3.35 p.m.

HL Deb 25 March 1964 vol 256 cc1272-313

Debate resumed.

LORD HENLEY

My Lords, may I thank the noble Lord, Lord Williams of Barnburgh, for drawing our attention again to the problems of agriculture? I think I may say in this House, without being invidious, that he was certainly the best loved Minister of Agriculture that we have had, and that anything he has to say on this subject we all listen to with the greatest of interest. He accuses the Government of electioneering in this Review. Well, my Lords, if it is electioneering, I am only too delighted that the agricultural industry is still resilient and important enough to be able to command this bit of notice.

But I wonder whether I am unique in being able to acquit the Government of electioneering. I know that a great many members of the Government's own Party think that it has been electioneering in this regard, but I wonder whether it is really true. I feel that I see the Government at last moving towards a very definite shift in policy—a policy which seems to me consistent with what our problems are. As the noble Lord, Lord Williams of Barnburgh, said, something had to be done at this moment to redress the balance of the position that the farmers have got into in the last two or three years, and I, at any rate, am going to give the Government the benefit of the doubt and say that it may be a coincidence that once again this falls in an Election year but perhaps it is not electioneering and is part of a consistent policy.

After all, we are talking about the problems of agriculture, and it seems to me that the central problem of British agriculture and, indeed, world agriculture is the problem of co-ordinating imports with home production; of coordinating imports with what we ought to produce properly in this country with this kind of agriculture we ought to have. I know that there are other problems, and perhaps the most important domestic agricultural problem is that of structure: that is to say, the size of the unit in relation to the various other factors. I think we are in a better position than the rest of Europe in this respect, but, nevertheless, it is our own central internal problem.

I do not believe that one of our major problems is that of technique. I am sure that so far as technique is concerned we stand higher than almost any other country in the world in regard to output per man and per acre, and also per unit of cost. These are domestic problems within our own industry, but the problem of agriculture as we face the rest of the world is the central problem of co-ordinating home production and imports. My Lords, how does this Price Review help towards this co-ordination? It must, of course, be seen as part of the Government's agricultural policy. Let me remind noble Lords that slightly over a year ago there was a breakdown in Common Market negotiations. I do not follow the noble Lord, Lord Williams of Barnburgh, here—we do not on these Benches, as noble Lords know and as I have said before. This breakdown was followed by a statement in May last by the Minister on what he was proposing to do, which was virtually to change our whole system of support. The Agriculture and Horticulture Bill, 1963—which is still going through this House; we have not yet finished it—implements this major change of policy.

There is another thing which the Government are doing at the same time and which is worth thinking about in this connection. The Minister of agriculture has asked the landowners' representatives, the farmers' representatives and also the representatives, of the five professional bodies concerned with land to start thinking about ways in which the 1947 Act and the 1948 Act might be improved and possibly end up in an improved and consolidated Act.

I welcomed the 1963 Bill, within certain limits, as being likely to promote a solution of this central problem of home production and imports, and I now welcome the Price Review Statement similarly. I welcome it within certain limits, in the same way as I welcomed the other within certain limits. Nevertheless, it see ms to me to be part of a general policy which the Government quite clearly are following consistently, and for this reason, as I said, I acquit them of electioneering. Obviously when one accepts a thing within certain limits one may be very doubtful about details. As a matter of fact when the statement was made last Wednesday I immediately listed a large number of details on which I wanted to ask questions, and quite rightly was called to order by noble Lords for making too much of it at that time. Perhaps I may now touch on one or two of those details which worried me.

The first is this question of cereals, on which the noble Lord, Lord Williams of Barnburgh, has already touched. I was very interested, because when I read the speech in another place of the spokesman for the Labour Party on agriculture I was not quite sure whether they were alive to this problem about asking the foreigner to increase the price. The danger, it seems to me, here is that one might be supporting, inadvertently, a foreign cereal grower; and there is also the danger of hanky-panky on the Corn Exchange, or wherever that kind of hanky-panky does take place. Obviously it lays us open to both these things, and I am glad noble Lords on my left have realised this.

The next point is the question of milk. The Minister answered me on this point. I am sorry that he could not have given a little more than 2¼d. plus the ¼d. He said he was afraid that would have two effects, the first driving up the price to the consumer too much and the second letting people come back into milk production who were better out of it. There are two answers to those two points. First of all, with regard to driving up the price to the consumer, does this really matter? It is conceivable that the price of milk is artificially too cheap. Would it not be better that a realistic price should be paid? On the second point, that a higher price might bring back into milk production more people than there should be, again I would ask: does it matter? I cannot help feeling that milk is the sort of thing that this country can produce very well, and there is no earthly reason why we should not produce more, dry it and, if you like, export it to the poorer countries. And at any rate, it seems to me a better course than bolstering up, shall we say, sugar beet—a course which I cannot help feeling is a mistake, because it interferes with what is the sole export of many countries which depend exclusively on sugar. I throw out that thought, because it is so often suggested that there is too much milk and that we must not produce more. I ask the question; is this, in fact, true?

LORD SILKIN

My Lords, if I may intervene, can the noble Lord explain in more detail what he is trying to tell us: that it does not matter if the price of milk goes up to the consumer, and it does not matter if we produce more milk than we require. Can he explain why? It is not self-evident.

LORD HENLEY

My Lords, I am sorry if my slightly confused method of speaking did not make this clear. The point I want to make is this. I feel that it is a mistake to be gearing prices to a subsidy price; we must get back to the idea, which seems to me perfectly reasonable, that we pay for a commodity at the price it costs to produce. I do not feel that putting up the price of milk a little matters. That is my point with regard to milk. My second point with regard to the quantity of milk we produce is this: I put it forward as a suggestion. So far from our producing too much milk, there is no reason why we should not produce more, and then dry it and export it to the poorer countries, in the form of dried milk. I said that here is a form of agricultural service, if you like, which might be more sensible than bolstering up sugar beet; that everything we grow in the way of sugar beet must affect those countries which depend only upon sugar as an export. Does the noble Lord understand what I am getting at? He may disagree, but does he understand?

LORD SILKIN

My Lords, I understand what the noble Lord is trying to say. But I still do not follow him when he says that it does not matter if the cost of living goes up.

LORD HENLEY

I have tried to explain that I think it does not matter in this connection, because I am against the idea of paying for our agriculture by subsidy. I feel that we must get back to paying for commodities at market price. That is a point with which some people will agree and some will not. I hope I have made it clear.

LORD WILLIAMS OF BARNBURGH

My Lords, the noble Lord does not seem quite to have appreciated this fact, when he says that price does not matter. It clearly does matter; and what the Minister must have in his mind all the time is not to fix a price which inevitably will mean a decrease in production of that particular commodity. Otherwise, the whole basis of maximum production is out of gear.

LORD ST. OSWALD

My Lords, I am grateful to the noble Lord opposite. I wonder whether I can clear Lord Henley's mind on one point. He referred to the price of milk as being artificially low. He said that he was against paying for agriculture out of Exchequer grants. There is, of course, no subsidy on milk. I do not know whether he is aware of that.

LORD HENLEY

My Lords, I was aware of that, but I still think that the whole of agricultural prices are so be-devilled by subsidies and cross-subsidies that the price of milk is not, in fact, what it appears to be. So much for milk: I think we have had enough of milk.

The next question is winter keep, which is another matter about which I am not happy. I would much rather, instead of adding £1 per acre, perhaps, work the same way by putting something more on hill cows. This winter keep scheme is going to involve all of us in a great deal of paper work, and I think the C.A.E.Cs. are already overloaded with it. With regard to fertilisers, I am sorry that the Government have taken something off the fertiliser subsidy. Is this the Government's answer to the Monopolies Commission's suggestion that something should be done about fertilisers? Because it seems to me a rather feeble way of doing it.

LORD ST. OSWALD

My Lords, the noble Lord is mistaken if he thinks the Monopolies Commission criticised the fertiliser manufacturers.

LORD HENLEY

That was not my interpretation of the Monopolies Commission—but never mind.

Then there is the mechanism of this new deficiency system. I quite like that. It looks as if it might be a help, but I think we shall have to wait and see how it works. But in spite of these details in regard to which either I am not sure how they will work or of which, in some cases, I slightly disapprove, I am quite certain that the major policy trends of the Government's suggestions are sound; that they do help towards co-ordination of home produce and imports, and that they do, to revert to what I was saying earlier, tend towards making price come from the market and not from subsidy. I am very pleased that the Government have secured some agreement with overseas suppliers, and I hope that it will be possible to get something for beef and lamb in the same way as they have done with cereals. I make the same proviso as I made on cereals—I do not think it matters so much in the case of meat; there is not quite the same opportunity for playing the markets. Within these certain limitations, I feel that the Price Review does help the problem of agriculture and is a major contribution to solving its problems. But I feel that it is we in this country, and only we, who can take a lead in trying to get world agreement and a world-managed market in agriculture. We are the biggest importers of agricultural commodities, and because we are in that position it is only we who can do something about it.

If I am not taking too much time, I should like to say one last thing, and it follows on what the noble Lord, Lord Williams of Barnburgh, said in his intervention, as did the noble Lord, Lord Silkin—I refer to the question of a cheap food policy being abandoned as a result of the present trend in Government policy. I, for one, think it is right that the so-called cheap food policy should be abandoned, because I feel it is an illusion. We have the cheapest food in Europe, but it has been held at this figure artificially by our subsidy system. After all, the consumer still pays, whether he pays in the form of a slightly higher market price or in the form of an Exchequer subsidy. Why not? Why cling to this 19th century idea that cheap food must be to the advantage of the industrialist? I do not believe it is true. What it all amounts to is something like £6 per head per year, which is only half-a-crown per week.

It is not only there that the weight lies; it lies also in the difference between the farm-gate price and the price that the consumer pays. It lies also in the extra- ordinary difference between the raw material and the processed food. I wonder whether it has ever occurred to your Lordships to consider a product like crisps. The wholesale price of potatoes is well under £20 a ton, and the price of a packet of crisps, if worked out in terms of tons, is over £600 a ton. This is where the housewife is having to pay. It is not at the farm gate. It is not because of what we might say is the "non-cheap food" policy. That is where the money is going. Surely, if that is so, the market would stand a little more being put upon the price of those commodities.

Do not let us forget that this subsidy is in fact as much a subsidy to the exporter as it is to the farmer. The pound would not stand at 2.80 dollars if it were not for the system of subsidised foods which we have here. I personally think that there must be some subsidy. I am not for the moment suggesting that there should not. There must be subsidies for agriculture until we get a system of world commodity agreements. Our agriculture must be subsidised, because the whole of the rest of the world's agriculture is in the same sort of difficulty as we are. I do not think that this need lead to an international producers' cartel: and while we must have a subsidy, let it be based on the real cost, so that it can be seen and so that one can say that this bit of subsidy applies to the agricultural industry and that to the exporter.

I feel that it is unfair to the agriculturist to create an image of the inefficient and the heavily subsidised farmer when it is part and parcel of a wrong system of subsidies. If you take this apparently heavy subsidy bill, even if you say that it is all attributable to the agricultural industry and not to the consumer, or is not bolstering up the exporter or not helping the pound to stand up, it is still only of the same order of subsidy as that which the motor car industry gets in a different way through tariffs. It seems to me that even if the Government policy is tending towards cheaper food then that is all right; and within the limits of those things I was doubtful about I welcome this policy, I welcome the trend and a consistency I see in it, and I do not follow the noble Lord, Lord Williams of Barnburgh, entirely in condemning the Government, because it seems to me that on balance it is the right policy.

3.54 p.m.

EARL FERRERS

My Lords, it seems odd to think that it was nearly a whole year ago since we last had a full-scale agricultural debate. I am sure that the House is grateful to the noble Lord, Lord Williams of Barnburgh, for having put down this Motion and for having initiated the debate so that once again we can have a discussion on agriculture in its widest context. On whatever side of the House one sits, one can never fail to enjoy listening to the noble Lord. He always puts his case so clearly and so wittily that it cannot be anything other than enjoyable to listen to it, even if one disagrees with what he has to say. But on this particular occasion we are glad to hear the noble Lord speak because for the last few months we have been starved not only of his opinions but also of his presence, and we are glad to see him back again. The noble Lord will not mind my saying that, however well he has put his case, we on this side of the House cannot possibly agree with all that he has said. He has, of course, accused the Government of electioneering by adding £31 million to the agricultural subsidies in the course of the last Review.

LORD WILLIAMS OF BARNBURGH

My Lords, the noble Earl will not put those words in my mouth—I never uttered them. The only reference that I made that could perhaps be construed as being a criticism was when I quoted The Times political correspondent. I did not say that it was my view.

EARL FERRERS

My Lords, I stand corrected and will withdraw my remarks entirely. I can only conclude that he was using the argument in The Times as his own argument as well; but, of course, I entirely accept the fact that he does not mean that the Government were electioneering. However that may be, I have no doubt at all that some noble Lord on the other side is going to say that, because we have already heard rumbles of it from all over the place. I would only say this: that £31 million has been added to the value of the guarantees. Of that, £24 million is on milk, and noble Lords know perfectly well that the extra price of £24 million which is put on milk is being paid by increasing the price of milk to the consumer. It seems an odd way of electioneering if you make 50 million people pay more for the sake of 150,000 people. However, there we are, and I hope that we shall not hear any more about that particular matter, because it really does not hold much water.

LORD OGMORE

My Lords, before the noble Earl talks about watering the milk, I find it extremely difficult to understand all these diffuse arguments about mathematics and milk and beef and so on. But did I not hear the noble Lord, Lord St. Oswald, say that there is no subsidy on milk? Now the noble Earl says there is.

EARL FERRERS

My Lords, all I can say is that perhaps I have not only misconstrued the noble Lord, Lord Williams of Barnburgh, but also myself spoken indistinctly. What I meant to say—I apologise if I did not say it—was that there is no subsidy on milk; that although the value of the guarantees has gone up by £24 million with respect to milk, that is coming from the consumer and not from the Government. Therefore, I conclude that as the consumer, the housewife, is going to pay more for her milk and there are 50 million consumers, it seems odd to accuse the Government of electioneering when those 50 million people are paying more for the sake of 150,000 people.

VISCOUNT STUART OF FINDHORN

My Lords, may I, while we are on the subject of electioneering, say that I nearly asked the noble Lord, Lord Williams of Barnburgh, the other day, when the Price Review was announced, whether it was not the fact that he was always pleased to get an agreed Price Review, even if it was electioneering.

LORD WILLIAMS OF BARNBURGH

But I never had a disagreement.

EARL FERRERS

My Lords, I think we had better leave this business of electioneering and move on to something else. The noble Lord, Lord Williams of Barnburgh, said that in the 1960 White Paper the Government said that they intended to leave a fair share of the benefits for increased efficiency within the industry, and he added that they had not done so. But taking £25 million per year as the a greed figure of increased efficiency, in the four Reviews of 1961, 1962, 1963 and 1964 the farmers have been left with £59 million out of the aggregate of £100 million of increased efficiency. If that is not a fair share, I do not quite know what is.

LORD WILLIAMS OF BARNBURGH

My Lords, I am sorry to intervene, and I am sure that the noble Earl will not disagree with me when I say that if he will look at Hansard of another place of April 2, 1962, he will find that the Minister, in replying to a Parliamentary Question, said in regard to prices adapted to foodstuffs and other services that the net income in 1951–62 was £314 million, but in 1961–62 it was £310 million. So that is 1961–62 the farmers got £4 million less. Ten years have expired, at £25 million a year—that is, £250 million, out of which they got nothing; and there has been a 29 per cent. increase in productivity for which they got nothing. Therefore, in ten years they got nothing out of increased efficiency and nothing out of increased production.

EARL FERRERS

The noble Lord has the advantage of me because I have not the Hansard of April 2, 1962, nor, in fact, that of May 2 or June 2, and I should find it difficult to refute his arguments without actually seeing them written down on paper. But I would add this. The Government have, of course, stood by what they have said, and if I could, just for the record, confuse the noble Lord once more with a few figures. I would say that if he looks at page 28 of the White Paper he will see that in the figures adjusted to normal weather conditions the aggregate net farming income has increased from £364 million in 1959–60 to £438 million in 1962–63.

LORD WALSTON

My Lords, could the noble Earl, as a farmer, say when he has ever experienced normal weather conditions?

EARL FERRERS

That is rather like asking what is the stock size of a person who wants to get a suit of clothes. I have never yet found one; nor have I ever been stock size. Perhaps we could leave those figures for the moment, otherwise I feel that no other noble Lord will have a chance to speak other than by interrupting.

The fact is that the results of the Annual Price Review which have been agreed by both Government and Unions, and which have just been announced, are in themselves evidence of the Government's sincere and long-held determination to provide this country with a stable and efficient agricultural policy. The changes in agricultural production and in agricultural markets over the last ten years have been immense, and it is with these changes in mind that the Annual Price Review was held. The position in regard to supply and demand for food is very different now from what it was in war time and in the immediate post-war period, when the system of guaranteed prices was introduced; and it is natural that from time to time changes must be made in order to keep our system of agricultural support up to date and efficient, and to adapt it to the conditions of to-day. In recent years experience has shown us that it is necessary, in the interests both of producers and of consumers, for us to safeguard our arrangements from unpredictable and unregulated pressures to which they are from time to time exposed, which may bear no relation to the needs of the market, and which have at times led to excessively low market prices and heavy demands on the Exchequer.

During the course of the last year the world markets for many agricultural commodities have been stronger. This has been due to the fact that in Europe agricultural production suffered from the very severe winter of 1963, and also to the fact that Russia and China have both had very bad harvests. But these are only temporary factors. On the other hand, the scientific revolution in methods of agricultural production continues at an even faster rate, and there is the underlying tendency for production in the developed countries to increase faster than the commercial demand for food. The main risks to our support arrangements have arisen on cereals and fatstock, which in the estimates for 1964–65 account for about £177 million out of the total figures of £327 million for the overall cost of agricultural support.

As your Lordships know, we started consultations on these commodities last summer with the leaders of our agricultural industry and all other interested people, including the Commonwealth and overseas suppliers. The object of these discussions was to secure greater stability in our market and, at the same time, maintain a reasonable balance between home production and imports. We have also been determined to provide British farmers with the opportunity of securing a fair share in any expansion in the market which will arise in the future, due to the increase in population and the rise in living standards which can be expected. We intend that these new arrangements, both for imports and for home production, will enable supplies to be more related to the needs of the market and will ensure a reasonable balance between what we can produce at home and what we have to import.

I am glad to say, my Lords, that we have been able to make good progress in this direction. Last autumn we reached agreement with our overseas suppliers about the regulation of supplies of bacon to our market, and this agreement will come into operation next week. In February we reached agreement in principle with our main overseas suppliers of cereals about our proposals for minimum import prices on cereals and cereal products coming into the United Kingdom. Subject to their final agreement, and to the passing of the Agriculture and Horticulture Bill, which is at present before your Lordships, we shall be introducing this minimum import price system on July 1. In conjunction with this we shall, for home-produced wheat and barley, introduce standard quantity and indicator price arrangements, as explained in the White Papers—which, I am glad to say, at least have the blessing of the noble Lord, Lord Henley, if the condemnation of the noble Lord, Lord Williams of Barnburgh. In view of these arrangements the guaranteed prices for cereals remain unchanged.

For beef and lamb, despite an encouraging degree of progress, we have not yet been able to reach agreement with our overseas suppliers, and consequently we shall not be introducing any standard quantity arrangements for home-produced cattle or sheep in the coming year. But it is, of course, in everyone's interest to see that our market is not overloaded, and we shall be having dis- cussions with the main exporting countries in the coming months about the level and timing of their supplies.

To encourage our own farmers to give more attention to the state of the market when deciding when to sell their stock we are making some changes in the deficiency payments system for cattle and sheep. Within certain limits, the deficiency payments will be increased when the market is strong, and they will be decreased when it is weak. This will reward those who consider the level and trend of markets before selling their beasts and will, we hope, encourage producers to sell their beasts when the market is high and not when it is overloaded and weak. With the continued strong demand for beef, and in view of the fact that the rate of increase in home production is slackening, we have decided that some further stimulus would be desirable to maintain supplies. We have therefore, as your Lordships know, raised the guaranteed price and increased the calf subsidy for steer calves. Home production of lamb, on the other hand, is expected to increase substantially, given a good lambing season, and we have therefore left the guaranteed price unchanged. But the hill sheep farmer, particularly, will benefit from the increases which are being given in the guaranteed price for wool and, of course, also from the increased rate of the hill-sheep subsidy. Hill farmers will also be helped by the higher rate now being introduced for the winter-keep subsidy and by the fact that they will no longer have to choose between the winter-keep grant and the ploughing grant.

Looking at the prospects for cereals and fatstock as a whole, we believe that the steps which the Government have taken to regulate supplies will establish a much firmer basis for our system of agricultural support and, indeed, for the whole agricultural industry. I am glad to say that we have also reached a sounder position both for milk and for pigs. In the past, the problem of milk has been one of production rising faster than consumption. As the White Paper points out, milk output over the three years from 1958–59 to 1961–62 increased by an average of 110 million gallons. Over that same period, however, the liquid consumption increased by only an average of 22 million gallons. This meant that the balance which was produced had to go for manufacture, and consequently attracted a very considerably reduced price as against that which went for liquid consumption, with the result that the pool price to the farmer was lower—much lower than the farmer would have liked and much lower than the Government would have liked, as well. But it would have been totally imprudent had the Government increased the price of milk at that juncture, because all that would have happened is that milk production would have increased and the position would have worsened.

The effect of these relatively low prices, unpleasant though they have been—and no one denies it—was that some farmers decided to give up milk production, and over the last two years milk has been produced in smaller quantities. This has resulted in a far more healthy market for milk, and it is now possible for the Government to agree to a considerably increased price.

With pigs, too, we have achieved a position of greater stability. The breeding herd has beer at a steady level for about eighteen months, and the market for pork is strong. The agreement with our overseas bacon suppliers will ensure that bacon prices are not undermined by ill-timed or excessive imports. The increase, therefore, of three-quarters of a million pigs in the middle band of the flexible guarantee arrangement reflects the increased demand for pigmeat which the market can absorb at reasonable prices—and this it good. But, so as not to give an excessive stimulus to production, we have reduced the guaranteed price, leaving producers with a net improvement of 1s. 3d. a score on their present price.

However, the outlook for eggs is, unfortunately, far less satisfactory. As a nation we are already producing 98 per cent. of the eggs which we require, and the demand is inelastic. The industry continues to advance technically and to improve its efficiency through rising yields and in other ways, and there is a growing tendency for eggs to be produced in very much larger units than previously. We are now, therefore, in grave danger of over-production, and it is for this reason that it has been decided to reduce the guaranteed price of eggs by 1d. a dozen. This, we hope, will serve as a warning to producers and also to those who may be considering increasing their production of eggs.

As in so many instances in our commercial life, the larger units tend to be able to produce the commodity cheaper. This is so in many instances with eggs, and there has been a marked increase over the last few years in the number of large units of laying birds. In 1957 the number of birds over six months old which were kept in units larger than 5,000 was 469,000. This had increased by 1963 to nearly 6 million. Clearly, developments of this nature are to be welcomed as a sign of efficiency and alertness in the industry, but, of course, they can bring their own problems of over-production with them.

I see that the noble Lord, Lord Sainsbury, had something to say on this when he was reported in the Farming Express of March 12 as saying: A much greater difficulty we have to face is the growth of egg factories or mass production methods. It has been suggested that eggs produced by these methods cost half those from hens kept in the traditional way. The noble Lord goes on to say: If the present subsidy is fair to one it is outrageously generous to the other". I wonder what the noble Lord's remedy is. Perhaps he will tell us something about it this afternoon. Is he suggesting that there should be one price for the efficient producer and another price for the smaller producer? Is he prepared, by this method, to penalise the efficient; and is he prepared, by this method, to put a deterrent on people becoming more efficient—because, if they do, then they will receive a lower subsidy?

I would grant the noble Lord that this is a problem, but it is a problem confined not only to eggs. It is a problem that is with us in many other aspects, not only of agriculture but also of industry. If one looks at agriculture alone, one can say that there is a similar problem with milk or with grain, or with small farmers versus big farmers. I hope that the noble Lord will say something about this, because from what I read in his words I should like to know whether he is in fact suggesting a differential subsidy. If he is suggesting a differential subsidy, is that view supported by the noble Lord, Lord Walston, who speaks for the official Labour Opposition? It would be interesting to know.

Noble Lords opposite frequently make out—and I have no doubt we shall hear it this afternoon—that the returns that farmers receive for their goods now are lower than they used to be. We have often heard this argument used, and the ironical thing about it is that it is a reflection of the immense success created by the agricultural industry. It is the Government's task—and a very difficult one it is, too—to endeavour to keep a balance between four opposing forces. First, we have got the natural increase in production from the farms due to modern techniques, modern seeds and modern varieties; the second force is the relatively inelastic demand which comes from the consumer; the third force is the reasonable and fair standard of living which the agricultural community not only demand but deserve; and the fourth is the cost to the taxpayer of the agricultural subsidies. To keep those four forces in equilibrium is no easy task, but the Government do not shirk, and have not shirked, from their responsibilities in this respect, knowing full well that if any of these forces gets out of balance then the whole ship will shudder and shake.

It is because the industry has been so successful that these problems are here. Anyone who is engaged in agriculture knows that the industry is progressive. Certainly units are getting larger, but that is a trend not restricted to agriculture; certainly there is a high level of capital investment, and that is not a sign of a defeated and defunct industry but of a prosperous and vigorous industry; certainly there have been changes, and there will be more and more changes, but is that wrong? And certainly agriculture has its problems, and will go on and on having its problems so long as the industry exists, but that, my Lords, is natural.

If agriculture is strong, modern and vigorous, it can face the future with confidence, and it is with these big considerations in mind that this Government—and, I might add for the benefit of noble Lords opposite, the Government to follow, of the same complexion—are determined to have a strong, efficient and prosperous agriculture ready to meet the challenge of the future, whatever that challenge may be.

4.20 p.m.

LORD WISE

My Lords, first of all I should like to say how pleased I am to see the noble Earl on the Front Bench opposite leading for the Government on agriculture. I do not propose to follow him in what he has had to say. I must say, however, that I thought he made a typical opening speech on behalf of the Government, trying to excuse them in many ways.

To-day is Lady Day and we are considering the problems of agriculture. To-day tenancies are ceasing and new tenancies are opening up in many parts of the country. The outgoing tenants may be going with a sigh of relief that their problems are over, and the incoming tenants may anticipate meeting many problems in the future. In fact, there are many problems in agriculture, and most of them relate to living and material things. Two of these come readily to my mind. The first is, how to make a living from the land; and, the second, how to dispose of products at prices commensurate with one's labour and costs? During the last few years farmers have not been alone in their experience of difficulties and financial stringencies, but they have had their share. These have been referred to in the Annual Review which, throughout its many pages, strives to gloss over them and to suggest some alleviation. But its very lengthy explanations show a large measure of disquietude on the part of the Government. The practical results of all these, whether they be good or bad, must be left to the future.

It has not been easy for a farmer to carry on during recent periods of unsettled weather conditions and, at the same time, to have to face unreliable marketing practices, instability in market prices, increasing costs, high rates of interest, discounts added back again on accounts for expired credit periods, lower purchasing power, unregulated imports and foreign competition. This has placed a heavy burden on his shoulders. The Government have at long last awakened to the need for some system of control of imports and import prices. This is a welcome change of front on the part of the Government, if they mean what they say. Farmers' incomes, in spite of what the noble Earl said a moment ago, have not matched those in the professions and in the other industries, many of which provide services at first hand and often at a high rate to the agricultural population, or make profits from the purchase of agricultural products.

To buy cheap and sell dear seems a fairly common doctrine among agricultural suppliers and dealers. There are two ends to a stick, and more often than not the farmer is at the worse end. There are no resale price maintenance possibilities for the agricultural producer. It is known that Government financial palliatives have over a number of years been inserted grudgingly into the various branches of the industry in smaller or larger amounts; but these have not been sufficient or appropriate to establish a thriving and prosperous occupation consistently with proper remuneration and living conditions for farmers and workers in agriculture and an adequate return on capital invested in the industry. Those last words, my Lords, are not my own. They can be found in Section 1 of the Agriculture Act, 1947.

I am not at all in favour of a free-for-all, nor do I believe in the slogan "Conservative freedom pays". Personally, I look forward to the distant future—it may be distant—when subsidies, grants and deficiency payments instituted to augment farming income and to assist consumers in their spending for the necessities of life become things of the past; when British farming, through real beneficial Government control of imports, market prices and functions, can be assured of stability and fair rewards for its products and services to the community. It is somewhat ironical that the Government control some activities in the agricultural industry without cost to the taxpayer but are at a complete loss to institute methods of bulk purchase, resale of cereal products and more satisfactory and satisfying methods for fatstock on mere or less similar lines as were in vogue, with fairness to all concerned, not many years ago.

Our main present systems are outworn and vary in their application. What we have done with some commodities we should be able to devise ways and means to do with others. For many years now, what I have said in your Lordships' House has fallen on deaf or inattentive ears; but in the future someone may say that I was right in my generation. I have a friendly feeling for the small farmer, the chap who has to work most of the hours of daylight to make ends meet. The larger farmer has his own advantages and is more able to take care of himself. Government aid to him appears to be on more favourable lines. The cheques he receives are larger, and they seem to make a greater impact upon his bank balance or overdraft and perhaps help to keep his creditors in a better humour.

My Lords, I want for a moment to look at two items in the Annual Review as they affect the receipts of the small or medium-sized farm. I will deal with small quantities and acreages, and my figures can be multiplied and adapted according to individual circumstances. Milk naturally comes first to mind. The advance in price is 2¼d. per gallon, paid for solely by the consumer. In consequence, the family milk bill will rise very considerably during the course of the year in those families where there are a number of children. On a churn of 17 gallons—which was the churn in vogue when I had a large dairy herd though I do not know whether it has altered now—this 2¼d. per gallon amounts to 3s. 2d.; and, of course, the small milk producer may put less than 17 gallons on a milk lorry each day. Then, the additional receipts of the small man may be offset by additional feeding costs, since it usually follows that, if farming receipts rise, someone decides that the price of feedingstuffs and so on should rise as well. In fact, the vicious circle goes into operation. Also, what a small farmer may gain with his milk may be lost in the lower prices of his eggs.

Sugar beet is another item which plays a part in farming practice in East Anglia and other parts of the country. An increase of 3s. 4d. per ton for a 16 per cent. sugar content is proposed. This is roughly equivalent to an increase of £2 per acre. On the basis of the additional 5 per cent., for an acreage from one up to twenty, that would mean a further addition of £2 to the producer. That is not very rewarding, and I cannot imagine anyone being over-excited by reason of these increases. Ten years ago, the price of sugar beet was 125s. 7d. per ton for a 16.5 per cent, sugar content. In subsequent years it rose to 130s. 6d., and later dropped to 124s. 8d. It is now proposed that it should be 128s. for a 16 per cent. sugar content. I hope that the Minister will not suggest that in the past sugar beet production has been favourably encouraged. The additional price barely cancels out previous reductions, and the addition has already been swallowed up in additional costs of production and transport, which will no doubt be higher in the course of this year's operations. As a final word, I want to deal with the £7 million net increase. This works out, on an average over the whole of the farms involved, at between £20 and £25 for each farmer, soma naturally receiving more and some less. This is hardly the cost of a new Sunday suit for the farmer and a box of chocolates for his wife.

4.33 p.m.

LORD AMHERST OF HACKNEY

My Lords, I am sure we are all grateful to the noble Lord, Lord Williams of Barnburgh, for introducing this debate. I have listened to the two speeches from the opposite side of the House and there seems to be some contrast, in that the noble Lord, Lord Williams of Barn-burgh, was inclined to say that we were doing a lot for the farmer because it was Election year (though he did not say so in so many words) and the noble Lord, Lord Wise, has just pointed out that we have done practically nothing at all for the farmer. There does not seem to be a great deal of consistency.

I have lived to an age when I can look back at farming before the war and during the war and in the period during which the noble Lord, Lord Williams of Barnburgh, was Minister of Agriculture. As we know, it was a period of fixed prices and world shortages. Everything was sold to the Government at the farm gate. Quality meant nothing at that time and quantity was everything. But we sharpened our knives, ate it up and were duly grateful. And the noble Lord did a magnificent job. But to listen to him, you would think that from 1951 farming policy, as such, had ceased entirely.

Surely what caused the modifications was the returning ability to import larger quantities. And the policy was quite clear: it was to give the consumer the benefit of the low world prices and at the same time to protect the producer by subsidies and by making up his cost of production above world prices. As world supplies have increased, so has that system come under greater and greater pressure, and throughout the years it has gradually been modified. And I must say that it has been modified most ingeniously. I think we should pay tribute to the people who work out these ingenious formulae, which bring back to the producer the effect of market prices, without bringing them back too hard. For instance, when we look at the White Paper and contrast Appendix VI, Part I, which gives the simple fact of how much the price of the commodity has gone up, and Part II of the same Appendix, which shows how these alterations in the guarantee are to be implemented, we realise that the ingenuity of the scheme is wonderful.

We have to place this Review against the background of the last three or four Reviews, which have gradually put farming on a firm basis. They have gradually closed the ends of the unrestricted liability of the Exchequer and at the same time have introduced some form of standard quantity for the home producer. Now, we have the new and, I think, revolutionary introduction of some form of import control.

The Opposition pour scorn on the method of import control by minimum prices and imply that we can always get anybody to believe in a thing if we offer to pay him more for his goods. But, surely, just as the home producer is given a quid pro quo in the acceptance of standard quantities, so, to some extent, is the cereal exporter accepting a quantity limitation. If he cannot sell in this market below a certain price, then, when the market is fairly strong, he will not be able to import into it. In a way, it is the acceptance of a form of regulation, of import control, other than purely a question of the exporter getting more for his exports.

I hope we shall be able soon to come to agreements over meat, though at the moment that does not seem such an urgent problem. At the moment, the problem is one of where we are going to get meat rather than that of oversupply. I understand, for instance, that in Argentina the increased standard of living and the drought have caused severe shortages and it may be difficult to get all we need from that country.

I think one thing which the Review shows is that standard quantities need not necessarily be restrictive, in that they do not necessarily stop the amount produced by the British farmer from expanding as the market expands, which will enable him to get the largest possible share of that expanding market. After all, I think that the starting point for the standard quantities has been set reasonably high, and every assurance has been given that, if the industry can work competitively, they will get a larger share of the market.

To deal with the individual commodities, I welcome the increase to milk producers. But one question I should have liked to ask the noble Lord, Lord Williams of Barnburgh, had he been here, is whether he would expect milk to be subsidised. He was rather complaining about the high cost to the consumer. I could not agree less with the noble Lord, Lord Henley, over milk. I think it would be quite wrong to let production go up and up and hope that one would use the surplus entirely for manufacture, because if the farmer is going to be paid the liquid milk price, either we are going to have an enormously expensive surplus, which it will be quite uneconomic to turn into butter and so on, or the price to the producer will be extremely low.

On the question of milk, I think the Government have been right to resist the temptation over the last few years. As my noble friend Lord Ferrers said, production was expanding very rapidly, and the point had come when the Government faced the industry with the choice, really, of either attrition or coming to some sort of two-tier price system. The industry and the Milk Marketing Board, I think quite rightly, rejected the two-tier system. The only other alternative was somehow to get the production of milk reduced so that there would be an economic return to the producer. I think that has now happened, and as a result we have a much more efficient milk industry than we should otherwise have had. Although some 40,000 (I believe that is the correct figure) milk producers have gone out of milk production, I understand from the referendum that the Milk Marketing Board carried out among those producers that profitability was the prime cause in less than half the cases, and other things, such as dairy regulations, played a big part in their decision. I am glad that the Government now, through being firm in the past, are in a position to do something about it.

As an arable farmer, I am grateful that for the first time the Government are able to do something for the arable farmer, both in the extra price of potatoes and in the small increase on sugar beet. As the noble Lord, Lord Wise, said, this will represent about £2 an acre on a fairly high-class property; it is not a tremendous lot, but it is something.

It seems to me that the structure of the industry is very much sounder. The next thing to which we have to devote our attention is the improvement in marketing. We have the Verdon-Smith Report, and no doubt very soon we shall hear what the Government are going to do about it. I understand that the Government are having talks with the National Farmers' Union on the marketing of cereals. Now that it is hoped that we shall have a more stabilised market, this should be the opportunity for the home producers to be able to set their own house in order; and there is no real reason why home-produced grain should be at such a discount as it is against imported grain. I have talked for long enough, and I would only say, in conclusion, that I think this is a Review that should be of great assistance to the industry.

4.48 p.m.

LORD ABINGER

My Lords, as a farmer, I share the concern felt by many about the conditions which have been prevalent in the industry in the last two or three years. I accept that many farmers, and particularly the smaller men, have faced extremely difficult circumstances, with falling incomes, and deserve a better deal. I also accept absolutely that there must be some limit to the amount of support the taxpayer can be asked to give to agriculture. I agree that subsidies cannot be openhanded. But what I cannot accept is that these two requirements are necessarily conflicting. I believe that the interests of the farmer and the consumer are largely mutual interests, and that, if we are given the right Government policy, the interests of both will be served at the same time.

To this end, my first and most urgent plea to the Government is for a much more decisive system of differentials between the price paid for quality produce and that paid for low-grade produce from the farms. One of the problems which has been facing agriculture has been this increasing tendency towards over-production of certain commodities. Agriculture has performed its rôle magnificently in the national economy over the last 20 years. It has achieved its 4 per cent. annual increase in production, and it seems to me that if this tendency continues, there is some danger that the market will not be able to take up the increased production, with possibly disastrous results either to the farmer or to the taxpayer. Surely the first thing to meet a situation like this should be a determined effort to push the lowest grades off the market altogether. This would have the effect of getting production back into line with demand, and it would steady the market for the 90 per cent. of the self-respecting farmers who grow good food; it would help the consumer, and would ease the burden on the Exchequer. It is true that the Government have paid lip service to this idea of price differentials, but my case is that the differentials are nothing like decisive enough.

Let me consider some individual commodities. In the sphere of grain, wheat is one of our most important crops. The fact is that some of the best wheat grown in the country will provide the poorest return—the lowest price—to the farmers who grow it; and, conversely, some of the more indifferent wheats grown in the country will earn some of the best prices. I imagine that the best wheats of all are those grown for seed. They are an expensive crop for farmers to grow, and if they are a winter-sown variety, in the very nature of things they have to be sold immediately after the harvest at a time when the standard price is lowest. Even if they command a small premium from the merchants, they will not give the farmer who grows them as good a return as some more rubbishy wheats that he might choose to sell later in the summer. This particular instance may be an anomaly, but it is the case that there is no relationship between the amount of support the Government give grain and the quality of the grain.

In the field of eggs, I think we now have a position in which there is over-production, which is not of course, the case with wheat. I believe that these egg factories, which were referred to earlier, are a rather unhealthy development in the industry. I would not complain if these factories, housing 100,000 or 200,000, or even, it is suggested 1 million birds, were sited on the edge of some large town and confined their activities to providing that town with these eggs. But they go very much further than this. The eggs from these places percolate throughout the country, right down to the most rural parts of the South-West and the remote parts of Wales. They have a tendency in those rural areas to weaken the market for the local farmer-producer. One could not complain if one were comparing like with like, but I refuse to believe that, however efficient the transport system for moving eggs from the factories is, they can really compare in quality and palatability with a locally produced farm-grown egg. I should have thought that this was a field (and this point has already been referred to by the noble Earl, Lord Ferrers) where a selective subsidy might be worked out.

In the case of milk, we have heard again that milk is not subsidised, but is price-controlled. At times of impending over-production, the control has been severe. This year the control has been relaxed to the extent that the price received by the farmer has been allowed to rise by 2¼d. a gallon. Until recently, the price control was severe, the profit margin for many milk producers fell, and a number went out of business. I think it is true that this has been followed, in certain areas of the country at certain times of the year, by a definite danger of a shortage of milk, particularly milk for the creameries for making butter and cheese. It is a difficult point to prove by statistics, because we know that there is an overall average over-production of milk, and also that at certain times of the year in certain districts there is a shortage. I would ask: why penalise the whole milk industry at times of impending over-production? Why not be selective with the price control, and endeavour to push the lowest grade milk off the market altogether?

It is true that the Milk Marketing Board, who handle these matters on behalf of the Government, operate a price differential system. But what an esoteric system it is! The Milk Marketing Board pay a medium-range price for the best milk; they pay a rather higher price for some less good milk, and a lower, though quite good, price for some milk which I maintain should not be on the market at all at times of over-production. That is the current price control system. What is good milk? Other things being equal, I think it depends upon the composition of the milk. When all is said and done, milk is well over 80 per cent. pure water, and it is the remaining percentage of its contents, the solids content, that is of importance in defining the quality of the milk. The fact is that milk from the Channel Island breeds has by far the highest percentage of solids. Here, I must declare an interest, because I am a Jersey breeder. I do not think I am prejudiced; I think that both the farmer and the consumer will agree that Channel Island milk is the best. It is this Channel Island milk which the Milk Marketing Board lump in the medium-price bracket when paying for milk, although this milk will have a solids content of anything from 13.6 to 14.6 per cent.

The Board pay a higher price for non-Channel Island milk in possibly the 12.6 to 13.6 per cent. range of solids content, and they pay quite a good price for milk with a solids content of less than 12 per cent. Furthermore, in the summer the Board buy without question milk having under 11.5 per cent. solids content, which is below the assumed minimum of solids content for resale by retailers to the public. That is the sort of milk which in times of over-production should not be bought at all for human consumption. I believe that it serves absolutely nobody's interests to support low-quality produce, either by a weak and faulty price differential system, or by unselective subsidy, as in the case of the much-travelled eggs and the indifferent wheat sold late in the sell- ing season. It does not help the consumer, who may have to pay an artificially high price for even poor food; and, in any case, I should have thought that in time of plenty the consumer deserves better food. It does not help the farmer, who may find his market weakened by an influx of low-grade produce. And it does not help the taxpayer, who may find the cost of agricultural support getting out of hand.

I would plead, therefore, for a more selective use of the subsidies, and I should like to pose again the question raised earlier this afternoon: Whom do the agricultural subsidies benefit? I do not accept that the farmers are the main beneficiaries. I think the subsidies are meant to benefit the consumer. Surely the position is this: that by making public money available to agriculture, the Government are sharing production costs with the farmer. If this support is withdrawn, surely it is the consumer who suffers most. He will either have to pay the farmer his full production costs—that is to say, increased prices for his food—or he could let the farmer revert to the dog-and-stick system of farming—a simple, unproductive, though not necessarily unprofitable, form of farming—and buy his food abroad. If he were dependent on imported food he would starve in time of war and go very hungry in time of peace during balance-of-payments crises. I do not think we can assume for a moment that in the absence of home production imported food would remain cheap. I think the consumer could be in a position where he would be held up to ransom. Whether it is the consumer or the farmer who is meant to benefit, I suspect that neither of them are doing so at the moment as much as they should.

May I illustrate what I think is going on by an exaggerated example? The Government have proposed to raise the price of milk paid to the farmer by 2¼d. a gallon. To a farmer with forty cows this might mean an increased income of £250 a year; quite a handsome increase. If he is a mixed farmer working 250 acres of corn and dairying, he could expect extra income of about £1 an acre. But what happens if this farmer's suppliers—using a phrase currently popular in manufacturing industries— say: "The climate is right for an increase in prices"? The fertiliser supplier may increase his prices by an equivalent of 5s. an acre; the feeding-stuffs merchant follows suit; machinery engineers increase their prices; the farm chemist and the veterinary surgeon, the electricity board and the local authority also do so; and so it goes all along the line. The outcome may well be that the farmer is plus £1 an acre in income and plus 25s. an acre in costs. The poor fellow probably will not realise that for some time, because he is not an accountant or an economist; he prefers to be out in the fields examining the more fundamental problems of life.

I know that the Ministry checks costs when negotiating the Annual Price Reviews, but these are out-of-date costs. Has the Ministry any machinery for checking current costs and cost trends? If it has such machinery, has it any machinery at all for combating unjustified price increases? If the whole essence of the support system is the sharing of production costs between the Government and the farmer, the Ministry should be very interested indeed in the whole field of production costs.

In this context I would say at once that I most heartily welcome the Government's Resale Prices Bill. I think that resale price maintenance has become an undisguised menace in the agricultural industry. It is no exaggeration, I think, to say that a farmer can hardly be considered efficient now unless he has taken steps to combat it, by dealing with either co-operatives, to some extent, or the discount houses which exist in the industry. I hope Her Majesty's Government will push this Bill through firmly, quickly, and without significant amendment. I would also ask Her Majesty's Government to take a long, cold, hard look at monopolies and mergers. We have heard this afternoon that the fertilisers industry has been looked at in this way and has been given a clean bill of health. But the fact remains that more than three-quarters of the supply of fertilisers in the country are provided by three giant firms. I can only say, as a farmer, that the prices of their products are extraordinarily similar, and I just ask whether there is full, free and fair competition between them.

The corn and milling trade recently has been going the same way. The small country merchants are disappearing every year. Their businesses are being merged with another handful of giant combines, and I believe that this is against the interests of the consumer and the farmer and that the farmer's bargaining scope is being restricted. Too often in these days is he quoted one price—the highest if he wants to buy and the lowest if he wants to sell. My Lords, I will conclude by saying that I welcome the terms negotiated at the Price Review, but that I regret that the Government have not felt able to make the subsidies more selective. I would emphasise, too, that unless the problem of rising production costs is tackled at Government level, any benefit the farmer receives from this recent Review may prove all too ephemeral.

5.6 p.m.

LORD SAINSBURY

My Lords, in these interesting debates which we have each year on agriculture, if you come lower down in the batting order you are liable to cover subjects that have been covered by previous speakers. Therefore, in advance, I crave your Lordships' indulgence. When I spoke a year ago in a similar debate I uttered perhaps a platitude, but certainly an obvious truism, when I said [OFFICIAL REPORT, Vol. 248, col. 209]: Whatever evolves in future from the main political Parties in the way of agricultural policy, it will obviously be necessary to arrive at a fair and just division between what should be produced in Great Britain and what should be imported from the Commonwealth and the rest of the world. What makes this agreed aim so difficult to accomplish are the vagaries of nature. For example, who could have foreseen the 1962–63 winter in Europe and its after effects? There is no better example of this than the supply position of milk and milk products. A year ago I wondered whether Her Majesty's Government had not been unduly optimistic in thinking that the increase of a halfpenny per gallon would not add still further to the burden of milk that could be used only for manufacturing purposes. I was wrong, and I hope that that confession is good for my soul. I notice that the Financial Times, in their leader of March 19 of this year, when referring to the recent Price Review expressed the same sort of fears that I expressed a year ago. I quote: To make so large an increase as 2¼d. a gallon is to run the risk of upsetting the balance, discouraging the growth of demand and provoking another excessive flood of milk by tempting the marginal producer back into business. I was wrong, and I think it is quite possible that the Financial Times may be wrong, because I believe that once farmers have given up milk production—and they give up, as a previous noble Lord has said, for more than one reason—they are unlikely to resume within a short space of time; although I notice that the President of the Farmers' Union of Wales has said that in his view the increase of 2¼d. a gallon could inspire new entrants into milk and thereby cause a recurrence of the trend that was apparent two years ago. As regards liquid milk consumption in the United Kingdom, it is going up only very slightly more than the increase in population; in other words, about 1 to 1½ per cent. per annum.

As regards overall dairy policy, I think the Government have to make up their mind whether it is in the national interest to produce milk for manufacturing purposes, particularly for butter. Obviously, there has to be a reserve for the liquid milk market owing to seasonal variations in production, but surely this reserve can become too large. I am aware, of course, that there is a standard quantity, and that if milk prod action goes over the standard quantity farmers get a lower price. I am also aware that this standard quantity provides a reserve of about 26 per cent. above the liquid milk requirements. In my view, it cannot be said too often that the true cost to the nation of English butter is about double the cost of production of New Zealand butter. It seems to me, therefore, that the trend of milk production must be watched most carefully, because in my view before we know where we are we might once again, in common with the rest of Europe, be faced with the chaos of over-production.

May I next turn to a commodity where there is again the problem of balance between home production and imports, namely pigmeat. As your Lordships are aware, and as has already been stated, last week saw the publication of the Memorandum of Understanding on the Supply of Bacon to the United Kingdom Market, which ensures 36½ per cent. of the total target quantity for the home producer. When I spoke last week on the economic situation I mentioned that bacon prices were in the neighbourhood of 18 per cent. above prices at the same time last year. Currently pork market prices are some 25 per cent. higher than a year ago.

There are several reasons, I think, for the recent high U.K. pigmeat prices, such as the shortages on the Continent, that in turn are, in part, due to last winter's severe weather. This has led to traditional suppliers to this country diverting part of their exports to other countries—for example, Denmark exporting to France and Switzerland. In addition, high prices on the Continent have attracted exports of pigmeat from this country, mainly to France, and the quantity amounted last year to over 5,000 tons. This quantity, of course, is not big in itself, but has a psychological effect on market prices. The export of pigmeat to France has now fallen off owing to an internal drop in pig prices in France, showing once again that high prices increase supplies.

The increase of the present guaranteed pig prices to the producers in last week's Price Review by 1s. 3d. per score should, in my view, act as a moderate incentive to increased production and the overcoming of the present shortage in this country. It is, of course, only with increased production, on the Continent as well as in the United Kingdom, that the recent bacon agreement will be put to a real test.

It is probably in beef where there is the greatest contrast between to-day and a year ago, as to both supply and price. As is so often the case in these matters, several things have contributed to this change. Your Lordships will recall that a year ago two factors were operating which caused low prices. One was the volume and timing of imports, the other the effect in Britain of feed shortages on marketing. To turn to imports, your Lordships will recall that at this time last year the Minister of Agriculture sent what my noble friend Lord Williams of Barnburgh called "a couple of love letters" to the Argentine and Yugoslavia. Those letters appear to have had some effect of recent months. It has been estimated that imports of Argentine chilled beef have recently been running at some 40 per cent. behind those of the corresponding period of last year. In fairness to the Argentine it must be said that the British Government asked for shipments between September last year and March, 1964, not to exceed 89,000 tons with a minimum of 80,000 tons, and I am informed that in fact the Argentine have delivered about 82,000 tons.

It is not always appreciated, I think, that of the total production of beef in the Argentine, only 18 per cent.—which is a fair average figure over a period of years and is the last available figure, which is that of 1962—goes for export, and of that 18 per cent. Britain took about half. Therefore, unfavourable weather conditions, such as the drought that was experienced in the Argentine, in South America, some eighteen months ago, can have a considerable effect on the quantity of cattle now available for export. There is also what a newspaper this week described as the "beef drain". This must not be exaggerated, but it is an entirely new factor. There are now regular shipments from Britain to the Continent of live cattle, mostly cows, going on continuously. It is very difficult to obtain figures of the total volume, and perhaps the noble Lord when he comes to reply to this debate on behalf of the Government can enlighten us on this quantity.

Whatever the volume is, it is certainly having an effect on market prices, and perhaps what is most serious of all is that I have been reliably informed that if more suitable shipping space were available the number of exported animals would be much higher. The situation, therefore, over all, again in my humble opinion, seems fully to justify the proposed increase in the market price by 3s. per live cwt. and the increase in the steer calf subsidy. But it is perhaps an enigma that in endeavouring to prevent an over-supply, Governments sometimes help to create a shortage.

I now come to eggs. May I say that the noble Earl, Lord Ferrers, with his customary courtesy and kindness, informed me in advance of this debate that he was, I think he said, going to "have a dig" at me about eggs, and he quoted a speech I made recently at the London Egg Exchange dinner. He also referred to the fact that the Government, in the light of expanding production, are reducing the guaranteed price by 1d. per dozen; and, quite rightly, he said that that increasing production was due to the increase in the average size of the laying flock and higher egg yields rather than to the number of egg producers. In point of fact, the number of registered egg producers has declined.

In the speech which the noble Earl has quoted, I said what a relatively small contribution imported supplies made to the total. I think it interesting to compare the great change between the present-day and the pre-war situation. In the period 1934 to 1938, imported eggs, including egg products, accounted for 35 per cent. of the United Kingdom supplies. In the last two years the comparable figure has been estimated at 6 per cent., and of this 6 per cent. only 2 per cent. represented imports of eggs in shells. This is a truly remarkable change. In my view it would hardly justify import quotas which have been mentioned in the past in certain agricultural circles. In my view, it is not imports which present the problem, but the varying costs of production.

I said that eggs produced by the newer methods of mass production cost so much less than eggs produced from hens kept in the traditional way. Obviously—again I quote myself—if the present subsidy is fair to the one it is outrageously generous to the other. I said that, in my view, the one thing that we must not do is to discourage improved techniques leading to lower costs. So there is a fair measure of agreement between the noble Earl, Lord Ferrers, and myself.

Now I come to the point in his remarks on eggs at which he tried to sow the seeds of discord between my noble friend Lord Walston and myself. I appreciate that I am but a humble Back Bencher and that my noble friend speaks from the Front Bench; but, in spite of my humble position and his important one, nothing that the noble Earl said is going to weaken our friendship or succeed in sowing these seeds of discord between us. I am much more a shopkeeper than a politician, and I believe that the appropriate thing to say at this juncture is that it is not the job of the Opposition to provide the Government with the way to solve their problems.

However, I would offer two suggestions for consideration, without in any way committing the new Government that, before the end of this year, will be in power. The first of my two suggestions is consideration of a policy that was, I think, years ago, applied to milk, by which you had a graduated payment and the big suppliers received less than the smaller ones. That, I should have thought, could possibly be applied to eggs. Secondly, there are obvious variations of cost between the eggs produced a long way away from the market of their consumption, and those produced near the urban areas where they are consumed. It is possible that you could have a differential price system by which the small producers in the remoter districts received a higher price than the producers in the more urbanised areas. For what they are worth, I throw out those suggestions.

EARL FERRERS

My Lords, would the noble Lord allow me to interrupt him? I am particularly grateful to him for being so illuminating about this. He said that these were outrageously generous subsidies. When I asked him what he would suggest doing about it, he said, "That is a problem for the Government." This is most interesting. It is a good debating technique if you can deflect any arrows that come across the Floor and turn them into boomerangs. But if the noble Lord is going to suggest that these are outrageously generous, then I think he has an onus to say what are his alternatives. I am glad that he has said that, in his view, it would be right to give a differential subsidy, which, in other words, would be a smaller subsidy to the big man and a bigger subsidy to the smaller man. In other words, he would discourage the smaller person from being more efficient. Is that: really what he means? If that is so, is that what the Labour Party think? The smaller man would like to know.

LORD SAINSBURY

We are back on the electioneering point.

EARL FERRERS

This is fact.

LORD SAINSBURY

I personally certainly would not agree with any policy which discouraged increased efficiency or innovation; but there are certain inescapable differential costs. I was at one time on the National Egg Packers Council. Without reference I cannot remember the date, but this principle of a differential price has been considered by the Department concerned as well as by people such as egg producers and their representatives and egg packers. So I do not claim for it any originality. I have made it perfectly clear that it is not our job from these Benches to provide noble Lords opposite with the solution.

EARL FERRERS

But then, if noble Lords opposite are going to present themselves as a possible alternative Government, it is right that the farmers should know what they should expect from those noble Lords in regard to eggs. The noble Lord has just said that there are certain inescapable differences in costs. A few minutes earlier he had suggested that the big man should get less than the small man. All that I want to find out from the noble Lord is this: is he saying that there should be a small subsidy for the big person and a big subsidy for the small person? I am not saying that he is necessarily wrong, but is that what he and his colleagues feel?

LORD SAINSBURY

My Lords, you can criticise people who will not look ahead, and, with all respect, the present Government, in agricultural matters and in other matters, have not always looked ahead. I am suggesting that unless one makes a determined effort to solve this problem in an equitable way which does not discourage efficiency, the Government of the day—which I hope will be composed, as to some at any rate, of Members from this side of the House—will be faced with a problem not of a subsidy of, say, £25 million, but of a subsidy of £40 million. So, whatever you throw across the Table at me, the problem remains and somebody will have to solve it. It is over-generous to the large-scale producer who gets a certain efficiency of production purely from size. I have detained your Lordships too long. I have enjoyed this little interchange, but, in conclusion, I would say that, however satisfactory the outcome of the latest Price Review may be to the farmers, many long-term problems remain to be solved.

5.31 p.m.

THE EARL OF MALMESBURY

My Lords, I should like to congratulate and thank the noble Lord, Lord Williams of Barnburgh, for initiating this debate; and in doing so I add my thanks to those of other noble Lords. The noble Lord gave us a recent history of agriculture, though, if I may say so, that history was a little biased. I should like to congratulate the Minister of Agriculture and his Parliamentary Secretaries for this year's Review and Determination of Guarantees. I think it has in it something very great, in that it looks right into the future.

I know that the last noble Lord who spoke mentioned the future, and I rather think he felt it was almost the prerogative of the noble Lords opposite. But that is not so, for he has only to look at this year's Price Review to see that it definitely looks to the future. There are ideas in it, and those ideas have taken time to develop. It was not very long ago, in fact about four years ago, when agriculture was in a sellers' market. Very quickly it suddenly became a buyers' market and everyone became worried; the idea that everything which was produced was actually needed died very hard. There was also at that time a more or less free entry for overseas supplies, and a large number of people got hurt, not only in this country but in the countries from whom we were importing. The idea of standard quantities and import controls has a good deal in it, in that everybody concerned knows how he stands. He knows full well that he has to be an efficient producer.

Going back a little, I find that one of the most alarming things about open-ended guarantees was that so few producers had any idea what their costs of production really were. Starting soon after Christmas, they usually had a shot at what the thing would cost. One man would mention the figure and others would follow; but those who followed had no idea how they could apply the first man's figures to their own farm. In fact, they had no idea whether they were producing efficiently, whether they were producing a line that they ought not to produce, or whether they were producing too many lines and ought to streamline the whole of their farm business.

I must congratulate the National Agricultural Advisory Service. In recent years they have done a remarkable job of work and have co-operated closely with county committees and district subcommittees. They have held meetings, they have spotted weaknesses, and they have persuaded one or two farmers—this took place in my county, which I believe was a leading county on the question of costs of production—to try out some form of simple costing. What had always put farmers off was that costings seemed to become complicated, and in busy times of the year got put on one side.

Then, suddenly, the thing got going. One or two of the farmers who had started costings told their neighbours what had happened. They suddenly realised that perhaps they were spending too much on food in the production of a given quality of milk; or that the same thing could apply to meat, whether cattle or pigs. Revealing information came out, and the farmers began to realise what their costs really were. Then we received able farm management advice from N.A.A.S., and the forms were revised; and now, in this month of March, a wonderful thing has happened. In conjunction with the National Farmers' Union, the universities and all concerned, there is now produced what is known as the Farm Business Record Book. I am not advertising its sale in any way at all; I have nothing to do with it; but it costs only a guinea and is available for every farmer in the land. It is a simple book and I consider that every farmer could make use of it; and if he did, there would be a great deal less wild and inaccurate talk in the farming business. I believe agriculture has suffered from such inaccuracy in the past, and this is where so much political talk has got into the process—which probably has not done the industry itself a great deal of good.

The other point I want to bring out is that a tremendous amount of information is coming through from the botanist, the veterinary world, the scientific world, agricultural engineers, and so on. Although the Advisory Service is first-class, the information that is available is not coming through quickly enough. I should like to put forward the suggestion that there could be some form of abstracting or clearing house under a single heading, so that farmers could be fed with specific knowledge which they require. The trouble is that over the years the information has grown so vast and so quickly that it is difficult to get exactly what one wants.

I have rather left the Price Review, but I consider that it is a wise one. I move round the farming world a good deal, and I can say that the Review has undoubtedly given an incentive of thought and a calmness of mind to the farmer to go ahead in sorting out his own problems and to produce on each farm what that farm is most suited to do. It was only yesterday that I was given a figure by a small farmer with 30 cows, He is quite a good farmer, and he was very pleased with the 2½d. In fact, it has increased his income by just under £300. But I said to him, "What do you think of it as a whole?" He replied, "Well, it is not going to attract new people into producing milk, but it is going to encourage the man who is already in".

I should have said that that was really what was wanted, because the shortage of milk with which we have been threatened during the last two months has not, I believe, been produced because of farmers going out—and there has been a suggestion this afternoon that those farmers were not, perhaps, the most efficient ones. The shortage of milk has really been brought about by the very cold winter of 1962–63, when farmers found it extremely difficult to get their cows in calf. The result was that the milk due from those cows was late in appearing again this last winter. I think, from talking to people and going round, that that was the main cause of the shortage. That, obviously, is going to right itself, and this price seems to me and many others just about the right amount to give the necessary encouragement.

That, my Lords, is all I want to say. If I may, I should just like to mention, as my last point, the Verdon-Smith Report. There was one item in that which I know caused a good deal of nervousness, and that is the rejection of the idea of the provision of additional cold storage. Farmers feel that if there is a surplus of meat, additional cold storage could take up the slack.

5.43 p.m.

LORD HAMILTON OF DALZELL

My Lords, my experience, like that of my noble friend Lord Malmesbury, has been that this Price Review has been very well received in the farming industry—in fact everywhere, at any rate outside your Lordships' House. Even here, the jeremiads of noble Lords opposite to which we have become used have on this occasion been comparatively few and restrained. It has been, I think, a good Review; but to my mind the really important thing about it is that at last the Government have found a way towards a solution of what has seemed an intractable problem: how to maintain the profitability of farming without placing an intolerable burden on the rest of the community. It has been becoming clear for some time, I think, that our support system, which was devised in conditions of shortage, was becoming less and less relevant in the changing conditions of to-day. The difficulty was how to make sure that periodical, or possibly even permanent, surpluses of some commodities would not raise the cost of support to unreasonable heights, for that would not only embarrass the Government but, much more important, forfeit the good will of the general public towards the farming industry.

During the last year a pattern has begun to emerge based on the idea that guaranteed prices should be linked in some way to the quantities of the various commodities that are required. This, of course, is difficult to contrive, particularly with those commodities of which a large proportion is imported under conditions of no restriction on imports. The Understanding on the Supply of Bacon and the proposed arrangements for the control of imports of cereals will help, and these are the first instances of restriction on imports that we have had—a great and important departure from what has long been the method in this country. It is true that it has not yet been possible to reach agreement with our overseas suppliers of meat. I have no doubt that that will come in good time; but I am very pleased to see that it has been possible to devise a system by which the total price received by the farmer for his fatstock will now to some extent depend on the price he receives in the market. The situation hitherto had been most unsatisfactory: it was a situation in which the farmer need pay no attention whatever to the price paid to him in the market, since, however little he received from the buyer, the Government would make up the difference to the agreed amount. I think that that was exactly the opposite of what is wanted to-day, now that the farmers are being urged to pay more attention to their methods of marketing.

I find that the scheme for meat is complicated, but I am sure that the principle of it is right—and I must say that it is not only that scheme which I find complicated. Many of the schemes seem to be complicated now. I was in your Lordships' House the other day when we were discussing the minimum import prices for cereals, and I certainly had the impression on that occasion that I was not the only one of your Lordships who was somewhat perplexed. But, my Lords, any interference in the natural play of the market for any commodity is bound to cause complications; and the greater the degree of sophistication introduced into the system, the greater the complications will become.

Our agricultural support system was quite simple when it was started; but it has been going a long time now, and it has had to be constantly altered and adapted through the passage of the years to meet the constantly changing conditions. This process has now brought the system to a pitch of sophistication and complication which requires a huge bureaucratic machine to operate it, backed up by the fine array of computers which I have seen at Guildford. Of course, I accept that in the special conditions of agriculture it is necessary for the Government to interfere, to decide priorities, and, by distorting the pattern of the market, to exercise some control over production. But I must say that when I look at what all this involves in agriculture I am astonished that noble Lords opposite, as I understand it, should wish to introduce the same sort of interference into other branches of our national economy, where the need is by no means so obvious.

My Lords, I am not going to be long, but I should like to say something about one particular commodity, and that is milk. In passing, I should like just to take up a point that was made by my noble friend Lord Amherst of Hackney (who is not at the moment in the House) at a time when the noble Lord, Lord Williams of Barnburgh, was not in the House. I was interested, as he was, in the implications of the remarks made by the noble Lord, Lord Williams of Barnburgh, about milk. He appeared to approve of the increase in the price of milk to be paid to the farmer, but to disapprove of the increase in the price of milk to be paid by the housewife. That seems to me to imply the reintroduction of subsidies. I should be interested to know if that is the intention of noble Lords opposite. But I believe that every thinking farmer accepts that two years ago we were heading for trouble with milk unless some check in the upward trend of production could be achieved. Measures were taken that may have been uncomfortable; they were certainly effective. Production levelled off, and for the last few months it has been well below that of recent years. But I do not believe that indicates anything like a flight from milk, as has been suggested; or, indeed, that there is a danger of an actual shortage of liquid milk.

First of all, I believe, as my noble friend Lord Malmesbury and others have said, that the shortage during this winter has been largely due to climatic conditions—the cold, wet summer, which is always followed by poor milking performance in cows, and also the hard weather in the early part of last year, which made it difficult to get animals in calf and so interfered with the autumn calving programme. Certainly in my own herd the pattern of production seems to have been very similar to the national pattern, without any deliberate intention on my part. It is true that some farmers have gone out of milk, but for many reasons, as has been said, besides that of price. Some of them have been unable or unwilling to achieve the standards of hygiene which are now required of dairy farmers, and some of them have found the drudgery of the job too much for them.

It is also true that there has been a reduction in the national herd of about 3 per cent. which is partly due to the very high price now obtainable for culled cows. At the same time, all over the country farmers are increasing their herds and spending large sums of money on arrangements for improving the efficiency of their output. It has been noticeable that the demand for downcalvers has remained high. There has been an increase in the number of inseminations by dairy bulls. The Farmer and Stock Breeder of January 21, under the heading "Swing Back to Milk" said: Latest figures on cattle inseminations from Milk Board centres show a big swing back to dairy breeds … The new trend heralds a rise in milk production in something over two years' time. It is to be hoped that the dairy breed proportion of inseminations does not go on rising much further, else there will be a distinct danger of over-production of milk in 1966 or 1967. None of these things seems to me to indicate a lack of confidence in the future of milk—and all that was even before the present increase in price which has now been given. As a milk producer, I am pleased with the increase in price; but I hope that we shall not see the cycle of over-production starting again.

Farmers grumble, of course, and a fall of £40 million in aggregate net income—which is nearly 10 per cent.—is no fun, even if three-quarters of it was due to bad weather. Certainly in the SouthEast—that part of the country where I live—I have not been able to find, even before the Price Review, this dismay and depression we have heard so much about. I have no doubt that this Review, coupled with the other measures the Government are taking, will be accepted by the industry as giving firm grounds for confidence in the future of British farming.

House adjourned during pleasure.

House resumed.