LORD ST. OSWALDMy Lords, I beg to move, that the Fatstock (Guarantee Payments) Order, 1964, dated March 24, a copy of which was laid before this House on March 26, be approved. The purpose of this Order is to provide authority for guarantee payments on fatstock from the begining of the fatstock guarantee year on March 30. It supersedes the existing Order which, subject to some amendment in 1961, has been the authority for the guarantee payments since March, 1960.
The main difference from the existing Order is concerned with the changes in the guarantee arrangements for cattle and sheep anounced in the White Paper, the Annual Review and Determination of Guarantees for 1964. The guarantee payments for these classes of fatstock will now be in the form of graduated deficiency payments. The rate of payment in any week will be the difference between the average market price and the standard price for that week, and this difference will be adjusted according to scales of supplements and abatements, which will have the effect of increasing producers' returns if they sell on a strong market, and of reducing them if they sell on a weak market.
In addition, after the end of the fat-stock year, the total of the weekly payments will be compared with the amount due to the industry to implement the guarantee for the year as a whole, and any under-payment will be paid at flat rates to the producers of all cattle and 858 sheep which have been certified for guarantee payments during the year.
The only other change of any substance is in the feed formula arrangements for pigs, under which the guaranteed price is related to the cost of a standard feed ration and is varied in accordance with changes in the cost of the ration. A change in the basis of this adjustment was announced in the White Paper and the rewording of the relative Article—that is, Article 11—in the Order enabled the change to be put into effect. In commending this Order to your Lordships, there is only one other thing I would add and that is to say that the changes involved here have been discussed with producers' representatives and are generally acceptable to them. I beg to move.
§ Moved, That the Fatstock (Guarantee Payments) Order, 1964, be approved.—(Lord St. Oswald.)
§ 3.31 p.m.
§ LORD WALSTONMy Lords, the Minister, with his customary clarity, has made this simple little Order even more clear than it was to those of us who had taken the trouble to read it beforehand. I can only hope that it will have the desired effect of encouraging home producers to produce more cattle more quickly and market them at the time when they are needed, because one cannot get away from the fact that to-day there is a very genuine shortage of meat in this country and that the housewife, as always in these cases, is the eventual sufferer. The reason for this shortage is none other than the Government's policy over the past years, which this Order does not go any way to changing fundamentally.
Not only was there the discouragement of the home producer three or four years ago, which has naturally resulted in fewer cattle being available from British farms at the present time, but there was also at approximately the same time a very strong discouragement to our overseas suppliers, in particular to our Commonwealth suppliers in New Zealand and Australia, to send their meat here, and an actual request to them to look for markets elsewhere. Of course, they paid attention to that request and, in their desire to help us, looked for other markets. It is a fact now that the Australian and New Zealand producers 859 have so far succeeded in finding other markets that they are to-day finding it more profitable to send their meat to Japan and other countries rather than to send it to this country. This coincides with a very grave shortage of supplies coming from the Argentine. The amount, I believe, is now something like 25 per cent. of what it was last year, partly because they are consuming more themselves and partly because they are exporting to other places.
This is something which, as I say, eventually comes back upon the housewife herself, and if we take a look at some of the wholesale prices, it is not surprising that the prices in the butchers' shops have risen as much as they have. For the week ending April 21, in Smithfield Market the prices of four different grades of meat were as follows: Scotch sides, 2s. 3½d. to 2s. 6½d. a 1b.; English sides, 2s. 4½sd. to 2s. 6d.—and it is gratifying to an English farmer to know that English beef commands just as high a price as Scotch beef on an English market; Argentine chilled hindquarters, 2s. 7d. to 2s. 8d.—perhaps it is interesting to note in this connection that the cost of Argentine meat is slightly higher than for English; Argentine forequarters, 2s. to 2s. 1d. If we compare these prices with the prices twelve months ago we find that the Scotch sides, now approximately 2s. 6d. a pound, then cost 1s. 7d. to 1s. 11½d.; English—a similar kind of difference—1s. 7d. to 1s. 9½d. instead of 2s. 6d.; whereas Argentine chilled forequarters, instead of costing 2s. to 2s. 1d., as they do to-day, were selling for 11d. to 1s. 1d. In other words, the prices are very nearly double.
This is a pretty serious situation for which the Government must take a very large amount of the blame, because while they are very keen, and have been in the past, when they are getting into some difficulty over too much meat coming into this country, to ask our traditional suppliers to send less—as the noble Lord himself told us a little while ago, they have succeeded with cereals and hope to succeed with meat, and if they have not asked our suppliers to send less, they have at any rate asked them to charge us more for it—they have taken no precautions whatso- 860 ever (and now we are beginning to suffer for it) to ensure that when there are shortages the British consumer is safeguarded by having supplies of meat assured in reasonable quantities. If the present situation were not serious enough, we have only to turn to today's Times and read what has been said by Sir John Hammond, an acknowledged expert on the livestock industry and on meat supplies not only in this country but throughout the world: that this shortage of meat is something which, in his opinion, and in the opinion of many others too, is going to be with us for a very long time.
The reason for this is not very far to seek. It is something which many of us have expected for a long time. As the standards of living throughout the rest of the world rise, people who in the old days were not meat eaters become meat eaters. You will find now that Italians, instead of subsisting on their diet of macaroni and spaghetti, enjoy much larger quantities of meat. They are even importing meat, albeit in small quantities, from this country, as well as from Yugoslavia, who otherwise would be sending it here. France, always having had a high standard of living and of eating, imported in January and February of this year something like 5,500 tons of meat from this country, compared with 500 tons of meat in the corresponding period last year. This is something which is going on throughout the whole world, and which I am convinced is going to go on, with some ups and downs, over the next ten or twenty years.
This Order, a small one admittedly, and not one which is going to change the whole policy, unfortunately, does nothing whatever to redress the balance. I do hope that the Government are really waking up to the fact that, if the British consumer is to be provided with sufficient meat at a reasonable price, it is no good just thinking that we are always going to enjoy this position of being the one buyer in a world who is saturated with primary products, whether they be meat or anything else, the producers of which are only too anxious to send them to our shores, and are realising that we are now finding ourselves in a position of being one buyer among very many. The only way to get over the position, besides, 861 I hope, making long-term agreements with the overseas producers which will safeguard them against temporary gluts and safeguard ourselves against the more long-term slumps, is to encourage our own home production, and to face the fact that, if we are going to have the meat and the other foodstuffs that we require, our own farms are going to have to play a larger part in the future than they have done in the past, and Government policy will have to be adapted accordingly.
As I say, this Order does not do anything to set that right, but for all that we accept it as being an essential part of the general agricultural price structure as it is at present. We hope for better things in the future, when perhaps the Government, or at least, the Party opposite, will be able still to go on burying their head in the sand and disregard the movement of world events; but they will no longer be the Government and will be able to keep their head in the sand for as long as they like.
LORD ST. OSWALDMy Lords, I wonder whether I might answer the noble Lord's speech straight away. I do not, in fact, intend to answer the noble Lord, Lord Walston, at quite the same eloquent length, but I should first like to say, of course, that I am grateful to him.
§ LORD SILKINMy Lords, on a point of order, as there are to be other speakers, would it not be more convenient if the noble Lord heard them before replying?
§ 3.40 p.m.
§ LORD SAINSBURYMy Lords, after first declaring an interest, may I lend support to what my noble friend Lord Walston has said. As your Lordships remember, a year ago many of us were considerably disturbed about the phasing of imports and the very high cost to the Treasury of the deficiency payments. I would ask the Government whether they are equally concerned about the present shortage and high price of meat, and whether they consider the existing deficiency payments and arrangements are satisfactory, in the light of this completely changed supply position.
The current prices of meat—all meat—are running some 20 per cent. higher 862 than a year ago. I can quote different, but supporting, figures from those given by my noble friend Lord Walston. For example, with Argentine chilled beef, on the basis of Smithfield Market quotations for the four weeks ended April 17, hindquarters are 8d. per 1b. dearer, an increase of just over 30 per cent., and forequarters are 1s. per 1b. dearer, or nearly double the price of a year ago.
My noble friend has referred to that renowned expert, Sir John Hammond, and he has given a clear warning that in his opinion these high prices are likely to last for the next eighteen months. There are many causes, but there are surely some which could have been foreseen. There is the shortage of beef in the world outside North America. There is the shortage of Argentine beef, due to an earlier drought. There is the growing demand in Europe, owing to rising standards of living. There is the export of beef and veal from this country. Although it is comparatively small, in relation to the current total production, it is running, in tonnage equivalent, at more than three times the figure of a year ago. Also, as Sir John Hammond pointed out only yesterday, 80 per cent. of our beef production in Britain comes from the dairy herd, and the decline of the herd and the fall in milk production mean that calves available for beef are getting fewer. I think the situation is serious. It calls for foresight and the same desire to serve the interests of the housewife as has been shown to serve the interests of the producer.
§ LORD WISEMy Lords, before this Order is passed there is a point that I wish to make to the noble Lord. I do not want to deal with the practical matters, to which my noble friends have already referred, but I do want to make a plea to the Government for simpler Orders. I do not know how many noble Lords have read this Order, or seen it. This particular Order is very complex; it is not drafted in simple language, and it is very long for the purposes for which it has been promoted. There are nine pages; there are seventeen articles, some short and some long, and four Parts in the Schedule.
The Order starts off, in Article 2, with 21 definitions, which cover a page and 863 a half, and the word "guarantee" or "guarantees" appears in the Order 70 or more times. It is highly complex. I think that it will not be understoood by the farming community or by many people outside that particular area. The Minister will be kept extremely busy. He is mentioned no fewer than 44 times in the Order. He has to ascertain, to determine, to specify, to estimate, to approve, to require and to consider relevant matters. In addition to that he has to make payments—and that, I am certain, will please the farm community more than the rest of the Order. The Order was laid on March 24, and the 40 days are nearly up; and as it has already, apparently, come into operation, we on this side of the House, as my noble friends have said, do not wish to hold it up. But we hope that as a result of the Order, some benefits may accrue to the farming industry.
§ THE EARL OF IDDESLEIGHMy Lords, I would beg to point out that the situation confronting us over meat is that there is an increasing world demand for meat, largely because nations which formerly were non-meat-eating are now taking to the habit of eating meat and there has been no corresponding increase of supply. It is not a Party matter. It is not a matter which can possibly be affected by the transition of power from one Party to another. It is a world situation, and it is a very serious one. It is not purely a matter of shifting the emphasis of British production from beef to other forms of product. There is no certainty that we shall not also, in the long run, have a milk shortage as well.
The real answer, as I ventured to point out in a speech which I made on the South-East Report, is to adopt a wholly new attitude towards taking agricultural land for urban purposes, and the sooner all three Parties recognise the seriousness of that question the better chance we shall have of being able to continue to consume a moderate, and probably decreasing, amount of meat per head.
§ LORD BALERNOMy Lords, the noble Earl, Lord Iddesleigh, has, I think, put his finger on the spot in saying it is an increase in world consumption of meat which is causing the present shortage. It has increased at a somewhat 864 greater rate than was anticipated. But I think the noble Lord, Lord Walston, is unduly pessimistic regarding future shortages of beef in the world. At the present moment there is a tremendous over-production of beef in the United States of America, and the farmers there are most gravely concerned about the price of beef, which has dropped to the lowest price it has been for many years. They are bringing considerable pressure to bear upon their Government in Washington. I have just come back from the corn belt, and one would think that this was one of the major agricultural crises of the century. Certainly there are some farmers who are having to tighten their belts very considerably.
§ LORD WALSTONMy Lords, could the noble Lord tell us, as he has just come back from the United States, what the price of beef is in that country?
§ LORD BALERNOTwenty cents a 1b. and under. It was selling at Fort Worth at 19.5 cents. The point one might remember is that the United States is at present importing as much as 5 per cent., and it was extraordinary to hear United States farmers and agricultural economists expressing great alarm at this, to us, comparatively small proportion of meat importation. When you take 5 per cent. of the total production of meat in the United States, however, it is quite a sizeable quantity. Much of the beef comes from Australia in a form in which we do not take it—namely, ground meat as distinct from carcase meat. I understand that in America they feel they would have no difficulty in meeting the demand of the home market if an embargo were put on the imported supply.
There is one other point I should like to make, in the form of a question to the Minister—namely, whether it is not the fact that the retail prices of beef in this country are still, as they have been for some years past, considerably lower to the housewife than in other parts of Europe or in the United States of America.
§ 3.52 p.m.
§ LORD STONHAMMy Lords, before the noble Lord replies, I wonder, when he does so, whether he would say a word about the considerable concern that exists in the minds of many people 865 at the fact that, in a short period of two months, we have exported 5,500 tons of meat, on all of which, of course, the taxpayer has had to pay subsidy before it was exported; yet the foreign importer has paid to import it and sell it again. May I ask him also, when he comes to reply to the points which have been made by my noble friend, to have regard to the fact that the Government cannot possibly put the whole of the blame for the present situation on to either increased demand for meat in various countries of the world or shortage of supply, because if they had had sufficient foresight not to discard the whole machinery which was built up by a Labour Government for long-term contracts for meat from abroad, then, whatever the increased shortage in supply, there would not have been the same shortage in this country. Therefore, the Government cannot escape the blame for a great deal of the trouble which now exists.
§ 3.53 p.m.
LORD ST. OSWALDMy Lords, I am most grateful to the noble Lord, Lord Walston, for hoping that these measures would be effective. I hope we shall satisfy him in the course of time that they are. However, as I know that he always searches for truth, I should like in a small way to guide him back on to the beam of truth, even though he departed, as he later graciously conceded, far from the subject of this Order, exuberantly followed by others of his noble friends who also spoke, and most exuberantly of all by his noble friend Lord Stonham who spoke last.
I am sure he is not right in attributing the present temporary shortage of beef in this country to Government measures. He will remember, as I remember well, that at about this time last year—the time of the Price Review of 1963—his noble friend Lord Williams of Barnburgh twitted me merrily on the fact that the mark et was overloaded (as I think Lord Sainsbury himself has reminded us again) with Argentine beef. I can remember that the subsidy paid by the Exchequer reached a record sum: at one time it was 70s. per cwt. and amounted to a very large sum at the end of the subsidy year.
I think the reasons can be put down quite fairly—here, I am afraid, I disagree with the noble Lord, Lord Stonham, and 866 I consider the facts disagree with him—to shortages in supply and to the rate of take-up in certain countries, neither of which need continue at the same rate. Certainly, we expect the shortages to be purely temporary. There has been a severe drought in the Argentine, and this has made a great deal of difference to the amount of beef they have been able to send us this year. In slightly greater detail I can say that what has happened is that in normal years they send us bull beef. This year, because the cow beef has been so short, the Argentinians themselves have been eating bull meat, and that has taken off a considerable amount of what would normally be sent to our market. The noble Lord said—and I was glad to hear him say it—that he looked forward to long-term agreements for stabilising the markets, not only in our own country but in others. This certainly we are striving after. We all regret—I am sure he regrets it as much as we do—that the agreement on beef was not reached as was the agreement on cereals.
§ LORD WALSTONMy Lords, may I interrupt the noble Lord just to get that point clear? I understood that the long-term agreement on cereals is not for any specified quantity, nor is there any ceiling in the price. Therefore, if there were a shortage of cereals there would be nothing to guarantee that the British housewife would get cereals either at a low price or in adequate quantities. If that is so, would he tell us whether the agreement on meat is to be the same—if so, there will be no protection at all—or is he envisaging a different form of long-term agreement?
LORD ST. OSWALDNaturally, I cannot foresee what form the agreement on meat will take when it is reached—"when" is the right word. As I say, we hope it will be reached, but I think it will be unlikely to take the same form as the cereal agreement. His noble friend Lord Sainsbury asked whether we were equally concerned with the shortage as we had been with the abundance last year, and whether we were satisfied that the present system of deficiency payments is adequate. The answer to the first question is a relative "No", in that I do not think we are concerned at the moment. Naturally, we do not regard it with the same anxiety that he does, because he 867 thinks it is a longer-term shortage than we do. To that extent only is our concern less. We do think that the present deficiency payments system is satisfactory.
He mentioned the growing demand in Europe. This is, of course, true. A certain amount of Yugoslav beef has been sent to Italy. It is doubtful to what extent that enlarged take-up will continue. He took it that this was a direct result of our pleas to the beef suppliers to find other markets. Here, again, I return to the little exchange I had last year with his noble friend Lord Williams of Barnburgh, who referred to "a series of love letters" sent to the Argentine Government asking them not to send us too much beef. I replied to him at that time that these were not "love letters" but business letters, and as business letters they were effective, and as business letters they were able to be short term in contrast, of course, to "love letters." Does the noble Lord wish to intervene?
§ 4.0 p.m.
§ LORD WILLIAMS OF BARNBURGHMy Lords, when I referred to these "love letters", I was, of course, implying that for twelve years the Government and their predecessors had done nothing about the law of supply and demand in relation to agricultural produce. In the meantime, there has been a slump in prices because of over-supplies at any given time, with increased deficiency payments, and with all the Press of the country condemning somebody—they did not quite know whom—for doing nothing about these ups and downs. Of course, the villains of the piece were the Government, and time and again in another place, and three or four times in your Lordships' House, I have pleaded with the Government to try to get some order into the imports of various agricultural commodities so as to avoid these surpluses and slumps, the chaotic situation in regard to meat, wheat, cereals and indeed other commodities.
These "love letters" have achieved something, which seems to have satisfied the noble Lord. He is not at all unhappy that there is a shortage of meat and that the prices have gone up, because the housewife is now paying a higher price and the Treasury are paying less. That has been the policy of the 868 Conservative Government from the beginning, and that was why they wanted to get into the European Common Market. The noble Lord almost invited me to get on my feet, when I did not really want to get up.
LORD ST. OSWALDMy Lords, I must say that since the first time I ever confronted the noble Lord in public, at a meeting of the Barnsley N.F.U., he has not changed—he is now as mischievous as he was then; and he is prepared to depart as far from the truth as he was then, and with as great charm as ever. What he says is entirely consonant with what his noble friends have been saying in the course of this small debate. If they were in power and a shortage were to appear, they would assume it was a permanent shortage and would take permanent measures on which it would be very difficult to go back. This is what I read into the noble Lord's remarks.
The noble Lord, Lord Sainsbury, and the noble Earl, Lord Iddesleigh, both expressed anxieties as to what we were doing about the supply of fatstock. I would remind them that the guaranteed price for fat cattle was increased by 3s. a cwt. during the 1964 Review, and also the calf subsidy has been increased by 10s. a head. Slaughterings in home-produced cattle are at present running at higher levels than usual, and in fact prices have eased lately. At the moment the market price is falling. My noble friend Lord Balerno asked me whether I could confirm that the resale prices of beef even to-day—when they are temporarily, as we believe, higher than usual—are in fact very much lower than in other European countries. That is very much the case.
The noble Lord, Lord Wise, had done infinite research into the numerical repetitions of phrases in this particular Order. He addressed a request to me, which won my heart, that these Orders should be simplified. I probably have to do more work on them than he does, and I should be delighted to see them made simpler. The trouble is that both fairness and precision insist on this sort of formula. There is in fact a booklet setting out the scheme at greater length, but in simpler language, called The Fat Stock Guarantees Scheme, which is sold by Her Majesty's Stationery Office.
869 I have done my best to answer the questions of all noble Lords who have spoken. I should like to end by saying again that we believe that the present shortages are of a temporary nature, that the measures taken in this Price Review will be adequate for this agricultural year, and that if the outlook is different in another agricultural year we shall have time to look at them again.
§ LORD WALSTONMy Lords, I should like to ask the noble Lord one thing before he sits down, for I did not wish to interrupt him during the end of his speech. He gave an answer to the noble Lord, Lord Balerno, in the affirmative concerning the comparative price of meat in this country and in other countries. Would the noble Lord be good enough, either now or later on, to give the actual figures on which he bases that answer?
§ On Question, Motion agreed to.