AGRICULTURE AND HORTICULTURE BILL

HL Deb 05 March 1964 vol 256 cc251-316

4.47 p.m.

Order of the Day for the Second Reading read.

THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (LORD ST. OSWALD)

My Lords, I beg to move that the Agriculture and Horticulture Bill be now read a second time. This Bill has been fully discussed in another place, and many of your Lordships will, I am sure, already be familiar with its form and purport. The Bill covers two clearly defined fields: Clause 1, which provides for the application of minimum import prices and levies to agricultural and horticultural commodities; and the remainder of the Bill, which covers new measures in the horticultural field.

To deal first with Clause 1, this covers most important new powers to apply minimum import prices and levies to agricultural and horticultural commodities in the interest of maintaining market stability in the United Kingdom. This interest is one we share, whichever Bench we may occupy in your Lordships' House. The need for these powers arises consequent upon the Government's policy on cereals. But it was decided that, rather than drafting powers in terms of cereals alone, it would be far better to seek general enabling powers exercisable in respect of agricultural and horticultural commodities generally.

Your Lordships will know that there is wide and hopeful discussion on the possibility of international agreements, not only on cereals—which is already under consideration in the GATT Cereals Group—but also for other temperate commodities. Moreover, market conditions for temperate foodstuffs change rapidly. It was these considerations, in particular, which prompted the Government to bring forward legislation in the form of general enabling powers, though there are no plans for applying them to other commodities at the present time.

The powers in Clause 1 are, therefore, exercisable by Statutory Instrument. The detailed system of minimum import prices and levies for cereals, and indeed for any other commodity to which the powers may subsequently be applied, would have to be brought before Parliament in accordance with the Orders provision in the clause. In drafting these, the Government had in mind two sets of considerations: on the one hand, the need to give adequate Parliamentary control over the scope and details of the arrangements which Ministers may wish to introduce; and, on the other hand, the practical requirements of applying and enforcing the minimum import price system by the imposition of levies.

Basically, there would be three steps in introducing the minimum import price arrangement under the provisions in the clause. The three agricultural Ministers would have to specify the commodities in respect of which they wished to exercise the powers. In effect, this would define the field of commodities within which the minimum import price and levy arrangements would be applied. And it has been thought right to provide for any Order which specifies a new commodity to require Affirmative Resolution in each House of Parliament. Thus Parliament would have the maximum opportunity to scrutinise and satisfy itself as to the justification for applying the arrangements to any particular commodity.

Secondly, the Ministers would be able to prescribe minimum import prices for any specified commodity, and to lay down the arrangements for applying levies and granting any allowances or reliefs under subsection (3) of the clause. Normally these detailed provisions would be prescribed in orders subject to the Negative Resolution procedure, which again would need to be laid before both Houses of Parliament. Thirdly, the Minister of Agriculture alone would be able, on the basis of the levy provisions which, as I have explained, would be prescribed in a previous Order, to lay down the rates of levies applying to individual commodities, so as to enforce the prescribed import prices.

Your Lordships will know, the Government's approach on cereals is to proceed, as far as possible, by agreement with our overseas suppliers. As a nation heavily dependent upon world trade for our livelihood, it is wise and proper that we should seek to agree with our trading partners concerned the arrangements for securing greater stability in our cereals market. The Government have been discussing these proposals with our four main suppliers—Australia, Canada, the United States and Argentina. As my right honourable friend announced in another place on February 11, agreement in principle has been reached with these countries for co-operation in the system of minimum import prices for cereals. Their co-operation is, of course, conditional upon the modifications which the Government introduce in their domestic arrangements following the Annual Review discussions, now taking place. We are in the course of approaching our other suppliers to see whether they are also willing to co-operate with us in the introduction of minimum import price arrangements.

Those countries which are ready and able to undertake to observe our minimum import prices when exporting to our market will be exempt from levies so long as they continue to do so. If they fail in their undertaking, we shall reserve the right to apply levies to their supplies in order to enforce our prescribed minimum import prices. The intention would be to apply in these circumstances a "country levy" which would be determined on the basis of the difference between the minimum import price for that particular commodity and the prices at which supplies were available for import into the United Kingdom from the country concerned. The country levy would then be applied on a flat-rate basis on imports from that particular country.

We hope that a large proportion of our supplies will be covered by agreements of the sort I have described. But in so far as we are unable to conclude agreements with some of our overseas suppliers, we should, when necessary, apply a "general levy" to all imports from non-co-operating countries on the basis of the difference between the minimum import price for the particular commodity and the lowest representative prices at which supplies were available for import into the United Kingdom from the non-co-operating countries as a whole.

For the purposes of enforcing our minimum import prices for cereals, our intention is to rely primarily on the types of levies which I have outlined. But the powers in the Bill will enable the Minister to prescribe, by Order, other types of levy arrangements to enforce minimum import prices if it proves necessary to do so. In particular, the powers cover the possibility of applying a levy, not on a flat-rate basis to all imports of a particular type, but in relation to the prices of individual importations.

The purpose of these arrangements which the Government propose to introduce for cereals is to remove the low troughs in import prices which have, from time to time, disrupted our domestic market. There is no intention of applying the minimum import prices at such a high level as to create a restrictive regime which would raise the general level of prices. At the present levels of prices for the main cereals, the minimum import prices we have in mind would not bite and no levies would therefore be charged on them. But the introduction of the minimum import price arrangements would have the effect of preventing unrealistically low-priced imports from damaging our market generally as they have from time to time in the past. As your Lordships will know, we are the only remaining large market which is completely open to imports of cereals. There is, therefore, always the danger at the present time that the low-priced surpluses of any country in the world will come here with disruptive effects on our market as a whole. This is the situation we need to protect ourselves against.

There is no change in the Government's basic approach to agricultural support. The deficiency payments system will continue to be the basis of support to cereal producers in this country. The Government believe that, unless steps are taken now to contain the cost to the Exchequer, our whole system of agricultural support based on the principles of the Agriculture Acts of 1947 and 1957 may be threatened. Clause 1 would give the Government the powers they need. I commend it as an important and valuable extension of our agricultural and horticultural legislation.

I now come to the Bill's horticultural provisions. These will be of great significance in helping the industry to reduce production costs and improve marketing. I believe they represent a new charter for the industry, to revitalise and strengthen its ability to withstand fair competition from any temperate country. While the industry will thus be put into a stronger position, making it less dependent upon the tariff, there is no cut-and-dried anticipatory plan for reductions in the protective tariffs. As I explained in the statement I made in your Lordships' House on November 27, there will be a period of some four years before any reduction is considered in the tariff on sensitive items—that is, those items which are particularly sensitive to overseas competition and enjoy a significant level of tariff protection in the home season. After this period reductions may be considered if it is judged to be in the national interest to do so. There will, however, be further consultations with the industry before any such reductions are made, and, in these consultations, account will be taken of all relevant data including the progress made towards achieving a higher degree of competitive efficiency. And I would add that the Government would certainly not be preparing to invest large sums of money in horticulture, and to encourage others to do the same, if they did not believe that great progress along these lines could be made.

I turn now to the details of these horticultural provisions. They fall into four categories: the extension of the existing system of grants to growers and co-operatives; the improvement of credit facilities; grants for the redevelopment of the major markets; and the introduction of compulsory grading. The Bill greatly increases the maximum amount available for grants under the Horticulture Act of 1960. As well as providing for the new grants under Clauses 2 to 5, this will enable us to enlarge the list of equipment eligible for grant under the existing Horticulture Improvement Scheme, with particular reference to equipment for the production, as well as the transport, storage and preparation for market, of horticultural produce. Consultations are being held with the industry and we have had many useful suggestions from other sources about the sort of equipment which should be included. A draft of the extended Scheme will be laid before Parliament in due course.

In Clause 2 of the Bill we are proposing to take powers to introduce a scheme to provide grants for improving the efficiency of small horticultural production businesses. We have in mind especially the small grower who wishes to reorganise his business or adapt it to changing conditions; and the grant would be a contribution to the working capital necessary to enable him to do so. Growers have been concerned for some time about the low-quality fruit which sometimes comes on to the market—often, it is reasonable to suppose, from small orchards on agricultural rather than horticultural land. Clause 3 provides for grant for grubbing out orchards, including orchards of this kind.

Clause 4 introduces a new form of assistance for co-operatives—grants towards the initial capital needed to get co-operatives going, or to help existing co-operatives to expand. This will help to surmount one of the chief obstacles to effective development of horticultural co-operation; namely, the difficulty growers find in raising sufficient working capital to mount their operations on a practical and purposeful scale. Grants to co-operatives are also proposed under Clause 5. This will make possible an extension of the Horticulture Improvement Scheme under which grants can be made to co-operatives who wish to build, equip and run their own markets in producing areas. The clause recognises that for this purpose some cooperatives might need to join together with other co-operatives or individuals, and so allows what we might call "second-tier" co-operatives to apply for grant. Clause 6 was added to the Bill on Report stage in another place.

It is designed to ensure that any cooperative receiving grant under the Horticulture Improvement Scheme or under Clause 4 of this Bill has provision in its constitution to secure sufficient produce from members for marketing by the co-operative.

Clause 9 introduces new arrangements for augmenting the supply of credit for growers and their co-operatives. Our experience in operating the Horticulture Improvement Scheme up to the present has shown that a good many growers have held back from taking advantage of it, due to difficulties in raising their two-thirds of the cost. The method this clause proposes will make use of the services of the banks, who have a great deal of practical expertise in assessing creditworthiness, but superimposes an arrangement by which one or more institutions will offer guarantees to the banks, and in turn be supported by a Government grant when they have to honour the guarantees on such debts as may go had. This will, we hope, turn out to be a cheap as well as an effective method of inducing an impressive expansion in the total of bank credit facilities. Your Lordships will have noticed that there was some lively discussion in another place, as to the particular institutions which could qualify for grants for this purpose.

The question presented has been whether the Agricultural Finance Federation, as well as the Agricultural Credit Corporation, should participate in the grants in aid under Clause 9. In view of what was said in another place, my right honourable friend has given further thought to the matter and has decided that, by way of establishing a proper relationship between the Federation and the Corporation, some change could be made in the method of implementing Clause 9, as compared with that outlined in another place. Briefly, what we are now doing is to offer the Federation one-tenth of the sums to be made available under the clause, and the Federation, in employing this share, will have the same status in the eyes of the Ministry as the Corporation will have in employing their share. They will, in other words, be grant-aided bodies operating in parallel under the same conditions.

My Lords, I come next to wholesale markets. I take it that all noble Lords will be agreed upon the need for action on this front. Most of our major wholesale horticultural markets are out of date, congested and badly sited. Experience has shown that without an effective incentive we shall not have them rebuilt quickly enough. The purpose of Clause 10 is to provide that incentive by making grants of up to one-third of the cost of redevelopment available over the next ten years to markets of major importance. The grants will also have the effect of enabling market authorities to charge lower rents in new markets than they would otherwise have to charge, and so help to keep down costs of distribution. My right honourable friend has stated in another place that our present intention is to adapt an actual potential throughput of £5 million as our criterion for judging whether or not a market is a major one. I have no doubt that this grant-aid will help over the next decade to provide a system of up-to-date and efficient markets playing their part in the modernising of our country.

I now turn to the third Part of the Bill, which gives Ministers the power to designate compulsory grades for certain fresh horticultural crops "when dealt in in bulk". And I would emphasise the last few words, which I have quoted from the Long Title, since they underline that this Part of the Bill is primarily intended to help our growers to compete more effectively with imports. We all know that a great deal of horticultural produce coming from abroad is graded; and where this graded produce is available at the same time as ungraded home produce, the home product is put at a disadvantage. There is every reason to think that this sort of consumer selectivity will continue, and even increase, under present conditions. The introduction of a dependable grading system is therefore urgent if our home-grown produce is not to suffer in comparison with imported produce.

A number of forward-looking growers have already recognised the problem and introduced their own grading schemes. There is, I believe, general recognition of the advantages that would flow from the introduction of standard grades administered on a common basis throughout the country. That is what this Part of the Bill sets out to do. But, of course, we cannot bring in overnight compulsory grading for the whole range of fruit and vegetables. We have it in mind that in the first instance grades should be prescribed, after consultation with the industry, for four or five commodities. These would be apples, pears, tomatoes, cucumbers, and possibly cauliflowers. We shall need to recruit and train an inspectorate, and it is likely to be two or three years before we are in a position to enforce any grading. The grade descriptions will be published as soon as they have been settled, so that growers will have at least one full season in which to accustom themselves to what is required before the use of the grades becomes obligatory.

Your Lordships may wish me, before sitting down, to summarise what this Bill sets out to do. It seeks a realistic adjustment of some of our agricultural and horticultural policies to meet the changing conditions of the modern world. Clause 1 provides a new and essential buttress to our support policy for agriculture. The horticultural provisions of the Bill promote a determined effort to help create a fully efficient and competitive horticultural industry in all its aspects: production, marketing and wholesale distribution. I believe that, together, the Bill's provisions mobilise into a practical and penetrating attack on the problems facing British agriculture and horticulture over the next decade. I am quite sure that during the coming years we shall see its provisions reflected not simply in the Statute Book but in two efficient and prosperous industries, and in the service that they give, and will continue to give, to the entire nation. My Lords, I beg to move.

Moved, that the Bill be now read 2^a.—(Lord St. Oswald.)

5.9 p.m.

LORD STONHAM

My Lords, I am most grateful to the noble Lord for his clear and careful, although in some respects not sufficiently long, explanation of this very important Bill. I feel that his explanation of Clause 1 might have brought forth sounds of triumph from the Opposition Benches, because for ten years, as the noble Lord is well aware, we have argued convincingly, and the Government have refused stubbornly to admit, that open-ended deficiency payments, while denying protection and a fair living to the farmers, were a disaster to the taxpayer. We have insisted that deficiency payments, perhaps just tolerable in the conditions of 1953, could not possibly stand up to world pressure in 1963, particularly, as the noble Lord pointed out, when we are the only remaining open food market in the world with food imports totalling some £1,450 million a year. From these Benches we have consistently urged import controls and a managed market, and for years this has been just as consistently ignored. So the cost of support has risen to some £360 million in a single year—£210 million of it for meat and cereals alone—until, of course, the Treasury would have no more of it.

So we are to have import controls and a managed market. But I, for one, am not cheering, for two very good reasons. The first reason is that the Government may at long last be doing the right thing, but they are doing it in a hopelessly wrong way. The second is that the farmers throughout those ten years have had to foot the bill for what I regard as ten years of Conservative folly. The whole of Clause 1 is, in fact, a device to save £100 million or so on the Departmental Estimate. But over these last ten years the Department has been screwing those same savings year by year out of the farmers.

The noble Lord said that these proposals were in line with the Labour Party's 1947 Act. If they are in line with it, it is a very long line, and it is a long distance away.

LORD ST. OSWALD

The 1947 and 1957 Acts.

LORD STONHAM

I do not agree that 1957 was very much in line. It had gone distinctly off the rails, and that is partly why we are having this Bill now. In 1947 the Labour Party said that there should be proper remuneration and living conditions for farmers and workers and an adequate return on capital invested in the industry. And the 1947 Act did just that. But since 1952 the farming community has been, in real terms and relatively, getting progressively worse off. So to-day, two out of five farmers earn less than £12 a week, and only one farmer in three earns more than £20 a week, and that is counting interest on his invested capital as earnings. If we deduct interest from the total income, most farmers get for their labours only two-thirds of the minimum wage allowed for a farm worker.

I would ask: is the farmer being fairly rewarded, as he was promised under the 1947 Act? His output has increased 50 per cent. since the war, but his income has increased only 10 per cent., and the whole of that increase came under the Labour Government before 1951. In the last ten years farmers' costs have increased by £188 million. But their guaranteed prices have increased by only £12½ million, and they have thus been called on to bear £175½ million of increased costs. Compare that with other industries which, like agriculture, have increased their output since the war by 50 per cent. The farmer's income has increased only 10 per cent., while other industries have increased their incomes by 50 per cent. So far as prices are concerned, the things the farmer has had to pay for have increased by 25 to 35 per cent., and the prices he has received have dropped by 1 per cent. in the last ten years. No wonder the National Farmers' Union say that to put their members on something like parity with other industries their income must be increased by 25 per cent. over the next three years!

Agriculture, one of the most progressive industries, is entitled to a fair deal. Since the war home food production has increased by some £400 million a year, and every penny of it a saving in imports. Compared with pre-war our farms are producing two-and-a-half times as much grain, 99 per cent. more eggs, 114 per cent. more sugar beet, and the full yield of milk per cow has increased by 200 gallons. And all this has been accomplished with 170,000 fewer farm workers. Yet for ten years what I regard as the "Scroogery" imposed by the Government's deficiency payments scheme has denied them a single penny of reward for their extra efficiency and effort. So what I regard as this death-bed repentance, even with its promise of such forms of Socialism as co-operative marketing and financial assistance for co-operative and municipal enterprise, brings no plaudits from me.

But my main and very deep concern about Clause 1 is the method by which the Minister proposes to control imports and manage the market. He is going to fix minimum import prices, and impose, as I understand it, a levy equal to the amount of the deficiency if imports still come in at prices below the minimum. The noble Lord was careful to point out that, although this is a general enabling Bill, it is proposed only to apply the provisions in regard to minimum import price to cereals. What are the likely consequences going to be? At best, it means balancing on the knife edge of restricting home production and curtailing imports, remembering that even a small percentage of over-supply from overseas can rock the market.

Therefore, the level of minimum prices is crucial: if it is too low, it defeats its object; if it is too high, it affects our terms of trade and puts up prices to the consumer. The noble Lord assured us, of course, that it would not put up prices to the consumer. In other words, it is going to be so low that it will not have the effect that the Bill is intended to have. You just cannot have it both ways. My belief is that in any case, whatever happens, it is going to put up prices to the consumer.

The Minister of Agriculture, Fisheries and Food quoted in another place a hypothetical figure of £20 a ton as the minimum figure for barley. It is within your Lordships' recollection that a little while ago the French, and I believe the Russians, exported (or they certainly would have) barley to this country at £17 a ton. Let us assume that the same kind of circumstances of their having an over-supply arise again. One of two things is going to happen. The French or the Russians, who sold us barley at £17 a ton, will now make the price £20 a ton in loyally keeping the agreement which the right honourable gentleman hopes to make with them. We shall, in fact, be fixing, not a British minimum import price, but a world minimum price.

To me, the spectacle of the right honourable gentleman the Minister of Agriculture forcing overseas suppliers to charge us higher prices for their food than those at which they are willing to sell is a sight to astonish the world. It must increase prices to the house- wife, and the farmer who buys imported feedingstuffs as a raw material will also have to pay more. Let us take the other thing that can happen, although I do not think it will: exporters insist on selling at £17 a ton, and then we stick a levy, presumably of £3 a ton, on top of that to bring the price to £20. Again the housewife is bound to pay more.

The other point that worries me is that this is a general enabling Bill, and does not merely give powers to fix minimum import prices for cereals; it applies to all agricultural and horticultural produce and to products derived from them—a most extraordinary thing. If it is so applied, it can affect our international trade and our taxation policy, because in the clause the Minister takes power to fix minimum prices for a large proportion of our imports, and to levy import taxes on most of the essential foodstuffs consumed by our people. It is no good the noble Lord crowning and telling me that those powers do not reside in the Bill, because quite obviously they do.

LORD ST. OSWALD

My Lords, I think that is probably a tacit invitation for me to intervene. If I have to find fault with what the noble Lord is saying, it is this. He said that the Bill "applies". Of course, it does not apply. The Orders will apply. Until an Order is approved by Parliament, nothing will apply at all.

LORD STONHAM

If it is not going to apply, then no Orders are going to be produced, and we might as well not have the Bill at all.

LORD ST. OSWALD

My Lords, surely the noble Lord is suggesting that Orders covering all commodities will be approved virtually simultaneously. That is not so. The point I am making is that, Order by Order, the Bill will be applied, but until the first Order it will not be applied. Therefore his picture of the enabling powers of the Bill being extended over the whole field of food imports simply does not add up.

LORD STONHAM

If the noble Lord is saying that until this Bill becomes an Act of Parliament and until the Minister takes action on the Bill nothing will happen, of course I will agree with him.

I do not want to read to him the whole Bill, but if he will look at Clause 1(1) he will see that it says: The Minister … may by order specify produce of that description or any of its related products or both as commodities in relation to which the powers conferred by subsection (2) below may be exercised … Later in that subsection it says: … specified commodity' means any description of produce or related product in relation to which those powers are for the time being exercisable by virtue of such an order. That is the whole range of agricultural and horticultural produce and products derived from them—for example, wool, hide, or things of that sort. It is no good the Minister denying that these powers are being taken, and that once this Bill becomes an Act of Parliament those powers can, and probably will, be exercised.

LORD ST. OSWALD

With Parliament's approval.

LORD STONHAM

Yes, with Parliament's approval, but, as I have pointed out, many things over the last ten years have been carried through with Parliament's approval because there has been a permanent majority on the other side of this Chamber. We are now discussing the disastrous financial effects which have flowed from those acts with Parliamentary approval, which the noble Lord is now asking us to undo. I take no pleasure in the fact that we are passing a Bill with defective clauses in it which will become dangerous only if, unhappily, we continue to have a Conservative Government.

These import levies—import taxes, which they really are—although paid in the first instance by the importer, will naturally be passed on to the consumer. Indeed, they could facilitate a major shift in the burden of taxation from direct taxes to indirect taxes on the consumer through increased prices; and the burden, of course, as with any increase in food prices, falls most heavily on the shoulders of those least able to bear it—the poor, the aged, the working people with larger families, and any people with small fixed incomes. I know that some foods in the total bill presumably would not qualify for levy—the non-indigenous food. But, as I mentioned, raw materials would. An increase of just 10 per cent. in the cost of food imports would increase the cost of living by some £300 million. I said that I thought the Government were doing the right thing in the wrong way, and, in our view on these Benches, the only way for British agriculture is that based generally on the 1947 Act, whereby we have really guaranteed prices, wherever those are possible, and subsidies, wherever they are necessary, arranged in such a way that they benefit both farmers and consumers alike. To depart from those policies and to switch to food levies and restriction on supplies will bring expensive, and perhaps even tragic, disaster. Increase in food prices means increase in wages. That means an all-round increase in manufacturing costs and a decrease in our power to export.

On the other hand, food subsidies, although consistent with the General Agreement on Tariffs and Trade, are a most powerful form of export subsidy. We must not forget that since 1957 the terms of trade have moved in our favour by 20 per cent., which is a bonus of £1,000 million a year on our balance of payments. A rise in food prices would start a reverse trend and push us straight into a deficit—assuming we are not there already. World food prices are not still falling; they are rising. In the last two years, prices of imported food have risen by 12 per cent. and retail food prices by 5 per cent. Nor are there quite the same world food surpluses. China, India and the Soviet Union have come on to the market as heavy buyers of cereals.

Our difficulty in the world may therefore be to keep food prices down, not push them up. It is under such conditions that the Government introduce a measure which must have the effect, beyond any peradventure, of restricting home production of staple foods. Labour's policy of food subsidies widened the world food market; Conservative food restrictions and levies will narrow it. We cannot help the underfed nations by producing less food. We should aim to produce more, and then find ways, in co-operation with other countries, to help them with our bounty.

I regret that the noble Lord was not able to say just a word about the proposal for a world food board when he was mentioning the restrictions which would have to be imposed on home production. This proposal, which is strongly supported by the National Farmers' Union, should be investigated and followed up, because it is tragic even to think of restricting production of food here when more than one-third of the people of the world are, in varying degree, starving.

The right honourable gentleman, the Minister of Agriculture, Fisheries and Food, admitted on February 7 that his attempts to reach agreement with overseas suppliers on the level of imports of beef, veal, mutton and lamb, appropriate for 1964–65 fatstock season, had failed. Therefore I am sure the noble Lord will agree that there can be no quantitative limitation of imports during the coming fatstock year, because no agreement has been reached. I ask him: Does that mean that the Minister may consider applying to meat the provisions of Clause 1 of this Bill for fixing minimum import prices? If not—and the Minister shakes his head—I would then ask: What safeguard is there against the possibility, if the conditions turn unfavourably, of another colossal bill for deficiency payments on meat? The Minister's proposals for voluntary restriction of imports, which the noble Lord mentioned very briefly in about half a sentence, would have been coupled with agreements for standard quantities at home, and he will agree that the Labour Party do not object in principle to the idea of standard quantities. After all, the 1947 Act may be said to be the parent of the idea of standard quantities, because in it we referred to the production of such parts of the nation's food requirements as can be produced at home. I am not quoting the exact words, but they are well known. To-day, in fact, most of the staple foods, except meat and cereals, have standard quantities built into the price arrangements in one way or another.

We are, however, very much concerned—and I hope the noble Lord will comment on this—to ensure that standard quantity arrangements shall not lead to artificial or unnecessary restriction of home production, or to scarcity prices. If we are to have standard quantity agreements written into the arrangements with the exporters of food to this country it must mean restriction of some kind in production—of course it does. That is what the standard means. Therefore, what we in the Labour Party are concerned with is that there shall be, not unlimited production but a sensible expansion of British agriculture, and we think that that principle must be built into any fixing of standard quantities. We believe that agriculture is entitled to share with industry the planned 4 per cent. production increase. It is no answer to deny this on the ground that in some products there is no room for increased production without increased demand: the same position exists in some industries. We should allow for an overall 4 per cent. increase in agriculture, and we believe that the best way of co-ordinating imports with home production would be to exercise control over imports through a commodity commission and not by, as we see it, the hit-and-miss, and probably wholly ineffective method of the import levy. I have dealt with this matter at some length because I believe that it is by far the most important part of the Bill, and may have very far-reaching consequences.

I now turn, with considerable relief, to Parts II and III of the Bill and the proposals for horticulture. We on this side of your Lordships' House have for years been pressing for production grants for growers and co-operatives; for capital assistance for the small man; for the provision of working capital for co-operatives; for assistance in building up co-operative markets; and for arrangements for extended credit and compulsory grading. All these measures we warmly welcome, and we are grateful that they have come at last, even though they are, as we think, long overdue. But the noble Lord will agree that it is not possible to speak with any certainty of the effects of these Parts of the Bill until we have seen the regulations which will be published, and which we shall examine with great care. There are, however, some points that' I should mention, because I think they reveal obvious defects.

The Bill proposes a possible total of £27 million in production grants. That is a very useful sum, but I would ask: will it be taken up? In 1960, £8 million was made available for a similar object, but to date only some £3 million, I believe, has actually been taken up—and I have no doubt that if that figure is not a very up-to-date one the noble Lord will tell us what is the exact figure to date. But only some £3 million, out of £8 million available for a four-year period, has been taken up for the very reason that growers could not afford to find their two-thirds share; and so far as the small man is concerned, I think it is generally known that he is already far too heavily "in the red" with the banks as it is. This Bill does improve the credit facilities, but not, I feel, sufficiently to ensure that the amounts available will be fully taken up. In our submission, if these proposals are to succeed there must be far more help for the producers' co-operatives; and in Committee we shall suggest improvement, particularly with regard to facilities for credit for producers' co-operatives.

In this connection I warmly welcome the announcement which the noble Lord has made with regard to the Government's second thoughts arising out of discussions in another place on their original idea to give a credit monopoly, as it were; a guaranteed monopoly for the Agricultural Credit Corporation. I welcome the change of heart in principle, but I am not at all sure that the proportions of nine-tenths for this Corporation and one-tenth for the Finance Federation are right, or, indeed, that they will allow credit to go to the quarters where it is most needed. But that is a matter with which I know my noble friend Lord Peddie will be dealing.

Another point on which we are not satisfied is this question of the one-third grant for grubbing-up old orchards on agricultural holdings. I am sure that the noble Lord is perfectly well aware of the kind of old, worn-out, disease-ridden orchard on an agricultural holding which it does not pay the holder to look after properly. He is not going to plough up that orchard for the sake of only a one-third grant. I think the grant will have to be higher, if it is to do any good. We welcome also the plan for compulsory grading, but we are very disappointed that there is no mention of a minimum grade, and also because the proposed quality grading will not apply to retail sales. We take the view that there will be nothing to prevent a retailer from buying cheap, ungraded fruit and mixing it up with graded fruit. If the noble Lord thinks retailers would not do anything so daft as that, I can assure him that he does not know the kind of thing that they get up to.

I should also like to know, when the noble Lord comes to reply, whether it is the Government's intention to use the minimum import price mechanism for horticultural produce. I know he mentioned that action with regard to tariffs is at least four years away, but I should like to make it clear that some of us would not regard the removal of tariffs on horticultural produce as any great loss; nor do we think that they have been of very great help. But what we are concerned about is that, if tariffs are eventually to be removed, it is essential that there should be adequate protection against dumping; and the industry is entitled to know now the Government's intentions in this respect. We hall also discuss in Committee, under Clause 20, the Government's intentions with regard to the pre-packaging industry, which is a subject vital to the future of horticulture.

My Lords, these points, though important, are relatively small compared with the two major defects in the Bill's proposals for horticulture. The first is that action with regard to improvements to wholesale markets is left entirely to local authorities' initiative. The Government, as it were, have only negative powers to say "Yes" or "No" if a scheme is put forward. We all know that in the provision of markets we lag hopelessly behind Europe, and, as the noble Lord says, hopelessly behind what we need in this country. We need not only reconstructed markets, but new markets, and we should like the noble Lord to tell the House how we are to get new markets (and the Bill provides for new markets) if they are to be limited to those existing markets with a throughput of some £5 million a year or more. We shall never get new markets that way.

LORD ST. OSWALD

I am sorry to interrupt the noble Lord but I believe he wants me to, and I think this will be helpful to him. I did say a "potential throughput". Therefore, if a local authority can say, to the satisfaction of the Ministry, that they have a market with a potential throughput of £5 million, it would be eligible.

LORD STONHAM

I am most grateful to the noble Lord for interrupting me. That is a completely satisfactory answer. I am sorry if I misunderstood him. It means that we can have new markets if the possibilities are there. The difficulty is that the Government propose to leave the whole matter to the initiative of local authorities. We believed that you will never get new markets in areas badly served, and you will never get a proper regional organisation within a national plan—which is what is needed—unless the Government take the initiative. On this point the noble Lord will know—it is his Calais on his heart—that we told the Government three years ago about Covent Garden: and we were absolutely right. Three years have been wasted, and the Government have been in a hopeless muddle about it. When we come to give advice on this Bill in Committee r hope they will accept our advice, and we shall make progress.

My final word is on the great error in the Bill in its failure to provide for a permanent body having continuing oversight of development of horticulture, research, teaching, packaging, grading, marketing, et cetera. Apparently the whole complex problem is to be left to a section of the Ministry of Agriculture, Fisheries and Food. What possible hope can there he for horticulture in such a setup? The H.M.C. lived a brief span and died, as we said it would, because it had no "teeth". We need a similar organisation but with a clear directive and with power to act and initiate. With such a body, and with this Bill, we could do something to get somewhere with horticulture. Without it, I am afraid it will be another case of hope deferred, but fortunately hope deferred only until a Labour Government are returned to power with the know-how and determination to restore to British agriculture and horticulture the high hopes and certainties of 1947.

5.42 p.m.

VISCOUNT FALMOUTH

My Lords, I address your Lordships feeling very diffident and rash, in view of the vast experience which your Lordships have on agricultural matters, and I feel that yet another voice may be unnecessary. Nevertheless, since the war I have been, as I am, a practical farmer and fruit grower as well as an owner, and I hope therefore that your Lordships will bear with me for a few minutes.

First, I must say that I welcome this Bill as a non-political and constructive effort by Her Majesty's Government to deal with some of the problems inherent in this island. But there are one or two points which I should like to put before your Lordships. Part I of the Bill is a very important part indeed. It marks a complete change of policy, and to judge from the discussions in another place and among the agricultural unions, perhaps it is the most controversial. I think it is a real attempt to protect, first, the farmer and, secondly, the taxpayer against dumping and wrongly priced goods entering the country. The anti-dumping laws of 1957 can be used against special cases, but they are, as your Lordships will know, slow and cumbersome to act. Speed is the essence of market correction and market management, and I hope that a minimum import price coupled with the levy will be an effective way of dealing with these under-priced agricultural commodities without limiting them by quantity or by direct prohibition.

Let me turn to fruit growing, horticulture. I myself am a fruit grower; therefore, I must disclose a quite considerable interest in this matter. It is true to say that there is disquiet in ail parts of the country because if tariffs and import restrictions are removed, so far as horticulture is concerned, any advantage which may accrue under this Bill will not compensate for that. In fact, horticulture will be gravely damaged. In apple growing, for instance, it has been argued that there is a general levelling up of costs on the Continent of Europe with ours. But when we look at the proper basis of comparison, costs per unit of production that is relating costs to output—I do not think we shall find this is the case. Abroad they have enormous advantages over us. They have many more sun hours than we have: perhaps 500 to 1,000 hours more a year. This brings much more uniformity in their produce, much more colour and much higher yield.

Now in the countries in Europe, by withholding irrigation at certain times of the year they can get what I understand is called bud initiation, or, in other words, they can control bud formation, which is so important in fruit growing. I would again submit to your Lordships that any advantage that this Bill gives the horticultural industry cannot be a substitute for tariffs and quotas. As horticulturists we cannot grow regular crops in this country every year, and it is the short year with higher prices which is so important to the English grower to keep him in business in the glut years which are always there. When we see that in the last twenty years apple production throughout the world has increased by 300 per cent.—and I think that in British Columbia, which is a great apple growing district, this has been called the "apple explosion" your Lordships will see how precarious is the industry.

Let me go on to Part II of the Bill, which deals with improvements of efficiency in small production businesses. There is a production grant for units up to 30 acres, and I welcome this. The small horticultural holding is a means by which the horticulturist can start small and go up to bigger things; it is something in which he can have an aim. I can think of many ways in which this money can be spent—purchasing fruit stock, equipping greenhouses, new heating systems, small irrigation plants and sprayers—and I hope Her Majesty's Government will make this grant available for what I might call movables. So often one sees small men plying away, working away, with "dud", secondhand machinery. I know your Lordships will realise that, as in everything else, no farmer ever gets rid of anything good, so the small man has to buy very poor equipment on the secondhand market. I mentioned sprayers. I know that spraying was very fully debated in your Lordships' House in the debate on chemical sprays. But I think I must here say to your Lordships that, if the country wants the English grower to put clean fruit on the market, he simply must spray.

I attach the greatest importance to grubbing of orchards. I think your Lordships may not realise the very large number of old orchards there are in the country. In 1949 half the acreage of apple orchards in the country was orchards under 10 acres, and I think this accounted for 91 per cent. of the holdings. Old small orchards are the main source of rubbish put on the market in glut years, and this is certainly one of the greatest hazards to the English market that commercial growers have to face. Such produce depresses the price. Grubbing these orchards is a very expensive business, particularly because the trees are generally big, old trees, and it costs sometimes £40 to £50 an acre. I agree with the noble Lord opposite that one-third of the cost would not be enough to encourage the farmer, as distinct from the horticulturist, to carry out this work. I would also ask Her Majesty's Government if they will press ahead with producing the fruit census of 1962, which is so important a document, so growers can plan their planting. When they make the census, I hope that they will divide the apple into three compartments—culinary, cider apples, in particular, and eating apples.

Let me deal next with marketing and the provisions in the Bill dealing with help to marketing organisations. It is most valuable that co-operative marketing businesses will be able to receive increased grants for working capital for the first two years to assist their development. I think we should realise that there is divided opinion among growers in the apple industry as to whether to take advantage of one of these cooperative organisations or to sell by grade. Some five or six years ago I took part in a private survey in our district to see whether we should found one for ourselves, and in the end we decided against it. Fruit growers—I am really talking in this sphere about hard-fruit growers, apple and pear growers—are most independent people, and many much prefer to market their own produce. They know that they have a good brand; they have a good repution in the market which they have struggled to earn, and they have kept it over a long period of time. They do not want to be controlled by a pack-house manager. They think that they are doing the job of storing, grading, despatching to market and accounting more cheaply than if it were done by another organisation; and their staffs are largely drawn from the wives of the men whom they employ. Co-operative packhouses, on the other hand, have to employ their staffs on unremunerative, out-of-season jobs to retain them for the late autumn and winter seasons.

Private growers feel, too, that they can perhaps more easily dispose of their second-grade produce through the ordinary market channels in small lots, rather than through an organisation which may have to put a big offering of second-grade fruit on the market. Against this point of view, there is the small grower, with perhaps 25 acres, who cannot afford storage and who therefore often sees a considerable advantage in co-operative selling., Again, these co-operative organisations have a buying side in raw materials, as well as a selling side and this helps to reduce the costs of members. On the whole, I submit that the costs of collective packing and marketing have never yet been lower than farm packing, simply because of the high expenses of collective packing. Collective packhouses, I would ask your Lordships to note, are in large buildings, and as a result they are rated by the local authorities.

I come to Part III of the Bill, which deals with grading. This is of enormous importance to the fruit and vegetable industry. I think that all responsible growers welcome Clause 11. Voluntary schemes have failed in the past, and I hope that it will not be long before Her Majesty's Government introduce regulations to this effect. Grading and the inspection of fruit, particularly apples, will not be easy, owing to the immense variations in soils from county to county, from farm to farm, and even from plantation to plantation. The great variation in the appearance of English fruit results. This characteristic makes it most difficult to grow to uniform standards, compared with foreign apples, which are grown on much more uniform soils with much more sun, which in its own right gives much greater uniformity. I would submit to your Lordships that there must be, as the noble Lord opposite said, a minimum grade below which fruit will be rejected. I would submit, too, that the grades should be as simple as possible. I noted this year a variety of apple which was sold in 27 grades. This is much too expensive. I hope that Her Majesty's Government will make quite clear the position about the size of fruit. There is no mention of size in this clause of the Bill. I think that all apples—indeed, all fruit—below a certain size we should try to send to process.

Now I come to what is perhaps the most contentious part of the horticulture provisions—namely, the direct sale of ungraded fruit to the retailers. I do not think your Lordships may realise the amount of ungraded fruit which may go to the retailer under this scheme. I note that Clause 11(4) can be used to prevent this. I agree with noble Lords opposite that there will be a great danger that retailers may mix up fruit. They will have a box of first-grade and a box of second-grade; they will mix the two, and perhaps sell them as grade one. Under the Food and Drugs Act that is illegal. However, they may well say that these apples are "extra selected"—as indeed they are. I would say that the inspectorate should be carried on right down to the retail shop. I think it is important that it should be compulsory for retailers to mark ungraded fruit or mixed grades with a label saying "Ungraded fruit". One last point about grading. I would ask Her Majesty's Government to phase the operation over a number of years. Inspectors have to be trained: growers have to be trained, and the market has to be trained. This will take a considerable time. When grading has been successful, as I am quite sure it will be, then will be the time for the industry to advertise. The fruit grower has an entirely beneficial product that he is putting on the market, and I am quite sure that there is great scope for increased sales of English fruit.

To sum up, my Lords, grubbing and grading are vital to the industry. If tariffs and quotas are removed, the industry will he in a most vulnerable position; and that risk will not be counteracted by the grant provisions in this Bill. I hope that it is in order to use an expression which we have in food growing. I have introduced, as have all food growers in this period of grubbing and re-planting, many maidens in entire orchards; but I must confess that the introduction of this "maiden" has caused me far greater concern. I thank your Lordships for listening to me with such patience.

6.0 p.m.

LORD WISE

My Lords, it is with the greatest possible pleasure that I offer my congratulations to the noble Viscount for an excellent maiden speech. It was wellreceived by all your Lordships. He started off by saying that he thought he was rash. He was not rash in any way whatever, but gave us a maiden speech excellent in every way. I can truly say that we hope he will on many occasions join us in our discussions on agriculture and on other matters, so as to give us the benefit of his practical advice. Many of us on this side of the House remember his father, who I think for many years sat on the same Bench as the noble Lord now occupies. We hope that as a younger man he will be spared sitting on that Bench for so long, and that he may come over to this side. We have had three excellent speeches in this debate up to now—speeches which will be read with interest by everyone interested in this subject. The speeches which are to come will be equally important and I am certain will be equally well read.

I look upon this particular Bill as being important. Some Bills which come before your Lordships are good, some are bad, and some are mixed. So far as I can see, from the speeches we have heard and from what has happened outside the House and in another place, this Bill may he classified as mixed—good in parts and not so good in others. It opens up possible additional advantages for agriculture and horticulture. These are much-needed and long overdue. In these days, when free enterprise is still an accepted doctrine of the Government, some of the clauses in the Bill which lean towards planning and control are not surprising or unexpected at this time of agricultural difficulties. The Bill is better by reason of these new departures in Government policy; and although it is not complete and comprehensive I hope that we can regard it as an earnest of better things to come for agriculture and horticulture.

The Bill has received interesting comments from different angles. I am not going into those angles, but they differ and have received the attention of people who are engaged in these industries and whose livelihoods depend on their prosperity. For those reasons we on this side, subject to some Amendments we may wish to make at a later stage, will not delay the Bill's passage at present. It received long-drawn-out consideration in another place. Some Amendments were made; others were unacceptable to the Government—and these may have to be pressed again and new ones introduced. I hope that when that happens the Government will be more understanding and co-operative in this House than possibly they were in another place.

I am intrigued by the wording of the first three lines of Clause 1(1), which read: In the interest of maintaining in the United Kingdom a stable market for agricultural or horticultural produce of any description produced in the United Kingdom … I trust that the intention behind that sentence can be treated as likely to become a reality. It looks to me to be rather wishful thinking for the future; but I hope it will not stay at that, and will materialise. For if the industry has suffered in the past from any particular drawback, it has been the complete absence of stability in its marketing operations. Haphazard conditions, doubtful practices, a flood of competitive imports, continuous and sometimes violent price fluctuations, as well as increasing costs, have been the bugbears of farmers or horticulturists. To iron these out or get rid of them entirely should not be beyond the wit of man, but the individual in farming cannot achieve this happy position by himself. He must be helped by Government action. To those of us who believe in this, the measure of control to be exercised by the Government in this Bill is thus welcomed. Personally, I hope that the Government will put back into the, Bill the import prohibition which was in Clause 1(2). The Standing Committee in another place, composed as it was of a proportionate number of representatives according to Government and Opposition strengths, agreed on this: but the Government by a narrow majority later struck it out. I should not like in present company to express an opinion on this action. In order not to give offence, I shall have to choose my words.

I come to one or two smaller points. The noble Lord who has just sat down commended the small horticultural producer. Points have arisen as to what is to happen to him in the future. If the area of land occupied and the nature of the product or use of the land have to be taken into consideration (as I understand is the case), I hope the Minister will not be too dogmatic on this point and will stretch it somewhat, according to the circumstances of each individual case. I want to encourage the small producer, the man who works hard and wants to get on. He deserves every encouragement, and if there is unnecessary frustration he may lose his determination and go under. Diligence and a progressive outlook are commendable and should be rewarded.

The noble Viscount, Lord Falmouth, touched on grading, and I should like to deal in a few words with this subject. I am hoping that it may be possible for grading to go right through the operation to the consumer; and that, I understand, is the wish of some branches of the National Farmers' Union. Perhaps I might quote from a newspaper report of a meeting of one particular branch in my own area a few days ago, which said this: A … resolution, which was endorsed, recommended that if a new Horticulture Act was introduced any grading standards should be compulsorily applied right through to sales by the retailer. One member, … who proposed this motion, said the objection of Norfolk Government M.P.s that such an arrangement would be difficult to administer was no excuse at all. Another member went even further: he said that, … existing arrangements were not adequate as had recently been suggested by the Minister of Agriculture. He considered that if grading was not compulsorily carried through to retail sales this clause should be withdrawn completely. I do not think that we on this side of the House hold that view, but we all hope, I think, that grading will go through to the consumer. The noble Lord mentioned the question of apples. It is very difficult, in the ordinary stall markets, for the purchaser to be certain of the sort of grade he is receiving. The five types of produce which were mentioned by the Minister are products which go through to the ordinary market stalls and to shop retailers, and it is therefore important to ensure that the consumer obtains what he is paying for and the quality he expects.

6.12 p.m.

LORD AMHERST OF HACKNEY

My Lords, I also should like to add my congratulations to the noble Viscount-Lord Falmouth, on his most excellent maiden speech. When one looks at this Bill, on the face of it one would think that the only people who could have any anxiety would be the housewife, because the price of food might possibly go up, and the overseas producer who might have lost a market for his surpluses. But one would have thought that to the agricultural producer it could bring nothing but joy. There is power to prescribe minimum prices and levies on imports, which are valuable new powers enabling the Minister to control imports for which the industry has so long asked. Then, in Part II, we have generous and much needed grants for the horticultural industry to make it more efficient. But, at the same time, one has to realise that the enthusiasm of the producer is in some cases slightly muted, for two reasons; there is the spectre of standard quantities and there is, for the horticulturist, the fear that he may in the future lose the benefit of the tariffs.

One must realise that one is now looking at the Bill against a background—I would not go nearly so far as the noble Lord, Lord Stonham—of a time when many farmers, rightly or wrongly, feel that their incomes are not keeping pace with the rest of the country's. At the same time, they have had some experience of standard quantities, though under completely different circumstances in, let us say, the case of milk and several other products, and their experience has not been altogether as happy as it might have been. I do not propose at the moment to argue the question of farm incomes and so on, because that is a matter to be dealt with much more when we debate the Price Review. But now we see the possibility of new standard quantities being introduced, possibly for cattle and sheep, and probably for cereals. I am not arguing against the standard quantities, but I think one has to realise that they are viewed with a certain amount of suspicion.

I personally support this Bill, and I think it is a bold and imaginative measure. I think that the Government are quite right to take the very wide powers they are taking in Clause 1, so that they can deal with any difficult situation, such as goods coming in at ridiculous prices, as it arises, and far more quickly than they could under the anti-dumping legislation. I think they are right to take wide powers, even though it is the intention at the moment to use them for only the control of cereals.

I must say that I was very surprised at the reception which the noble Lord, Lord Stonham, gave to this clause. I am sorry that he has left. I thought that one would have heard perhaps a certain amount of "I told you so" and "I have been asking for this for ten years". But, when he has now got what one would have thought was the sort of thing for which he was asking, what one did not realise was that he would paint the most gloomy and blood-curdling pictures of what was going to happen: either the price of food was going to go sky-high, or it was going to be so low that it would be completely ineffective. In spite of the fact that every new Order would have to have an Affirmative Resolution of this House, he appeared to say that a very wide range of products would immediately be brought in under these powers. The one thing that he never suggested as remotely possible was that the price might be fixed at the right level; only that it could be so low that it was useless, or so high that the price of food went up.

I should like to congratulate the Minister on the successes of the negotiations with our suppliers of cereals, and I hope that in the future similar agreements may be reached with our suppliers of meat, because I am quite sure that, as a great exporting country, we must do these things by agreement with our suppliers. We cannot afford to take unilateral action except in the last possible resort. Of course, we do not know what the details of the cereal scheme are going to be. They will come out at some time, presumably, with the Price Review. But I hope that any scheme that is brought out, if it involves standard quantities, will be fair to the home producer, the consumer, the taxpayer and to the foreign producer; and in particular, that the home producer will not be put into too much of a straitjacket. After all, standard quantities do not necessarily mean putting the industry into a straitjacket. I would have thought that they are really—and I think this is a part of the Agriculture Act. 1947, that the noble Lord, Lord Stonham, must have missed—such part of our requirements as it is in the national interest to produce. That was one little bit that I think he overlooked.

After all, standard quantities, whether they are restrictive or not, depend on the point where you start them, how much you allow for what is already in the pipe-line and the factors you allow for reasonable growth. I would have thought that in a more stable market, with the worst of the "lows" ironed out, the home producer was really in a better position to compete with imports and, by doing so, to have the standard quantity progressively raised. What I should like from the Government is an assurance that those are the lines on which they are thinking: that if the home producer can compete successfully and win more of the market, then that part will become part of the standard quantity. After all, in an expanding market there is no reason whatsoever why the home producer should not be able to do that.

I hope that this attempt to put stability into the market will be only the start of our trying to put stability into a large number of the markets in primary commodities, because I do not believe, and I think very few people now believe, that violent fluctuations are in the interests either of the consumer or of the producer. They have a disastrous effect on the countries of origin, where these primary products are grown; and, of course, with their development plans, they reduce the rate of improvement in the standard of living and put back the time when those countries can become more markets for our exports. So I welcome Clause 1 of the Bill.

I also welcome Parts II and III, which I think are quite uncontroversial. In particular, I think that the small horticultural business grant, combined with the extension of the horticultural improvements scheme and, at the same time, the improved credits, really should go a long way to help the smaller producers. Of course, this will be a new and quite big job for N.A.A.S., because it will give advice not purely in the technical sense of how to grow the things, but on management, which is the side which is growing so much at the moment. I think that these grants should be a very great help.

The only other point I should like to mention is the marginal producers—the noble Lord, Lord Wise, mentioned it—the people who have just under four acres but are still viable and have useful holdings. It is probably not possible, or it may not be possible, to deal with this in the Bill, but I wonder whether there is not something which could be done to bring more of these people into the scheme.

I think these provisions should go a long way to help horticulture become more efficient. And, as the noble Lord said, they also contain the guarantee that the duties will not come off on the sensitive products for at least four years. Four years is really quite a long time, and they should have some chance. What is more, it is very difficult to forecast at all what the international situation will be in four years' time, and how much other people will have improved. So I think that, at the moment, we should consider increasing the efficiency of the industry and let the other matter wait. I feel myself that this Bill, when it becomes an Act, will, together with the 1947 Act and the 1957 Act, make a very great contribution to agriculture.

6.29 p.m.

LORD HENLEY

My Lords, I welcome the Bill within certain limits. I welcome it because I think it is a step towards the co-ordination of imports and home production, which perhaps was not so important when the 1947 Act was framed as it is now. But it is a very great change. The noble Viscount, Lord Falmouth, whom I should like to congratulate on an excellent and most knowledgeable maiden speech, is one of the few people who pointed out quite how major a change it is. By Conservative standards, it seems to me, it is positively revolutionary, because it involves changing the whole existing support policy to a policy of protection; and that in itself involves a major shift in international trade relations. It seems to me that before we make a change of this kind we must scrutinise the major economic principles of this plan, to make sure that we are setting sail on the right course, to make as sure as we can that we are taking not just the only available course but the best course that is open to us.

This Bill is, after all, the outcome of the breakdown of our negotiations to enter the Common Market. Of course I regretted the breakdown of those negotiations; and I still hope that at some time in the future we may get back into the European system. Nevertheless, I welcome the Bill, because I feel that, within that context, this is probably the best available course open to us. I say "probably" because there are certain aspects of the Bill about which I have grave misgivings. Government policy here may be right—in fact, in the circumstances I think it probably is right. But there are aspects of it which worry me, and which I should like to examine a little. Some of them are points which the noble Lord, Lord Stonham, touched on in his speech.

What they amount to is this. The present support system—that is to say, the system of deficiency payments, food subsidies and so on—had very great advantages; but it appears that now, under the stress of changed conditions, it is breaking down. The advantages were, first of all, the question of cheap food. I think that under the old system we undoubtedly had the cheapest food in Europe—though I sometimes wonder whether this is not an illusion. After all, whether you pay for the food by subsidy or by protection, the consumer still has to foot the bill: it is only a matter of internal transfers of payment. I sometimes ask myself whether cheap food is necessarily the right policy at present. Should not the consumer pay for what he consumes at the price it costs, without this illusion? I made the same point in a different context last week, during the Transport debate, when I said I felt that car users were not paying for the services they had, and should be made to do so. I wonder if this does not apply also to food. We have the illusion of cheap food because we support it by subsidy and deficiency payments; but it is the consumer who pays just the same. Can we not help the poorer consumer in some other way or by some other means?

The next advantage which the existing system had was export subsidy. I feel that not enough is made of this point. It is not fair to the agricultural industry always to be talking in terms of subsidy to agriculture, when in fact no small part of the subsidies paid are subsidies to the exporter. As a farmer myself, I feel this very strongly. The point is always made about what idle, useless dogs we are, and how much public money we get, when, in fact, a great deal of the public money is used to support people other than ourselves. Thirdly, the system, as we have been using it, was acceptable under the General Agreement on Tariffs and Trade. It is possible that this system has now become unworkable; indeed, it is possible that it was never entirely workable under a free market system. And so we are proposing to change over to something entirely new—protection. I do not think that people realise just how much we are abandoning the old system of deficiency payments. I think that the Minister rather suggested that we are continuing a great deal of these. So we are. But the power to change over completely to protection is written into the Bill. It is a sweeping change altogether, not only a sweeping change in agriculture but a sweeping change in our whole taxation policy and our whole import policy; and this, it seems, to me, involves very great dangers.

First, there is the real danger that the terms of trade may be damaged against us. This is fundamental to us. In many ways it is more important than the whole agricultural industry. If we damage our terms of trade it is no good our trying to support agriculture, because there will not be any agriculture to support. Secondly, whatever one says, the cost of living will go up. There must be a rise in wages, and this must, in turn, affect our export costs. Again I ask myself; does this matter? This is part of the illusion. Should we not, in fact, be paying for what we consume at the price it costs? It is possible that a quite small increase in the cost of imports—something like 10 per cent.—would cover the whole cost of the agricultural subsidies bill. I am not absolutely sure of my figures, but I believe that a rise of about 10 per cent. would yield £300 million, an amount which comes near to balancing the subsidies bill.

Another grave danger is indirect taxation, a point which the noble Lord. Lord Stonham, raised. Again I ask: how much does this really matter today? The old concept, particularly from these Benches, was to regard all indirect taxation as anathema. I think we are now changing our views here—I do not mean only on these Benches; but I feel that the old distaste for indirect taxation is perhaps not so great as it used to be. Is it really shifting the burden of taxation, as the noble Lord suggested, on to those who cannot afford it? Cannot one possibly devise means of helping them in other ways? At all events, I put forward the idea that perhaps indirect taxation is not quite so great an evil as has been suggested. Fourthly, there is a very great danger of this kind of system, the protection system, slowing down the whole process of the exchange of agricultural goods over Europe. Any form of protection restricts trade; it does not expand it. That, in itself, is bad.

Those, my Lords, are the four dangers which come out of the new system; and they are dangers which must be scrutinised closely before one adopts a changeover, as we are doing, to this totally different and new system. Again, we do not really know how this new system is to work. There was an interesting interchange just now between the noble Lord, Lord Amherst of Hackney, and the noble Lord, Lord Stonham, on the latter's figures. He, in turn, criticised the noble Lord, Lord St. Oswald, as to how this was going to work. We do not know; the Government do not know—they are only guessing.

My Lords, that covers the feelings I have over my major worries and difficulties, over the major implications of this. But there is also one particular implication that I should like to air again: I refer to the question of standard quantities. When I first looked at this question of standard quantities in the Bill I was very worried about it: I felt that it put a noose around the farmer's neck. Then I thought, "Poor chap! he always has a noose around his neck anyway, living in an industrial country like England, in which agriculture is only 5 per cent. of the economy. That smallness of interest is a noose in itself." The more I looked at it, the more I felt that it was the corollary of a limitation of imports. If farmers are going to ask for a limitation of imports—and that is what this Bill is designed towards—then the industry must be prepared to expect a limitation on what they themselves grow and produce. We cannot possibly expect to get agreement with the buyers for our own exports unless we are prepared to do this. The noble Lord, Lord Stonham, pointed out that the 1947 Act carried the germ of this idea with it. Although one might dislike the idea, obviously it is the only possible one in the circumstances. It, too, has its dangers. After all, it restricts production exactly as any form of protection reduces production rather than expands it.

Noble Lords on these Benches, like noble Lords on the Benches to my left, have felt that it might be done better by some system of commodity commissions. I think that both our Parties have said a good deal on these two points. I would go further and have a wholly managed market. I am not quite sure how far noble Lords on my left are prepared to go towards that, but I am convinced that, in the long run, it must be a wholly managed market.

LORD STONHAM

My Lords, where we have commodity commissions, there would be a wholly managed market.

LORD HENLEY

Yes, my Lords, I think that is more or less what I believe it to be. At any rate, some kind of world commodity agreement might be a more helpful way of dealing with this problem than the adoption of the standard quantity conception. But I just do not know. One is entirely in the dark in this matter. Nevertheless, I am inclined to accept the concept of standard quantity as a quid pro quo in return for protection. That we must produce less, strikes me as the best available, though I hope temporary, solution of this rather difficult problem. It seems to me probably as reasonable a compromise in the context of the Act as we can hope for.

Having said that, within these limits, I welcome the Bill, I would end with a plea. It seems to me that this country, as the biggest importer of food in the world, is able, as no one else is, to take the initiative in laying the foundation for a sounder food and agriculture policy over the whole world. Although we have been excluded from Europe, it seems to me, that this Bill takes us a little nearer to the Common Market. I am sure that here I am at odds with the noble Lords on my left, but I feel that, consciously or unconsciously, this Bill is getting us a little nearer to the Common Market and that this is to be welcomed. That, in its turn, is a step in the direction of a managed world market; and I feel that, in the long run, a managed world market is absolutely essential. It is not only ourselves who are bedevilled by these difficulties in agriculture. Every other country—Russia, America, the Commonwealth, and the countries of Europe—is faced with this problem, one of the most difficult and intractable in the world. At one moment, the world is flooded with surpluses; the next moment, the larger part of the world is plunged into hunger. There is this extraordinary dichotomy between these two aspects of agricultural industry, and this applies to the whole world. And it can be solved only by having a wholly managed market, not only for this country but for the world as a whole. So that, in spite of my misgivings on the Bill, I welcome it as a step in the right direction.

6.46 p.m.

LORD PEDDIE

My Lords, I welcome the opportunity of joining in the congratulations that have been extended to the noble Viscount, Lord Falmouth, on his maiden speech. He gave us the benefit of his practical experience and his speech itself carried many shafts of clear, cool wisdom, particularly where he agreed with this side of the House. It is my intention to deal with only Part II of the Bill, and particularly with Clauses 9 and 10. But, before I do that, in the light of the comments we have just heard, I will make a brief reference to Part I, which makes provision for minimum import prices and levies, which are presumably designed to make the cheapest imports dearer. I am kindly to the viewpoint, just expressed, of concern about the possibility of substantial increases in the price of foodstuffs. The policy that is being put forward ends the practice of free imports of basic agricultural products and, I would agree without question, makes it easier for this country to join the European Economic Community.

I think a case has been established that deficiency payments have become far too expensive. Already we have had reported the crazy situation of deficiency payments for grain being held down by producers being asked to charge more. This new method may be better, but it shifts the burden of deficiency payments from general taxation to a direct tax, which, so far as I can see, is more likely to be imposed upon the most efficient importer. That in itself is not a good principle.

Only 4 per cent. of the population of this country are engaged in the production of food, of all kinds, but 100 per cent. of the population eat it. While protection for the agricultural industry is important—indeed, I would concede, necessary—it is equally important that the population should not necessarily pay high prices, because high prices for foodstuffs can have important repercussions upon the economic system itself. Ask any industrialist or anyone responsible for the negotiation of wage rates about the influence that the price of food has on these negotiations.

To turn to Clause 9, I must say that I welcome the statement that was made by the noble Lord in charge of the Bill, that Her Majesty's Government have had second thoughts in regard to their attitude concerning recognition of the Agricultural Finance Federation. This makes it unnecessary for me to express a great deal of the criticism I should have expressed had it not been for that statement. I am sure that the change of heart and policy on the part of the Government is welcome, but, nevertheless, I think it is in itself a tribute to the persistent logic and emphasis of those in another place who pressed the point upon the Government.

However, I should appreciate it if the noble Lord would give the House a few more details. I understand from the noble Lord's statement that the facilities to be afforded to the A.C.C. will be precisely the same as those afforded to the A.F.F. The suggestion is that one-tenth of the £100,000 will be made available to the A.F.F. I am speaking personally now, but I think there is little justification for the figure being 10 per cent.; it ought to be more. At the same time, I hope the Minister will be able to confirm that there will be no difference in the treatment afforded to the A.F.F. as against the A.C.C.

There is a strange story of the attitude of the Government in these negotiations. While we welcome the comment that has been made, at the same time we deplore the circumstances surrounding the attitude of the Government so far as their relationship with the A.F.F. is concerned. It is, as I say, a strange story, and it indicates that throughout the whole period these negotiations must have been held exclusively with the A.C.C., despite the fact that, surely, the importance of the Agricultural Finance Federation must have been recognised in this field of effort. Indeed, I believe that in the early stages, following upon the obvious alarm that was expressed by the Agricultural Finance Federation, a communication was addressed to that body indicating that there was no possibility of their recognition. But on Second Reading a different story was told.

I am glad that there has been this change of heart, because had it not been so it would without question have been an indication of favouritism and a refusal to recognise an organisation that is doing work equally as important and useful as that of the A.C.C. As I have said, it is not necessary for me at this stage to bring forward many of the points I should have done to justify recognition of the Agricultural Finance Federation. This has been done, and I am glad to hear that the guarantees given will be in precisely the same terms as those afforded to the A.C.C.

I should now like to turn to Clause 10 of Part II, which authorises grants not exceeding one-third towards the cost of extending, building or reconstructing wholesale markets. A substantial sum of money—£20 million over a period of ten years, which could possibly be increased to £25 million—is being allotted for this purpose by the Government, and I feel that in the debate so far insufficient attention has been devoted to the significance of this action. I think all noble Lords would agree that the great majority of urban wholesale fruit and vegetable markets need improvement. Most of them, if not all, are too small to deal with the current volume of home and foreign produce. The majority of them have bad layouts, which make it difficult to employ those modern methods of handling produce which could effect economies in operation.

It is essential to remember that the location and form of many of these markets are the result of historical factors in transportation and pattern of consumption rather than present-day requirements. Few of the wholesale markets in this country to-day really conform to the demands that are set by present-day requirements. These factors add substantially to the operational costs and, what is more, they add to our traffic problems. Therefore, the offer of financial aid over the next ten years to local authorities will, as I am sure we all agree, give a stimulus to the modernisation problem.

Nevertheless, I think it is as well to give some thought to the influences that will be brought to bear upon the prosecution of the policy which the Government obviously have in mind. In the first place, inadequate markets have been with us for a long time. It is interesting to note that less than half of the local authorities to-day have any firm plans for market redevelopment; and I believe there have been only two new wholesale markets constructed since the end of the war. There are a number of reasons, also, to cause one to believe (I should appreciate some comment from the noble Lord opposite on this) that even the offer of this assistance can be no guarantee that a comprehensive modernisation programme will be launched if it is left exclusively to local authorities, because there are difficulties involved which would in many cases justify non-activity on the part of local authorities.

We were discussing some of these difficulties yesterday when dealing with the problem of urban renewal. Let me recount some of them. In the first place, there are the complexities of town planning, including the difficulty of purchasing land and its fantastic cost; and the need to secure agreement among traders who frequently occupy sites in the markets with a full recognition that a transfer to another site will mean a substantial increase in rent: in other words, the changeover from the rent established by conditions of a generation ago to the economic rent that would be demanded by the new markets.

Another point—and there has been no indication that the Government recog- nised this—is that additional market organisation ranks very low in the order of priorities so far as municipal authorities are concerned. The markets may be inefficient, but they are performing a function; and when the local authority are considering doing what the Government want them to do, and they have in mind matters of much greater and immediate concern to the voter, such as slum clearance, re-housing, provision of schools, roads and the like, it is perfectly obvious that the majority of them are not likely to pursue the development of new markets merely because of an offer of assistance of the character the Government are suggesting. One could say more with regard to that.

There is a second point which I would mention. Even if the local authorities were persuaded to modernise their markets, it is very doubtful indeed whether local authorities or anybody else has any precise idea about what sort of markets should be built at the present time. As an illustration, what thought has been given to what extent the construction and functioning of wholesale markets should be modified to conform to a trend whereby specialisation in food retailing is being replaced by the growth of organisations handling all types of foodstuffs, including fruit and vegetables? Whilst I would agree that the Chambers Report of 1963, I think it was, provided some information on food and vegetable market design and construction, it was certainly not comprehensive. Largely, the problem of market location remains a completely unexplored field. My noble friend made reference to the problem of Covent Garden Market, which is an indication not only of the complexity but of the difficulty in this matter of siting.

My third point in this regard is my final point. It is by no means clear that local authorities generally would at this stage be wise to embark upon the big-scale problem of market redevelopment without a detailed examination of the trends that are taking place in distribution, both wholesale and retail to-day. There is a great growth in the volume of retailing organisations, and an increasing tendency to integrate the wholesale function into their activities and deal directly on a specification basis with large-scale growers. This trend may become the dominant factor in the determination of marketing in the future.

May I also refer to the question of grading? Grading, if carried much farther than this Bill carries it, could in the future be a factor affecting wholesale markets. If grading is carried to its practical and logical conclusion, I suppose a case of fresh tomatoes could be bought as easily, and with as great a certainty of quality, as one could buy a can of peas. If we arrive at that situation, the whole conception of wholesale marketing will be quite different. I mention those points because it is obvious to me that Her Majesty's Government have given not the slightest attention to the real question of marketing. Have they given this sop of some financial aid so that they will be able to say to the municipal authorities, "Why have you not got on with the job?" Yet the slightest investigation on their part would reveal the tremendous obstacles and difficulties in the path of municipal authorities who may desire to take up the offer that is made by the Government.

Our problem to-day, I agree, is to replace these 19th century buildings and markets—and sometimes they are older—and to create in their place the form of marketing that will not merely handle the produce of to-day but will be able to deal with the sort of trade, both wholesale and retail, which we may get in the next 20, 30 or 40 years. Therefore, unless we give attention to this, it is possible—I place it no higher than that—that municipalities will be persuaded or coerced to engage in certain market developments which, before the passing of more than one or two decades, will he considered complete white elephants.

7.6 p.m.

THE EARL OF KINNOULL

My Lords, I rise to welcome this Bill and should like to confine my few short comments to the horticultural section of it. I am pleased to see that the Government are taking positive steps to assist the horticultural industry, and I must say that the industry as a whole is very vulnerable and badly needs Governmental assistance. This industry now has an annual turnover of £160 million and, in the recent words of the Minister, makes an important contribution to the national economy. Direct assistance by production grants to the small producer will, I am sure, be warmly welcomed, but I do not feel that a maximum of £500 per holding will go very far to assist the small grower to expand his business. As no doubt many noble Lords are aware, the present-day costs required are enormous, and I am told that one acre alone of glasshouses would cost over £20,000. I should like to suggest that this figure of £500, as provided in the Bill, should be reconsidered and increased to a higher sum.

The grant available for co-operative societies, I feel, needs careful examination. I consider that the marketing organisation should be a local government responsibility, and not be left to the co-operatives. The history of co-operatives has not been in every case a story of success; and although a number started after the war, the total co-operative sales today represent only 2 to 3 per cent. of the horticultural market. There have been a number of failures, and I wonder whether a grant to be made available under this Bill will necessarily be a good public investment. So often the reason for a co-operative society failing is that there is no control over their members. So often the members use the society's facilities to dispose of their produce as a last resort when other outlets have failed.

I cannot believe it right for public money to be made available for the benefit of only a few growers: I do not believe there is any proper benefit to the industry as a whole. Members of a society may be far more anxious to see the society succeed where only their own money is at stake. As to the setting up of new co-operative markets, I would humbly suggest that the existing markets in numbers are quite adequate. We should improve the existing facilities rather than set up new, costly markets that will be in direct competition with existing markets.

The provision of compulsory grading has received certain criticisms from the trade. The main concern is how many inspectors the Government are expecting to need, and who will pay for them—the trade, the housewife or the Government. Many of the wholesalers take the view that, in any case, buyers of horticulture themselves visually grade, and they do not feel that lower quality goods on the market have any real detrimental effect on trade. It is felt that to set up an efficient team of graders will require a great number of staff and considerable expense.

Much as one welcomes the Bill as an immediate assistance to the industry, there is a growing fear among the industry that the real problem is that British growers cannot compete on equal terms with Continental growers, and if, in the future, this competition is allowed to come about, the present injection into the industry will be of no real value. The conception of the Bill, one is told, is to encourage growers to improve their competitive production in relation to foreign suppliers by improving the marketing. The Bill, of course, does benefit the industry, but I do not believe that it will have any lasting effect on the reduction of growers' costs; and this, surely, is the reason why we cannot compete on equal terms with foreign competition. As I understand it, the Minister has given the industry four years before reducing tariffs. This I regard as an ominous warning for the livelihood and the future of the grower.

7.11 p.m.

EARL FORTESCUE

My Lords, I will start my speech by offering my warmest congratulations, not only formally but sincerely, to my noble friend Lord Falmouth for his maiden speech. I am also most grateful to the noble Lord, Lord Stonham, for making many of the points which I was going to make, for I am thereby able to shorten my speech, to the benefit of your Lordships. I shall speak only to the horticultural part of the Bill.

I welcome this Bill, which is a good Bill so far as it goes, but I feel that in some respects it goes rather in the wrong direction. There have been enormous changes in horticulture since the war and the dominant one is that the buying is getting into fewer and fewer hands, and the small man is getting a worse and worse deal. Inevitably, the big buyers go to the big sellers for their produce, and the small man, for the most part at present has to go to the wholesaler, who acts on commission. That is, in my view, an entirely wrong principle. I come from an area of smaller growers than there are in the East and South-East counties, and it seems to me that the small grower is not likely to take up much of the grants on the 33⅓ per cent. basis which has been offered to him. Under the 1960 Act only a very small amount was taken; and I think that that was a good thing, because there is a grave risk of getting over-capitalised. The grower has increasingly become not only an accountant but a salesman and a mechanic, and to-day the "green fingers" end of it is another man's job altogether.

I regard the industry as in two parts: first, growing and, second, grading, packing and selling. The latter is really a factory job, which I should like to see handled right throughout the country by co-ops; the co-ops taking produce at a fixed price, selling it to wholesalers in the big markets at a fixed price and not on commission. Then, we should not see produce of first-class quality being retailed in the shops at double the price which the grower obtained initially. An outstanding case of growers getting over-capitalised is in the erection of cold stores, which cost roughly £100 an acre—a very large amount of money to put up for equipment which will be used only for a few weeks in the year. Cold storage, to my mind, should be done by the co-ops, and the wholesalers, who have an opportunity of using their big stores for other purposes throughout the year.

I welcome the clauses regarding grading, but grading only for the wholesale market is nothing like sufficient. We must somehow get the rubbish off the market; and one is apt in these days to include as rubbish the small fruit which has become very unfashionable, although some of it is good. But this past season it has been quite unsaleable. For myself, I give all my small dessert apples to the local education authority to be eaten in the schools, thereby promoting the doctor's dental scheme, and they have been extremely grateful. It would not cost other growers anything to do the same thing, and in a season of scarcity the local authorities might very well buy up small apples and feed them to the schools. That is only one suggestion.

Another way of getting rid of—not necessarily rubbish, but a glut of other produce is by processing. The recent record of processing has not been particularly helpful. During the last war two drinks were introduced as producing vitamins. One was blackcurrant juice, in the form of Ribena and the other was rose hip juice. Unfortunately, in recent years a tax has been put on Ribena, which has promoted the sales of rose hip juice, which is very good juice anyhow. The result has been a catastrophic drop in the price for blackcurrants, which makes it practically impossible to produce blackcurrants at a profit in the many parts of England where they can be produced only at a rate of one ton or one and half tons an acre. A few areas are luckier, but in a great part of the Eastern Counties they cannot produce more than about one ton to one and a half tons per acre, and at a price which does not pay the grower. If that tax could be taken off Ribena it would help the blackcurrants growers enormously.

There is another outlet for processing. In recent years numerous attempts have been made in this country to promote the consumption of apple juice on the sort of scale on which Hitler made an appeal to the youth in Germany. I do not think it would be an exaggeration to say that in this country all the attempts have been failures. I understand that in the State of Washington, in America, one company has spent an enormous amount of money on research and development. I have written to try to get some details, but so far I have not succeeded. This company take in a matter of 300 to 400 tons of apples a day, process them and produce a very saleable and popular drink. I gather that the process has been enormously expensive, but that is the sort of thing the Government might well subsidise.

So much for processing and getting rid of the "smalls". I think the present system of marketing (to which the noble Lord, Lord Peddie, made some reference) to the wholesale commission agents is entirely wrong. There are good and bad wholesale commission men, but they nearly all have an interest in selling foreign produce; and in many respects the foreign produce is more specious than ours. The Italians, in particular, send over here round, rosy rubbish with skins like a cricket ball and absolutely devoid of taste. The wholesalers find that they have a greater appeal to the housewives than a good English Cox has, and sell at a higher price. That, I think, is wrong; and if the commission agents could buy their stuff outright and not sell it on commission, I believe that it would be for the benefit of the home growers.

The only other point that I wish to bring out is the question of publicity. A few years ago there was a scheme for publicising the consumption of apples. It was not well supported by the growers, merely because it was on too small a scale. There was an appeal for money. I think £30,000 was put up, but £300,000 was needed. So people lost heart and did not subscribe, and the effort died out. If a publicity scheme for home-grown apples and home-grown produce could be introduced it would assist enormously in the revival of the industry.

7.22 p.m.

LORD WALSTON

My Lords, I also would start by adding my congratulations to those of other noble Lords to the noble Viscount who made such an admirable maiden speech, so full of his own practical experience and wise thought and I, too, with my noble friend Lord Wise, hope we shall hear frequently from him again. Perhaps I may begin by saying that there was one point on which I disagreed with him, when he said, in a slightly different context, that no farmer ever gets rid of anything good. But I would remind him that farmers assisted in getting rid of something that was the best thing they ever had, and that was Tom Williams, my noble friend Lord Williams of Barn-burgh, and the Government of which he was a prominent member some twelve years ago.

Where I agreed with the noble Viscount very strongly, and indeed with other noble Lords who made the point after him, was on the question of grading fruit and horticultural produce, and whether that should he carried through to the retail end or riot. After all, what is the point of grading? Why is there this provision in the Bill that there should be compulsory grading? It must surely be simply because it is to the benefit of the consumer; otherwise there is no need for it at all. It is not inserted in order to benefit the wholesaler or the retailer and to make life easier for them; it is to make it better for the consumer, so that he knows what he is buying. And yet by failing to follow this through to the shop itself, the whole purpose of the provision is being defeated. I hope the Government will reconsider this matter very seriously and make what is a wise and reasonable provision really worth while instead of stopping just short of the target they wish to achieve.

There was another point made by the noble Viscount, Lord Falmouth, and also by one or two other speakers later on—I think the two noble Earls who last spoke also made this point. It was implicit in some of the things they said, which I do not think they meant in quite that way, and I hope they did not; it was to the effect that the British grower of horticultural produce is at an inevitable intrinsic disadvantage when compared with foreign growers. That, of course, is true in certain respects for certain commodities. There are some things which we cannot grow so easily or so well as foreign producers. Obviously, we cannot grow peaches so well as the Italians or the South Africans; we cannot grow artichokes so well as the Bretons, although they have great difficulty in getting rid of produce at a reasonable price.

But there are some things we grow infinitely better, some we can grow as cheaply, even tomatoes—Worthing growers can compete in their growing costs with the Dutch, but when it comes to marketing costs it is a different story. When we turn to raspberries or strawberries, so far as quality is concerned we are away ahead, and when we turn to what the noble Earl, Lord Fortescue, mentioned, the Coxes, there is no apple in the world to beat it or come anywhere near it. I think it would be a great misfortune if it were thought that noble Lords in this House, with their great experience, really felt that the British horticulturist could not produce things as good as, or better than, the foreign producers. I must say I can never understand why people in this country insist on buying these extraordinary, soft, shiny red things called apples which come all the way across the Atlantic, and will often pay more for them than for some of the rather smaller but absolutely first-class apples which the noble Earl, Lord Fortescue, has to give to his local authority—and they are very lucky to get them.

I, on occasions, when I go abroad to rather distant climes, especially into the Caribbean, occasionally have a hankering for an apple. I go into a multiple store there and all I find once more are these soft pieces of cotton wool with glossy red paint on the outside. Why cannot we export apples? They are good enough, and would be a very good export if we could build up demand for them and make people realise what a good apple can taste like. I hope we shall not be content with trying to improve horticulture at home simply for home consumption, but that we shall realise that we have something which is better than is grown anywhere else in the world, and we could build up an export trade on it.

THE EARL OF KINNOULL

My Lords, surely the point is the cost, not quality. I personally was discussing cost. I quite agree that on quality Britain cannot be bettered.

LORD WALSTON

I am afraid I could not quote off-hand how much apples cost in the shops to-day, but I do not think the price differential between second-quality Cox's and the imported apple is so very great. I think we can compete with them, and that those not considered good enough to sell at all could certainly be sold.

THE EARL OF KINNOULL

The noble Lord mentioned tomatoes.

LORD WALSTON

Yes. There the point I wished to make was that our producers in certain areas—and I specified Worthing—were competitive in costs with the producers in Holland, but when it came to distribution, there, for some reason which is too involved to go into at this stage, our costs shot up and theirs remained very low.

Perhaps that can lead me on to the second point—I wished to make only two points on the horticultural section of the Bill—and that is the question of wholesale markets. I agree with every word my noble friend Lord Peddie said on that matter. It is a subject that clearly is of the utmost importance in the problem of reducing our costs and making us competitive; and it is quite intolerable that we should be satisfied with a condition whereby it is in fact cheaper, or appears to be cheaper, to take a tomato or lettuce from a horticultural holding in Holland and bring it into a London shop than take it from the Lea Valley to the London shop. That is something we cannot accept with equanimity.

It is good that the Government have made some financial provision in this regard, but of course my noble friend Lord Peddie is absolutely right in saying that it is not simply a question of having the money to do it: you must know how to spend the money wisely. It is no good simply leaving it to the local authorities in the hope that they will spend that money wisely. They may have a market that has the requisite turnover; it may be a very backward market, and therefore presumably they will rank for this grant. But it may well be that in the type of wholesale distribution which will be coming in the years ahead and in the type of regional development that will take place also, that particular market should not exist at all and should be phased out and some neighbouring market be made the main market for the centre, or possibly all those markets should be abolished and one entirely new market should be made. These things cannot be decided by the local authorities; it is not their job, and they do not have the overall vision. It must be decided on a regional basis, and the initiative must not be left to the local authorities but taken by some other body, which I suggest, in the first instance, should be the Ministry of Agriculture, Fisheries and Food.

We must remember, too as both my noble friends have reminded us, that the example of the Covent Garden business is not an encouraging one. We waited years before the Covent Garden Authority was set up. We have now waited three years since it was set up, and not one step forward that one can see has been taken. Even if they start immediately with their plans, we shall have to wait at least another three years before any benefit can possibly come from this project either to the grower or to the con- sumer. So if we are to follow anything like the speed that we have seen with the Covent Garden Authority, the outlook is indeed grim, and the millions which the Government are preparing to spend on these schemes will stay in the Treasury coffers for a long lime. If, on the other hand, it is simply doled out to any local authority which has or thinks it is likely to have a turnover of £5 million, then I am afraid a lot of this money will be squandered.

I will not deal any more with the horticultural side of this Bill. Important though it is, it has been most adequately covered. I will turn to deal solely with Clause I of Part I of this Bill and all that that implies. This Bill has been described by the noble Lord, Lord St. Oswald, as a penetrating attack upon the problems which exist. Of course, why these problems exist at all after he and his colleagues have for so long graced their offices is another question which we may discuss at some later stage. But, at any rate, he feels that this is a penetrating attack upon these grave and serious problems. The noble Lord, Lord Amherst of Hackney, described it as a "bold and imaginative measure."

Let us look at this a little more closely. What in fact is being done, and why does it need to be done? As my noble friend Lord Stonham has so forcefully expounded to your Lordships, we have from time to time suggested that the present system of agricultural support is a bad one and is not working. In fact, on more than one occasion, I think, I have drawn attention to the rather curious state of affairs, whereby, although in our churches in this country prayers are often offered up for a bountiful harvest, and at Harvest Festival thanksgiving is made for the bountiful harvest, if we remove ourselves from the churches and go into the Ministry of Agriculture or into the Treasury we may well find people offering up prayers—if, indeed, they do pray in such places—for a thin harvest, a poor harvest, because if there is a big one, as we well know, there will be a glut on the market, prices will drop, the deficiency payments will rise and the total amount which is called for in deficiency payments will be that much larger, and so the burden on the Treasury and on the taxpayer will be colossal, and Ministers will even have to go to another place and ask for Supplementary Estimates.

That is what has happened under this particular system, and of course, as has been pointed out, there are grave difficulties in this. No wonder the Government have finally realised that this is so. So what do they do? They bring in this "bold and imaginative measure" to make a "penetrating attack" upon this problem, and the way they make this penetrating attack is to go along to the four countries from whom we buy most of our cereals—on the whole, four rich countries: not underdeveloped, not countries suffering from malnutrition or anything like that: Canada, the United States, Australia, and the Argentine, which is not quite so rich—and say to them, "We are having difficulty at home. Our market fluctuates too much, and so, in the interests of market stability"—those are the words of the noble Lord—"we want to make some arrangement with you to help us solve this problem."

The arrangements they ask them to make are, not to restrict what they are going to send us, not to give us a long-term contract at a fixed price or anything like that, but simply to promise not to charge us as little as they have been charging us in the past. That is just as cock-eyed as this other system whereby it suits the Government to have a poor harvest, and it is difficult for them if we have a good one. That in itself is cock-eyed, and it must be cock-eyed to remedy an existing evil by asking the people who are selling us produce to charge us more for it.

I do not want to give the impression that I am against this Bill; I am not. We welcome—I think that is the official word; I would say "we accept"—the Bill as it is, and I am certainly not in favour of leaving these vital commodities, the food of this country, to the free play of the market. That far we go hand in hand with noble Lords opposite, because they now at last realise that it is not wise to leave these things to the free play of the market. That is a great victory for those of us who talk of a managed market, as did the noble Lord. Lord Henley.

Nevertheless, if we are going to move away from the free market to a managed market, surely it is not good sense or good housekeeping simply to ask our suppliers to charge us more. They do not mind charging us more; it is quite nice for them. But cannot we obtain some quid pro quo? We have a selling price as well in the world. I know that the noble Lord opposite will say to me in a little while that of course we have, that we have the International Wheat Agreement with an upper and lower limit. But these are pretty wide limits. Apparently the lower limit is not low enough to satisfy the noble Lord, so it must be different from that. The International Wheat Agreement is not adequate to cope with this.

Therefore, I believe that we could yet get some benefit for ourselves as well as for the exporters of the world, instead of going rather plaintively, as it appears we are, and saying, "Please will you help us with our own internal difficulties and"—I do not think I am reading too much into what the noble Lord said "in return we will agree not to expand our production and, provided that our Price Review figures are correct, we will then come in with you". We are going as suppliants to them instead of doing what, surely, we should have done—saying, "Here we are, the largest importers of foodstuffs in the world. We are in a masterly position in the world food market. We can do what we like with it. We can wreck it or we can make it." Let us make use of that, but do not let us wreck it. Let us make it into a good food market. Is the noble Lord anxious to interrupt?

LORD ST. OSWALD

Yes, I am. The noble Lord is speaking as if the food market were the only market in the world.

LORD WALSTON

My Lords, I was going to come to the other factors. There are other world markets, as other noble Lords have mentioned. I suggest that our competitive position might be worse if we pay more for our food. I will not repeat their argument. But we as the biggest importers of food in the world at present—whether we always shall be I do not know—should say to these other countries that we want to regularise our food market; we want to take the fluctuations out of it and we do not want prices to drop too low—the International Wheat Agreement tried to do that, but for one reason or another, which the noble Lord did not explain, it was not satisfactory—and also we do not want prices to go too high; let us make some arrangement between ourselves that will achieve that.

If possible, I should like us to go still further, and to say—perhaps this is asking for too much—"Let us have specified quantities; not only standard quantities for the British farmer but standard quantities for the foreign farmer as well". I do not see why we should bind the British farmer to produce a certain amount which has been calculated as being desirable, while allowing other countries to be free, subject to certain price regulations, to export to us as much as or as little as they want.

Let us remember that these long-term agreements are not always solely in the interests of the exporting country. At the present time the price of sugar fluctuates between £75 and £105 a ton, but we are buying it at something like £45. It may be that in the next few years, if Russia and China come into the market as they are beginning to do with wheat and sugar, we shall find a hardening in cereal prices throughout the world. Would it not be prudent for Her Majesty's Government to take that into account and to have a maximum as well as a minimum price for all these commodities?

As my noble friend Lord Peddie said, this is a big change from the old system of free food imports. The Government have taken a significant step forward, and we certainly welcome that. We are glad that they have done so and we believe that it is the beginning of something which makes us feel that they are at last seeing sense. We do not expect them to see the blinding light on the road to Damascus, but to see a little glimmer from a faint candle held afar. That glimmer, I hope, will grow brighter, and before long I hope they will again see a little more light and come closer to our way of thinking, so that we shall eventually find that we in this country have an agriculture which is not entirely subordinated to imports and is not completely protected from more efficient producers outside, but an agriculture where a balance is held between the two, where efficiency is increased, and, above all, where the price of food to the consumer is lowered. That is what we aim at doing. The reason why we welcome this Bill is that we believe it is a first, faltering, tentative, hesitant step away from the system of completely free food prices, in which importers of food do what they like and make what they can out of it: a step towards a more orderly and better form of agricultural regulations. For that reason, we welcome this Bill.

7.42 p.m.

LORD ST. OSWALD

My Lords, I should first of all like to join other Lords in congratulating my noble friend Lord Falmouth on a memorable maiden speech. He said in opening that he felt diffident and rash. Almost all of us, no doubt, felt diffident and rash on first giving tongue in your Lordships' House, but few, I think, with so little reason as my noble friend—and I am certainly not among those few. His mastery of the subject and clarity of exposition are comparatively rare, even in this House of experts, and I know that we all hope he has been given sufficient encouragement to speak with great frequency in the future.

My noble and friendly opponent, Lord Stonham, opened the debate for the Opposition. I am always refreshed by a brush with the noble Lord. So far nothing has happened as a result of those brushes to undermine our friendship, and I am sure that nothing will. Tonight I found him at his intolerant and inconsequential best. He said in paraphrase, it seemed to me, that we, the present Government, ought to have done this years ago, as he had been telling us to do, but that because it was we who were doing it, it must be entirely wrong. That was my reading of his speech. He said that we were balancing on a knife-edge. I should prefer to call it a tightrope, which is rather more comfortable. But what he ignored was that the measures in this Bill enable us, instead of falling on one side or the other of the tightrope, as we have been doing on occasion in past years, to have a kind of balancing bar so that we are able to walk from end to end of the tightrope with confidence and to return the following year with equal confidence.

LORD STONHAM

My Lords, I would remind the noble Lord that they use an umbrella on a tightrope, not a balancing bar. What I said was that the Government is at last doing the right thing in the hopelessly wrong way.

LORD ST. OSWALD

It is always the wrong way, of course, from the noble Lord's point of view; and the more successful it is, the more wrong it is. I quite appreciate that. He asked me whether there would be no limitation on fatstock under this system this year—he put it, in fact, as a rhetorical question. There will not. And he wanted an assurance that there would be no repetition of the drop in prices in our fat-stock market due to over-supply which we were going through at this time last year. We hope that there will not be. I would remind him that if he refutes the methods we are adopting in cereals he would be inviting the same sort of drop which he thinks is a possibility for fatstock. It is precisely against that sort of danger that we are, by these measures, guarding.

The noble Lord talked in terms of our controlling imports and thus having a managed market for cereals—

LORD STONHAM

My Lords, has the noble Lord finished with meat, because I asked him a direct question? I asked, in view of the circumstances the noble Lord has just described, whether the Government intend to use this Bill to fix a minimum import price for meat.

LORD ST. OSWALD

Clearly, we do not intend to use it this year. We have said, in words of great clarity, I thought, that for the present we intend to use it only for cereals. But we have enabled ourselves to use it for other commodities right across the field of agriculture and horticultural produce, as and when it seems wise, and if and when Parliament approves it, commodity by commodity.

However, to return to the point I was taking up, the noble Lord talked in terms of our controlling imports and thus having a managed market for cereals. This would not be the effect of the arrangements the Government are proposing to introduce under the powers which Clause I would provide. As I explained in opening this debate, the Government intend that the deficiency-payments system should continue to form the basis of our support arrangements for cereals producers. Contrary to what the noble Lord, Lord Henley, was suggesting, we are not abandoning our deficiency-payments system. But, as the noble Lord, Lord Stonham, recognised, it would be folly to ignore the pressures on this system from unrealistically low-priced imports, which even in relatively small quantities can do considerable damage to our market as a whole. The arrangements which the Government would bring forward under the powers in Clause 1 would be tailored to deal with this situation.

There is no intention on the part of the Government (though I am not clear whether this is the case with the noble Lords opposite) to control imports of cereals by physical means. The Government's proposals, on which we have already reached agreement in principle with our four major overseas suppliers (and I should have thought we might have received a greater measure of congratulation on this) would provide for the imposition of levies, when necessary, to maintain the minimum import prices, which would be set at levels designed not to raise the general level of import prices, but to eliminate the very low troughs of prices, of which the noble Lord is aware and to which he has referred.

It is clearly impossible to forecast how the introduction of minimum import price arrangements will affect food prices or the prices of feedingstuffs, because no-one can foresee how world prices are going to move over the next few years. One would require to know that. But if minimum import prices at the levels we have in mind had been in operation over the last few years, the effects on the cost of imported cereals as a whole, and so on the balance of payments and the cost of living, would, in fact, have been small; and those are figures that we have studied.

LORD WALSTON

My Lords, may interrupt the noble Lord for a moment? He was rather complaining that nobody had congratulated him on reaching agreement with these overseas suppliers. But would he seriously expect to be congratulated by his friends if he had persuaded his tailor to provide him with a suit at £10 more than the tailor had originally intended to ask him?

LORD ST. OSWALD

The noble Lord knows perfectly well that that is not the case here. That is a fair piece of twisting of the situation: I do not complain, but the noble Lord knows perfectly well that that is not the issue.

My noble friend Lord Amherst of Hackney expressed surprise at the remarks of the noble Lord, Lord Stonham, about Clause 1 of this Bill. I have no doubt that he must be equally surprised by the corresponding remarks of the noble Lord, Lord Walston, who wound up for the Opposition. I do not expect them to be in complete agreement with what we are proposing, but I cannot help feeling that their exaggeration of their case will one day embarrass them when they read it. The noble Lord, Lord Stonham, seemed to give the impression that, with the failure to reach agreement on the recent meat-sharing talks, the Government would be making no further efforts in this field—I thought I read that into his remarks. I might remind him of an Answer given by my right honourable friend in another place on this subject: The Government will continue its efforts to secure comprehensive and satisfactory arrangements on these lines and will participate in the work of the G.A.T.T. Meat Group. Meanwhile we are seeking the cooperation of our overseas suppliers in coordinating the level and phasing of supplies to the United Kingdom market in the interest of maintaining market stability in the coming months. But that is not, of course, invoking the enabling possibilities of this Bill, which I think was the question he put to me. I seriously believe that this approach is more likely to succeed than the splendidly jingoistic attitude of the noble Lord, Lord Walston, from which, as he prompted me to remind him, one might have judged that this country was buying food and receiving no trade advantages whatever from the rest of the world.

My noble friend Lord Falmouth was suspicious, I was sorry to hear, about the tariff removal, but he welcomed the small horticultural business grant, knowing some of the uses to which it might be put. I should like to explain to him that those horticulturalists will qualify who can produce a comprehensive business plan. It will have to be approved by the Agricultural Advisory Service officer, and, if it is approved, a grant will be given for the improvement and rejuvenation of the holding.

After what I have said, I was happy to hear the noble Lord, Lord Stonham, give a degree of commendation to the horticultural provisions of the Bill. Members of your Lordships' House and many others outside know and appreciate the sustained interest and effort which the noble Lord has devoted to the cause of the horticultural industry. He is one of its best-known and most effective proponents, and it is, therefore, all the more heartening to hear some degree of approval from him. But it was only to be expected that the noble Lord should differ from me about some of the means we intend to use in this part of the Bill.

Perhaps the chief point he has advocated is the need for what he calls a central directing authority for horticulture. As I understand it, in his mind this would be a body rather like the old Horticultural Marketing Council—in fact he referred to that—but with more extensive and more rigorous powers. I am bound to say that I see objections to such a body. In the first place, I do not need to remind your Lordships that the old Horticultural Marketing Council failed through lack of support and, indeed, through actual opposition within the industry. I find it hard to see how the sort of body which I feel the noble Lord has in mind, with its necessarily greater powers of control over the individual members of the industry, could hope to succeed in these circumstances.

Secondly, it seems to me that a body such as the noble Lord has in mind would need to be almost omniscient, in order to undertake the tasks which he would like to see done. Thirdly, I find it difficult to see how this body would be supposed to direct the running of horticultural markets. These markets have been run successfully—I do not think the noble Lord challenges this—for many years by local authorities. Their day-to-day business is not such as could be properly directed by a central body. The local authorities are very anxious to fulfil their duties in this field, and we think that the grants under this Bill will help them to overcome some of the frustrations from which they have suffered in recent years. The noble Lord disagrees. He thinks that they will not be given sufficient incentive, but there we must differ; we think they will. I really cannot see why the noble Lord wants to go further than this and overthrow the centuries of traditional responsibility which the local authorities have fulfilled and jealously maintained.

The noble Lord, Lord Wise, and my noble friend Lord Amherst of Hackney, mentioned the question of the minimum size of holding eligible for grant under the extended Horticulture Improvement Scheme. This question has been discussed at some length in another place, where it was suggested that the appropriate Minister might be given discretion to pay a grant in respect of a business which does not pass all the normal tests of eligibility. If he was satisfied as to that, it would be reasonable for him to do so. The objections to giving the Minister so wide a discretion are fairly obvious, and I do not think I need to enlarge upon them.

My honourable friend the Joint Parliamentary Secretary undertook to consult with the National Farmers' Union to see whether any way could be found of including those growers with under four acres who are genuinely viable, while still excluding the many who are clearly not. This gives rise to very difficult problems which the National Farmers' Union appreciate, and I may say that they agree with us that as a general rule the four acres limit is a reasonable one. Our discussions with them are still proceeding, and if we can come to a solution it will be incorporated in the schemes that will in due course be laid before the House and debated. But I must emphasise that the difficulties are considerable.

During the course of the debate some noble Lords have referred to the expansion of the Horticultural Improvement Scheme, and I think it would be of interest to the House if I filled in, briefly, some detail as to the background and effect of our proposals. As I have already said, Clause 7 provides more money, not only for the new grants in Clauses 2 to 5, but also for extending the Horticulture Improvement Scheme which was made under the Horticulture Act, 1960. This scheme was confined largely to facilities needed by growers and their co-operatives for improving the marketing of their produce. The 1960 Act, however, gave all the powers we need to extend the Scheme to facili- ties required for growing produce, as well as for storing it, preparing it and transporting it to market.

Clause 6 of the Bill, by raising the limit from £8 million to £24 million or possibly £27 million, will enable us to use these powers to the full. As soon as possible after the Bill has been enacted, we intend to lay before Parliament a draft Scheme for approval by Resolutions of both Houses. There will then be opportunity for debate on the scheme itself. I think it was also the noble Lord, Lord Stonham, who doubted whether sufficient of the available £24 million or £27 million would be taken up, pointing out to me how little of the money available under the present Scheme has been taken up. I would very briefly refer him, if he would forgive me, to one passage in my opening speech, in which I said: Our experience in operating the horticulture improvements scheme up to the present has shown that a good many growers have held back from taking advantage of it, due to the difficulties in raising their two-thirds of the cost. Now, of course, in another manner, in this part, also, we are assisting them to do that and to overcome, we hope, that real difficulty which the noble Lord mentioned.

The noble Lord, Lord Stonham, and my noble friend Lord Falmouth, said they thought the rate of one-third grant for grubbing orchards would be insufficient. We have given thought to this question, but we are not convinced that a higher rate of grant for grubbing orchards would be justified. There is already provision in the existing Horticulture Improvement Scheme for grants in respect of grubbing up as part of the normal operation of replacement of orchards. I cannot see a strong case for singling out grubbing for a higher rate of grant than any other facility. Secondly, the farmer or grower who has a worn-out orchard will, if it is a grass orchard—and the majority of them are—get a ploughing grant of £5 for each acre. This, together with the one-third grant we are proposing, seems to me to be sufficient incentive. What matters is that grant aid for grubbing should be extended to the farmer—and that is what the clause does.

I have been debating with myself whether I should blushingly admit to the noble Lord that last year I did in fact grub out, without any grant at all, one-and-a-half acres of old apple trees, leaving him to accuse me of unwisdom and lack of prescience; but such is my loyalty to the argument I am proposing that I feel I should use it.

LORD STONHAM

My Lords, could I ask the noble Lord to tell me how much it cost him to grub up that one-and-a-half acres, how many trees there were in it and how old they were?

LORD ST. OSWALD

They were very old; I do not know the number of trees, but it cost me about £85.

The noble Lord, Lord Peddie, has suggested—and this was one of the two main themes of his most interesting and powerful speech—that we need a much greater degree of central planning than is envisaged in the appropriate clause: that we need, in effect, a planned regional markets system. This might well be true if—and I must emphasise the "if"—our major markets were not, broadly speaking, where they ought to be. I contend that they are. Since our markets system has grown up freely and naturally, it could hardly, I should have thought, be otherwise. Where there has been a demand for large-scale supplies of horticultural produce, that demand has automatically been satisfied. I ask the noble Lord: where would the all-wise planner put his markets? It is where they are already—near the centres of consumption and distribution and conveniently close to the buyers who serve those centres.

Where I agree with the noble Lord, and where there is no argument between us, is that they are badly sited in the sense that many of them are too near the centres of the cities that they serve; but they are not badly located in the sense that they need moving to a different city altogether. I was able, however, to reassure the noble Lord, Lord Stonham, during his speech, that grant-aid will be available for the provision of new markets as well as for the improvement of existing ones. We need only a fair way of assessing which are the major markets, and that, we believe, we have found.

However, the noble Lord, Lord Peddie, went rather further. He said that we were introducing grant-aid for markets without the slightest consideration of the future pattern of marketing, or whether or not its object would be achieved. The inter-Departmental Committee set up a year ago by my right honourable friends the Minister and the Secretary of State for Scotland have been many months inquiring into these very questions, both here and abroad. They visited over a score of markets in seven other countries, and every important market in the United Kingdom. It was in consequence of their findings that my right honourable friends decided upon the policy embodied in Clause 10; and, unlike, I am sorry to say, the noble Lord, we are confident that it will in fact lead to the results that we all, he as much as we, wish to see.

Several noble Lords—the noble Lords, Lord Stonham, and Lord Wise, and my noble friend Lord Falmouth come to mind—suggested that the Bill would be strengthened and consumers given valuable protection if compulsory grading were to be extended to retail sales. This subject was discussed at some length in another place, as noble Lords will know, and the Government have given it considerable thought. In our view it is not necessary to extend the Bill in this way. In the first place, this is an agriculture and horticulture Bill. As I explained earlier, one of the purposes of all the horticultural provisions of the Bill is to enable the industry to cope more effectively with fair competition from abroad, and the introduction of compulsory grading in this country is intended to put home-grown produce on the same footing as imported produce.

To achieve this it will be sufficient to ensure that supplies of home-grown produce are properly graded before they reach the retailer, just as imported produce is at present. The retailer does not now sell imported produce as being of a particular grade, and from the point of view of enabling home-grown produce to compete on equal terms it is unnecessary to take compulsory grading right down to the consumer. That is not to say, of course, that the consumer will not benefit. The consumer will have the assurance that what he or she buys has been graded and has been subject to official checks. He or she will notice a great uniformity of quality, a characteristic hitherto confined to imported ported produce and the small proportion of home-grown produce marketed by growers who have voluntarily adopted grading standards.

THE EARL OF KINNOULL

My Lords, on that question of imported goods, may I ask the noble Lord a question on tariffs? The Minister is quoted as saying on December 12 that he would assume the tariffs would be dropped or lowered on imported goods within four years. Would the noble Lord confirm this?

LORD ST. OSWALD

No, my Lords, my right honourable friend did not say that. He said that in four years' time we should feel free to look again at the tariffs on sensitive items. He did not say that any definite action would be taken, but, in consideration of the impetus which is being given to the industry at present by the terms of this Bill, we should hope that, by the end of four years, the industry would be in a better position to compete on what are at present regarded as sensitive items. If that is so—and the decision will be judged on circumstances—I feel sure that my noble friend will be as pleased as myself. I think I should also say (unless noble Lords are getting weary) that fears have been expressed that the grades may in some way be undermined and brought into disrepute by the exemption of retail sales. We do not feel that there is any real basis for these fears.

I turn now to the points arising under Clause 9, and I am happy that the noble Lord, Lord Peddie, is now better pleased with what we are proposing than he was when the debate opened. I felt that he would be, because what we are doing is conceding a principle requested by his honourable friends in another place. Her Majesty's Government have responded to that request by offering that a proportion—a generous proportion, objectively assessed, I would say, of 10 per cent.: at least 3 per cent. more than the co-operatives' share in horticultural business—should be available to the Agricultural Finance Federation with the backing of credit co-operatives. As I mentioned earlier, my right honourable friend has now offered the Federation a share of the sums to be made available annually under the clause and to put them on an equal footing in the administration of the clause. That, I think, is the assurance the noble Lord wanted.

LORD PEDDIE

My Lords, I thank the noble Lord for that explanation. He made reference to business transacted with the co-operatives. I take it that the facilities extended to the A.F.F. will not be confined solely to the business done with co-operatives, but will be on exactly the same terms as those afforded to the A.C.C.

LORD ST. OSWALD

My Lords, may I look into that point? I cannot give the noble Lord an answer at the moment.

LORD PEDDIE

My Lords, I may be able to help the noble Lord. I merely asked—and, of course, he indicated it earlier—whether the terms will be the same as those afforded to the A.C.C.

LORD ST. OSWALD

My Lords, my wording was that they will be "on equal footing in the administration of the clause".

LORD PEDDIE

In the operation of the clause, I take it.

LORD ST. OSWALD

In the administration of the clause. For reasons which the noble Lord will appreciate, I had better not go further than that. I hope it means what the noble Lord thinks it may; but I feel that I ought not to go further at the moment, since this is a very recent agreement. But I will look into the point and get in touch with the noble Lord.

LORD PEDDIE

My Lords, it seems obvious that "administration" will refer to "operation"; and I accept it as such.

LORD STONHAM

My Lords, before the noble Lord resumes, obviously there will be an Amendment at the Committee stage, which I suppose the Government will move, to clarify this point: because I am quite sure my noble friend will not mind if I say that it is not he alone who wants to know about this point.

LORD ST. OSWALD

I realise that.

My Lords, I was very encouraged by Lord Walston's confidence in the ability of the British horticultural industry to compete with anyone: notably in selling apples to people who prefer apples to cotton wool. When the improvement in distribution and the guidance to consumers by dependable grading are brought in, I feel they will respond with a new lease of life; and I hope that my noble friend Lord Kinnoull also feels reassured by the words of the noble Lord, Lord Walston. My noble friend Lord Fortescue will not expect me to say anything about the purchase tax on blackcurrant juice, except that my right honourable friend the Chancellor of the Exchequer has undertaken to consider representations that have been made to him on behalf of the growers and manufacturers. My Lords, on such a note of sweetness I choose to end this debate.

On Question, Bill read 2^a, and committed to a Committee of the Whole House.