, otherwise I shall have to advise my noble friends to support this Amendment in the Division Lobby.

THE LORD CHANCELLOR (LORD DILHORNE)

My Lords, perhaps I should add that the Amendment is very narrow, indeed—only to insert the word "general" after the word "such", so that the subsection will read: The Minister may, in such manner and in such general conditions … I hope that the noble Lord, Lord Stonham, will explain what exactly is intended by "general conditions" in this particular context. To me the words have very little meaning.

LORD STONHAM

My Lords, if I have the permission of the House to answer that point, I thought that I had answered that when I moved the Amendment in the first place, though not perhaps in a legal sense, because I made it clear that the insertion of the word "general" would prevent the Minister from making a particular and express condition which would discriminate against one body or another. That is the intention of the Amendment, and I am firmly of opinion that that would be its effect. Presumably, a final decision on whether that would be the effect could be determined only in a court of law.

LORD SHEPHERD

My Lords, I was hoping that the noble Earl, Lord Ferrers, was going to respond to the request made by my two noble friends. We appreciate his position, in that he is standing in for the noble Lord, Lord St. Oswald, and obviously he is not in a position to give any undertaking in regard to the case that has been made. But I hope, in view of what has been said and of his admittedly difficult position, that he will give an undertaking to look at this point again, with no obligation one way or the other. My noble friends are asking that this matter should not be brushed aside, but should be given further thought between now and the next stage. If the noble Earl could respond in this way, I think that it would be for the convenience of the House.

EARL FERRERS

My Lords, if I may speak again for a few moments, with leave of the House, there is nothing I should like to do more than to respond to the request of the noble Lords opposite. I appreciate exactly how they feel, and I am grateful to the noble Lord, Lord Shepherd, for having suggested that, in view of the fact that I have not been in charge of the Bill all the way through, it might be easier to take this back. But I can only reply that I am bound to do what I feel my noble friend Lord St. Oswald would do, were he in this position—and that is, to say to the noble Lord that we have looked at this matter very thoroughly and carefully. The functions of the Agricultural Credit Corporation and of the Agricultural Finance Federation are fundamentally different. The Agricultural Finance Federation deals basically with hire-purchase and the Agricultural Credit Corporation deals with the whole circumstances surrounding an individual's agricultural or horticultural business. It is for that reason that, even if I were to take this back again and look at it, I should not be able to do so with any

Clause 12:

PART III

GRADING AND TRANSPORT OF FRESH HORTICULTURAL PRODUCE

Grading of produce

Duties as to grading of produce

12.—

(2) The circumstances referred to in subsection (1) above are as follows:—

(a) a sale of the produce by retail;

(e) a direct sale by the producer of any produce where the produce is, or is to be, delivered at premises, or at any stall or vehicle, from which it is to be sold by retail.

(3) The Ministers may if they think fit by order provide that subsection (2) above shall have effect, in relation to such sales as are described in the order, as if paragraph (e) were omitted; and an order made under this subsection may be varied or revoked by a subsequent order made by the Ministers.

(4) In this section "direct sale" means a sale where negotiations on behalf of the

possibility of extending the hope that we may accept the word "general".

3.47 p.m.

On Question, Whether the said Amendment (No. 5) shall be agreed to?

Their Lordships divided: Contents, 17; Not-Contents, 49.

CONTENTS
Addison, V.	Gaitskell, B.	Shepherd, L.
Archibald, L.	Henderson, L.	Stonham, L. [Teller.]
Burden, L. [Teller.]	Hobson, L.	Summerskill, B.
Burton of Coventry, B.	Listowel, E.	Williams, L.
Chorley, L.	Morrison of Lambeth, L.	Wise, L.
Douglas of Barloch, L.	St. Davids, V.

NOT-CONTENTS
Ailwyn, L.	Forster of Harraby, L.	Margesson, V.
Alport, L.	Fraser of North Cape, L.	Merrivale, L.
Amherst of Hackney, L.	Goschen, V. [Teller.]	Middleton, L.
Bessborough, E.	Greenway, L.	Mills, V.
Blakenham, V.	Hamilton of Dalzell, L.	Milverton, L.
Bossom, L.	Hastings, L.	Monsell, V.
Chesham, L.	Hawke, L.	Ogmore, L.
Conesford, L.	Hereford, V.	St. Aldwyn, E. [Teller.]
Denham, L.	Howard of Glossop, L.	St. Just, L.
Derwent, L.	Iddesleigh, E.	Sandwich, E.
Dilhorne, L. (L. Chancellor.)	Ilford, L.	Soulbury, V.
Dudley, L.	Jessel, L.	Spens, L.
Effingham, E.	Lansdowne, M.	Stonehaven, V.
Elliot of Harwood, B.	Lothian, M.	Strathclyde, L.
Elton, L.	Malmesbury, E.	Swinton, E.
Falmouth, V.	Mar and Kellie, E.	Twining, L.
Ferrers, E.

Resolved in the negative, and Amendment disagreed to accordingly.

vendor are not conducted by any agent other than a person employed by him under a contract of service.

3.55 p.m.

LORD STONHAM moved, in subsection (2), to leave out sub-paragraph (a) and insert: (a) the exposure for sale by retail of produce bearing a show ticket to which is affixed the label referred to in subsection (1) of this section and is clearly visible to intending purchasers, and sales of such produce which in the presence of the purchaser was exposed for sale bearing such a show ticket;".

The noble Lord said: My Lords, I beg to move Amendment No. 6, and I hope it will be convenient for your Lordships if I take Nos. 7 and 8, which are on the same point, at the same time. Here I return to stress once more our sense of the serious error that the Government will make unless prescribed quality grades are enforceable at retail level. It has taken a good many years for the Government to reach this decision—a decision which we regard as excellent, and which we support—that there should be these quality grades of horticultural produce. But we think it will be quite disastrous if they are not to be enforceable at retail level.

On the Committee stage, a self-imposed time limit left me with no time to reply to the noble Lord, Lord St. Oswald, but otherwise I should have taken up quite strongly two of the points he then made. The first was his suggestion that no case had been made out for extending compulsory grading to retail sales. I think a very good case was made out, and the trouble was that the noble Lord did not answer it.

The second point was the noble Lord's assertion—and I quote [OFFICIAL REPORT, Vol. 256 (53), col. 1030]: There will therefore be no more than an insignificant quantity of produce not properly graded arriving in the shops. The noble Lord produced no evidence whatever in support of that assertion, and indeed the growers, who are being compelled to grade their produce at wholesale level, and I, could not disagree with him more. Apparently, even the Government are not over-confident, because, again to quote the noble Lord, Lord St. Oswald, he said (col. 1030): … we shall not allow the concept of compulsory grading to be undermined in the marketing of any considerable volume of un-graded home-grown produce outside the wholesale channels of trade ". And, again to quote the noble Lord, he said (col. 1030): Ministers will have the power—and they will not hesitate to use it—under subsection (3) to make an order restricting these sales. I should like to comfort the noble Earl with that reminder. I remain completely uncomforted, first, because when on horticultural matters over the past years I have ventured to disagree with the Ministry's horticultural experts, time has usually proved that they were wrong; and, secondly, because apparently they are relying on the argument that there is no enforcement at retail level of the grades of imported produce. That is a completely irrelevant argument, for the very good and sound reason that no ungraded imported produce comes into our shops; it all comes in graded. Therefore, the argument that, for this reason, and because there is no enforcement of the sales of graded foreign produce at retail level, there is no need to have enforcement of our own grades of home-grown produce seems to me to be quite absurd. As there is no ungraded imported produce, the retailers cannot mix it up with the graded produce and so debase the grades.

However, if the Government allow ungraded home-grown produce to come into the shops, of course the grades will be debased. It means that the growers will then not recover the high cost of grading, which they are compelled to undertake under this Bill; and if they do not recover that higher cost in higher prices, to which they will be entitled, it means that they will be forced to bypass the wholesale markets, go direct to the retailers and sell ungraded produce. I think that, in the light of past experience, the whole grading scheme will be wrecked before the Minister comes to the conclusion that the sale of ungraded produce has reached a dangerous level and he should, therefore, bring into operation subsection (3).

As for the suggestion made by the noble Lord, Lord St. Oswald, in Committee that the quantities of ungraded produce will be insignificant, I would cite the position in the egg market. With eggs we have a first-class marketing scheme with a product which is abundantly, efficiently and effectively advertised; and, moreover, eggs must be graded and go through the packing stations in order to qualify for a subsidy. In other words, there is every possible inducement for egg producers to send their eggs through the packing station properly graded (they can send them through only if they are properly graded) and so qualify for a subsidy. Yet about one egg in every three laid by British hens by-passes the packing stations and is sold direct, either to the consumer or to a retail outlet. I know that a good proportion of these sales of so-called farm eggs are made under licence, but a great many are not: they are, in fact, illegal sales, but they go on. They are substantial, and far too many, I think, to be called insignificant.

Such sales mean that packing stations operate with a lower throughput and, therefore, at a higher cost—this with a well-marketed, subsidised product which, one might argue, with the financial inducement, is rigidly controlled, compared with horticultural produce in which there would be very little control. There is every reason, there- fore, for thinking that, in horticulture, with no sort of a marketing scheme and in circumstances where it may well pay the grower not to grade, there will be a flood of ungraded produce on the market. This is what the growers believe, and in this I would submit that they know better than the Ministry.

This case was fully deployed in Committee and, therefore, I do not want to go over the same points again; in fact, I have not in the words that I have said this time. But I hope the Government will look at this point again, because the arguments they have put forward in support of the clause as it now stands really do not hold water. There is considerable unease among growers, particularly the better growers, who are most anxious to grade their produce properly. They are very much afraid that if the present provisions for allowing ungraded produce to come into the shops remain unaltered, and unless there is statutory enforcement of the grading, not only at wholesale level, as the Bill provides, but at retail level as well, then all our hopes for the improvement to the industry which will come from grading will, in our view, fail. I hope, therefore, that, even now, before it is too late, the Government will change their mind on this score and will accept the Amendment. I beg to move.

Amendment moved— Page 12, line 8, leave out paragraph (a) and insert the said new paragraph.—(Lord Stonham.)

LORD WISE

My Lords, at this stage I feel I ought to support my noble friend who moved this Amendment. I hope that in this instance the Government will think again, if they have already decided to turn down the Amendment. This is one of the most important Amendments to the whole Bill, and a most important point, because it concerns us all—all Members of your Lordships' House are consumers. Unless this Amendment is accepted, we are all liable to be foisted off with inferior articles and ungraded produce. The noble Lord shakes his head. He has not had as much experience of marketing and buying in the consumer markets as I have. I can assure him, and all your Lordships, that if you are not very careful in selecting what you are purchasing you can be swindled in many ways. It all rests upon this question of taking grading right through to the retail markets and shops. Unless we do that, the Bill is likely to be of no effect whatever in the consumer's interest. I therefore ask the noble Earl to take the matter back for further consideration.

LORD HAWKE

My Lords, the noble Lord, Lord Stonham, sometimes appears before us in what appears to be the guise of a Liberal. On other occasions he comes as a Socialist totalitarian. It is in the latter role that he has been acting during this Amendment, because this is the most Socialist totalitarian Amendment I have ever heard: that a grower shall not be allowed to sell any of his produce unless it passes some particular grade and goes into the market as fully-graded produce. Naturally, the shops will buy and pay the best price for the best stuff. But there is bound to be fruit, and so on, which cannot be graded. Is that going to be thrown away and the price added on to the graded fruit?

LORD STONHAM

My Lords, may I interrupt the noble Lord? Does he appreciate that any grower who sends his produce to a wholesale market is compelled to grade under this Bill? Does he regard his right honourable friend the Minister of Agriculture as a Socialist totalitarian?

LORD HAWKE

The grower can sell locally all the stuff that will not grade. If the noble Lord's Amendment were passed, it would mean that the village shop could not buy the produce of the people round about because it will not be graded. The noble Lord has instanced eggs. This is the worst support for his case, because the reason why one in three eggs does not go through the packing station is that people are willing to pay a larger price for eggs which do not go through the packing station than they are for the ones which do. Are we to take it that if his Party comes into power every egg will have to go through the packing station, and thus one in three consumers will no longer be able to buy an egg which they believe to be fresher? This is a purely totalitarian Amendment, and I hope my noble friend will reject it.

EARL FERRERS

My Lords, I have listened with interest to what noble Lords who have spoken have said on this Amendment. I appreciate the views of the noble Lords, Lord Stonham and Lord Wise, and that they are particularly anxious to try to make sure that the housewife receives a reasonably graded product. I think it would be fair to summarise the points made on this clause as follows. As it stands, the Bill prohibits the sale of any of these specified products ungraded unless they are sold either over the farm gate or direct to a shop from which they will be sold retail—not to a chain store or to a depot, but direct to the actual shop from which they will then be sold. Those are the only occasions when it will be permissible to sell products ungraded.

The noble Lord, Lord Stonham, argued that sales of this sort are already far more extensive then we might realise, that they will increase in scope because they will provide a method of avoiding grading and that therefore the purpose of the Bill will be thwarted. I should like to consider this in some detail. It could be suggested that direct sales will rapidly increase in volume once this Bill becomes law, and that growers will try to avoid the expense of grading by selling their produce ungraded to local retail shops. I do not think this is likely to happen to any marked degree, because, in the first place, a grower who wants to sell ungraded produce will have to undertake to deliver the produce himself, and that would be quite an expensive operation. I doubt, in fact, whether he would save much expense by delivering goods as opposed to grading them. I should also like to emphasise again that sales which are exempt are ones where the grower delivers direct to the shop; in other words, the produce cannot be collected in a central depôt and it has to be delivered by the grower to the final place of retail. The retailer involved is being asked to buy an ungraded load of produce, some or all of which may well be below the minimum standard were it graded. As your Lordships know, the greengrocery trade is competitive and a buyer may soon find that his bargain purchases are not such a bargain after all, because he would be selling poor quality, ungraded stuff compared with the shop next door where graded produce was bought.

A further substantial difficulty affecting the greengrocer, which the noble Lord, Lord Stonham, has conveniently ignored, would be the severe imposition which would be placed on the retailer were he obliged to sell by grade. At the wholesale stage, or earlier, it is possible to effect the grading of produce efficiently and easily, allowing some tolerance for human error, but to oblige the retailer to sell each single component of the consignment by grade, possibly two or three days after the purchase, would inflict upon him the liability of placing the guarantee of grade on each individual pear, apple or other item of produce. This, we believe, would be placing an unfair and unrealistic obligation on to the retailer without offering any material advantage either to the consumer or to the industry.

LORD STONHAM

My Lords, if the noble Earl will allow me to interrupt, our Amendment expressly prevents the need for what he just said about putting a guarantee on every individual apple and pear. If he looks at Amendment No. 6 he will find that it does not make that necessary at all.

EARL FERRERS

I am not so sure about that. … the exposure for sale by retail of produce bearing a show ticket to which is affixed the label referred to in subsection (1) … means, in other words, that you are saying, "These apples are of grade 1". But if a person purchases four apples, some of them may possibly be bruised and may be below the exact requirement which might, when sold by the wholesaler, have allowed for a reasonable tolerance either for bruising or for anything else.

What the noble Lord is saying is that, if a show ticket is affixed, each person must know when he is buying that each apple or pear is of a particular grade. We consider that this would impose an unfair and heavy burden upon the retailer without any substantial advantage either to the consumer or the industry. If there were to be a marked increase in direct sales, the Minister has the power to take action to limit, or even to stop, this entirely, long before it represents a threat to the grading system. Subsection (3) of Clause 12 gives the Minister power to make an order restricting direct sales of this ungraded produce. The Minister has said in another place that he will not hesitate to use this power if necessary, and I repeat his undertaking here.

The noble Lord also suggested that grading at the retail level would benefit the housewife because she will be protected from misrepresentation. As my noble friend Lord St. Oswald explained during the Committee stage of the Bill, the housewife, in fact, does not need this particular protection, because she already has it. She is safeguarded against deliberate misrepresentation by the provisions of the Foods and Drugs Act. Section 6(1) of that Act makes it an offence to display a label calculated to mislead as to the nature, substance or quality of the goods so labelled. This is a valuable protection, and it is not necessary, in my submission, to take these additional powers here. I hope, therefore, that the noble Lord will accept that what we have done in this Bill is to allow for the grading of produce at the wholesale stage which will enable the retailers to purchase a reasonable grade of fruit or produce and yet, at the same time, not have the liability imposed upon them that they must be responsible as regards to grade for every single item of produce which they purchase and subsequently sell.

LORD SHEPHERD

My Lords, before the noble Earl sits down, I wonder whether he could help me. He said earlier on, in regard to the question of retail trade, that if goods went through a depôt they would then have to graded. What is the situation of a chain store of greengrocers who buy and collect produce from farmers and then distribute it themselves to the shops? This would be a retail operation. It would not be wholesale because the chain store would be buying direct from the farmer. Would those goods have to be graded or would they escape within the terms?—because there are a considerable number of these chain-store greengrocers in London and our main cities who buy their main produce from farms and distribute it in their own vehicles.

LORD HAWKE

My Lords, may I ask the question which follows up? If those goods were graded, presumably they would sell them as graded and get a higher price for them. If they were not graded they would get a lower price for them.

EARL FERRERS

My Lords, that is of course true, and I am glad that the noble Lord, Lord Shepherd, mentioned this, because I had hoped that I had emphasised the point. Clearly, I had not done so sufficiently. If a chain store of retailers purchases from a farm, then that produce must be graded. The only instance where it need not be graded is where a farmer sells direct to the shop from which it will then be retailed.

LORD SHEPHERD

No, my Lords.

EARL FERRERS

Perhaps if I explain a little further the noble Lord will understand the point. If the farmer sells produce to a retail shop, it need not be graded because it will thereafter be sold direct from that shop. If he sells to a chain store, and delivers actually to the individual chain store, and the produce is sold from that store, then it need not be graded. But if it is accepted by the chain store, and possibly taken some to one store and some to another, then it must be graded because it would be sold, as it were, to a depôt.

Perhaps I might draw the noble Lord's attention to Clause 12(2): The circumstances referred to in subsection (1) above are as follows.… (e) a direct sale by the producer of any produce where the produce is, or is to be, delivered at premises, or at any stall or vehicle, from which it is to be sold by retail. In other words, if the farmer sells his produce, to a shop which happens to be a member of a chain store, it may be sold from that shop ungraded; but if he sells it to a chain store, as such, to a depôt of the chain store, then it must be graded.

LORD SHEPHERD

Perhaps the noble Earl will agree with me that it is not a question of selling to the shop, but of the farmer delivering to the shop.

EARL FERRERS

I do not know really whether one is in order to have this chit-chat across the House. The point is, that the farmer must deliver the goods himself to the shop.

LORD STONHAM

My Lords, the answers which the noble Earl has now given in response to the questions of his noble friend and my noble friend Lord Shepherd expose the complete folly of the Government's case in this particular clause. This is now the wonderful setup we have: the fruit grower delivers his produce direct to a retailer and it does not have to be graded; the grower delivers his produce direct to a single shop of a chain store and it does not have to be graded; the grower delivers his produce to the depôt of a chain store and it must be graded. That is clearly the position as it stands under this Bill, and it is utter, abject nonsense. When the produce, the apples and pears, arrive at the depôt of the chain store, they must be graded immediately; if they get into the shop of the chain store by a direct process they do not have to be graded; there is no statutory enforcement; they do not have to be graded at all. I ask you, my Lords, was there ever more stupid nonsense than that, which we are trying to amend? It is absolutely indefensible. Nobody can argue that it is a sensible provision when it is such complete nonsense. I stated the position correctly. In the case of the chain store most of the produce comes to tie depôt and has to be graded. But when they become retail sales in the individual stock of the shop of the chain store there is no compulsory enforcement of the grading because they are retail sales. Subsection (a) says that a sale of produce by retail is excepted from the provisions of Clause 12.

EARL FER RERS

I was not shaking my head at the noble Lord's interpretation but merely at the fact that he said it was indefensible and would not work.

LORD STONHAM

If the noble Earl thinks distinctions of that kind are defensible and they will work, he is entitled to his opinion, just as I am entitled to mine.

The only other comment I would make is in regard to his point that it would be unworkable with regard to retail sales to have compulsory enforcement of grading because it would mean that every individual apple or pear would have to be guaranteed. He asked what would happen if an apple was bruised and therefore below the grade. I would say, exactly the same thing as happens in the wholesale market, where the produce will have to be graded by law. Is it to be assumed that produce gets on to the wholesale market, is graded and is never sub-standard, and that nothing has to be thrown out? Of course that is not so. If, for any reason, the produce is sub-standard, below the grade, in the wholesale market, the position is exactly the same as it would be if there were statutory enforcement of retail grading and the produce were substandard there; so there is nothing in that point at all.

On Question, Amendment negatived.

Clause 21 [Power to require use of prescribed containers, etc.]:

4.27 p.m.

LORD STONHAM moved to add to subsection (1): Before regulations are made, the Ministers shall appoint an organisation fully representative of all the interests which appear to them to be affected by the regulations, to define by research and investigation the containers and other articles most suitable for each purpose and to make recommendations.

The noble Lord said: My Lords, I beg to move this Amendment, and I hope it will be convenient if at the same time I take the final Amendment, because it is on precisely the same point. In regard to Clause 21 I feel obliged to say, "and it came to pass after many years", because it is for something like thirteen or fourteen years that my noble friends and I have been insisting that we must have standard containers for the conveyance of horticultural produce. Your Lordships will recall how hard we pressed this particular point during discussions in the Committee on the 1960 Act, when despite all we said the Government turned us down. But now, at long last, they have seen the light, and we are grateful for it.

There is, however, what I regard as a glaring omission from the clause, which we seek to correct with these two Amendments. I think the noble Earl will accept that before any decisions are taken about specific containers there must be detailed discussion with growers, with distributors and with the container manufacturers to decide on the best types of containers for different purposes. It is also certain that this will call for a good deal of prior research and investigation. But the Government do not appear to have foreseen this, because they have made no financial provision in the Bill for it. Hence the second of the two Amendments with which I am now dealing.

We think that the best way of doing the job is to appoint an organization fully representative of all the interests likely to be affected by the regulations, and to give this organisation the job of undertaking the necessary research and then defining the most suitable containers. It would, in fact, have been another task for the Horticultural Marketing Commission which I should very much like to see set up and to which I have previously referred. But, failing that, it is obvious that we must have a representative organisation for this specific purpose, and I think there is no doubt that it should be set up and put to work without delay, even if it is not intended to implement this particular clause for a number of years. Indeed, I do not see how grading and the regulations regarding containers can possibly be introduced until you have an organisation of this kind in action.

I hope that in his reply the noble Earl will give some clarification on one or two points. First, do the containers which are referred to include both returnable and non-returnable market packs? Do they include consumer packages, for example pre-packed? I think these are matters on which we could be advised now. If it is the case that all those are going to be included it will greatly increase the already large number of container and package types to be considered under this clause.

Secondly, on what basis are the containers selected by the Government to be prescribed or defined? Is it the intention to lay down solely dimensions or their performance, or will the prescriptions also include complete specification as to material, design and construction? I would mention that the designs of non-returnable market containers are often patented by the manufacturers, and the introduction of statutory prescriptions could have a very restricting effect on the packaging industry. Again, new packaging materials and designs are constantly being brought out, and it is probable that the introduction of detailed container prescriptions would, as it were, have a braking effect on further development by packaging manufacturers, unless the regulating machinery to be set up under this clause was extremely flexible.

There is in Clause 23(1) an undertaking to consult interested organisa- tions before regulations are made, but I would mention to the noble Earl that that does not fulfil the purpose of this Amendment. The views of these organisations, in the absence of extensive trials and experiments, would not be sufficiently complete and, I submit, could not provide the Government with a valid basis for the necessary decisions. Then, because of the many types of produce and the even larger number of containers which are involved, a comprehensive programme of performance testing would be required which would have to be planned over a number of years. Then again, an initial period of time would be needed to set up the necessary administrative organisation and to recruit suitable scientific staffs, and so on.

Even if it is not proposed to make regulations in the foreseeable future, I submit that it would be necessary, nevertheless, to implement this Amendment without delay, because at present there are only two existing bodies with any knowledge of this particular subject. The first of these is, of course, the British Standards Institution, although, so far as I know, the B.S.I. have not undertaken work of this kind on a substantial scale in the past—and the standardisation of containers represents only a small part of their work. The other organisation which I have in mind is the Produce Packaging Development Association, which is a specialist body representative of the interests of producer, packer, distributor, and container manufacturers. It has something like ten years' standing in the field of horticulture pre-packaging and is recognised by the Department of Scientific and Industrial Research. Some years ago I believe it received a small grant from the Ministry of Agriculture, but recently lack of funds has caused a reduction in its development activities.

I hope that the Ministry will be able to remedy this under the terms of this clause, because since the death of the Horticulture Marketing Council, the Produce Packaging Association is the only organisation with specific interests and experience in the development of horticulture containers. The remarkable advance in horticulture pre-packaging is, I think, largely due to the Association's work. As we know, of recent years there has been a phenomenal increase in the pre-packaging of vegetables, and it has been of great value to the horticulture industry. I hope that the knowledge and research facilities of this organisation may be fully used and that it may provide the nucleus of the type of organisation referred to in my Amendment which, I submit, will unquestionably be needed. In fact, unless the Government are prepared to accept the Amendment, tie powers sought in the Bill at present appear likely to prejudice the interests of many sections of the industry, and I would submit that they need to be looked at carefully.

I think this is the fourth occasion during the passage of this Bill upon which I have shown that there is a clear need for an organisation to help the Ministry with regard to specific problems. So far we have not had a single word from the Government on how it is proposed that he Department will cope with the many problems to which I have referred. I hope that when the noble Earl comes to reply he will he able to fill this gap on this subject, and I would suggest that the first step towards filling it effectively would be to accept this Amendment. I beg to move.

Amendment moved— Page 17, line 37, at end insert the said words. —(Lord Stonham.)

4.37 p.m.

EARL FERRERS

My Lords, again I have listened with interest to the noble Lord's points, and I realise that he is most concerned about the standardisation of containers for marketing produce. I appreciate what he has said about them. I should find it difficult to fill the gap in the way that he has suggested, by accepting his Amendment in toto; but I fully appreciate what he has said.

Perhaps I could begin by outlining the purpose of this clause. The clause, as it stands, enables Ministers to make regulations standardising the containers and pallets which horticulturists use to send their produce to the market. Although there is a general measure of agreement in the industry on the benefits of standardisation, it will take some time to draw up specifications for containers for the various products. A lot of research is being done at the moment on containers and the different materials, shapes and sizes and so forth, and it will be some time before any specifications can be produced. Nor will we make the use of such containers compulsory before the industry in all its various sections, has had an opportunity to get used to them and to try them out.

It could be argued that we should not make any real progress until a coordinating body such as the noble Lord suggests has been established. This could be responsible for undertaking research work leading to the designation of standards for containers. I think really this is a matter of judgment rather than of principle, and where the noble Lord and I might differ is over the method of obtaining the same end. There is, as the noble Lord opposite realises, a great deal of commercial interest in the manufacture of containers, and several large firms have their own research teams. I am sure the prospect of standardisation will encourage these firms to increase their efforts. Others have not lagged behind. The noble Lord mentioned the British Standards Institution. Indeed, well he may, because they have a programme of work in this field as well; and the Agricultural Market Development Executive Committee have made grants for specific projects, and would be prepared to consider applications for further work.

Then, when we look at the present arrangements for co-ordination, we find that research needs in this field is one of the subjects which are being considered by the Horticultural Advisory Council, whose views upon it the Minister will receive in due course. If they suggest that some extra research is necessary, there is the Agricultural Research Council, who will be prepared to consider firm proposals for additional projects. I hope that noble Lords will take the view that there is, in fact, plenty of evidence to show that a lot of work is being done on research into containers, their different sizes and shapes and the materials and things to be used in them, and that there is machinery for this particular work which ought to be successful.

The last thing I would do is to be complacent and to suggest that the outcome is easy or simple—it is not. We realise that this is an important matter; but I believe the existing machinery is sufficient for the purpose, and that if one were to set up another body merely to co-ordinate all the works that are going on at the moment, one might in fact hamper that work by putting yet another tier on to the existing organisation. I hope that with that explanation the noble Lord will not press his Amendment too hard. We want to get standardisation of containers as soon as possible, but his Amendment would merely add another tier on to the existing machinery, which I do not think would really help.

LORD STONHAM

My Lords, I do not intend to press the Amendment; indeed, matters of this kind cannot be satisfactorily settled in this way. They can be settled only by detailed discussion and consideration of the points. I quite appreciate that the noble Earl is not complacent about this, but, although a good deal of research work may be going on in regard to containers, there can be no effective implementation of the provisions even of this clause unless there is some co-ordinating or directing force—which may indeed be his own Department. I do not dispute that, although they have so much on their plate that I should have thought that it would be much better to have another body, representative of all interests, to do it. In fact, I feel sure that eventually that will have to happen, otherwise the job will never be done. Unfortunately, the only two organisations which are undertaking the work at the moment are the two I have mentioned. There may well be research going on, but, judged in relation to the need, it is extremely diverse and woolly and must be brought together. The need for it will become ever more apparent.

My only concern in moving these Amendments is to draw attention to that need and to the urgency of the matter. Decisions must be taken now, and it will be several years before it is possible to say that we know enough to have standard containers and then to bring forward the necessary standards and the regulations for imposing them. The only difference between the noble Earl and myself is that, although we both agree it will be necessary, I believe that the organisation should be set up now, whereas he is prepared to wait. I think time will prove that I am right. For the moment, I will leave it at that. My Lords, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.