§ 5.46 p.m.
§ THE EARL OF KINNOULL rose to ask Her Majesty's Government whether they are satisfied that the Potato Marketing Board has carried out its duties in the best interests of its members during recent months. The noble Earl said: My Lords, the reason why I put down this Unstarred Question to-night is that I believe there are many disappointed potato growers throughout the country who feel that the poor market price for last season's crop stems from the present inadequate arrangements between the Government and the Potato Marketing Board. I should like to say at the outset that I appreciate that to control the potato market to secure both a steady flow of potatoes and a fair price for them is no easy matter. My few remarks are intended not so much to criticise the efforts of the Board as to criticise the existing working arrangements between the Government and the Board and the Government's adamant refusal to go to the Board's support last December.
§ There are approximately 60,000 registered potato growers throughout the country, producing a total of some 660,000 acres. Each registered grower pays to the Board a levy of £3 per acre to safeguard his interests. Thus, the total annual revenue the Board receives is approximately £2 million, £1 million of which is earmarked for the Market Support Fund. As I understand it, the Government support the potato industry by two methods. The first is by fixing at the February Price Review a guaranteed price for the following season; and the second is to contribute £2 for every £1 the Board puts towards the Market Support Fund. This at present runs to £3 million per annum.
§ The guaranteed price for potatoes, which was first set out in principle under 1320 the 1947 Agriculture Act, stands this year at £14 per ton. It is, in fact, no guarantee whatsoever to the individual producer but it is a certain safeguard to the industry as a whole. The guarantee would operate only if the average market price throughout the whole season dropped below £14 per ton. This average market price to many producers is thoroughly confusing, as it still allows the market price to fall to £9 to £10 per ton without apparently bringing the guarantee into operation.
§ Perhaps the more important form of Government support is through the Market Support Fund. This fund, jointly financed and controlled by the Government and the Potato Marketing Board, has the principal rôle of acting as a supporting influence on the market price. The Board may, with the consent of the Government, step in as buyers of potatoes with the resources of the fund when it is felt that the market price may be in danger of dropping below the guaranteed level. But last December the market for potatoes was on the floor, and the result showed up a serious weakness between the Government and the Board. The Ministry refused to co-operate in buying potatoes at that time and the Board felt it was forced to act on its own in the interests of the growers with its own limited resources and for only a limited period.
§ This open friction made many growers suspect the Government's future intentions, and indeed such fears seemed to be endorsed only a few weeks ago. It was then announced that the Ministry would not support the market, although again the Board expressed its concern. It then transpired that the Ministry woke up to the fact of its obligation to the guaranteed price and the nasty possibility of a deficiency payment having to be made. Suddenly, last week, it not only reversed its recent decision but decided to recoup in part the Board's expenses of last December. It now supports the Board as buyers of potatoes.
While welcoming this move, one cannot help but come to the conclusion that the present relationship between the Ministry and the Potato Board is not satisfactory. Potato growers invest large sums of money, I understand about £100 per acre, in growing main potatoes. I
submit that they are entitled, in the words of the 1947 Agriculture Act
to receive an adequate return on the capital invested in the industry".
§ Such an "off and on" support policy by the Ministry has a damaging effect on the market and drives the poor grower into accepting uneconomical prices for his crop. If the growers are prepared to raise £2 million per year to safeguard their market, surely the Ministry could show equal determination and not dillydally on the touchline. I should like to ask Her Majesty's Government to give a more positive support to potato growers and the Board, and not leave them out on a limb as they have done this year.
§ 5.50 p.m.
LORD ST. OSWALD
My Lords, I have little to add to what my noble friend has already said. I am, of course, able to sympathise to some extent with the Minister and his colleagues, who have taxpayers' money and the consumer to consider as well as farmers' returns. He is, all the same, aware, and my noble friend has just reminded us, that the call upon the taxpayer may be a good deal greater, through an eventual deficiency payment, if the timing of the intervention—that is, support buying—is delayed unwisely.
It seems to me possible that this may, in fact, prove to be the case here. Quite certainly, a number of perfectly sensible, prudent farmers had the heart taken out of them by the brusqueness of the Minister's reply on February 10 to a Parliamentary Question in another place, following his Statement on February 9. There was nothing in either the Answer or the Statement to give them much hope. They therefore sold at the bottom of the market and are now pretty angry. The bottom of the market was very low indeed, as my noble friend has just said. From immediate personal experience, I can tell him that I sold two loads at £9 10s. a ton, and I have been told about Yorkshire neighbours who sold as low as £8 a ton. I am not declaring an interest, because it is, in fact, too late for the noble Lord opposite to do anything for my interests in this matter, however much I might wring his heart. The majority of farmers did not foresee at that time the volte-face of a fortnight later; that is to say, on February 25. Those who hung on to their potatoes not- 1322 withstanding are, of course, less incensed, but it would, I think, in all objectivity, be most unreasonable to blame the others. During 13 years of calm and considered government, farmers had not come to expect this kind of volte-face.
The words used in the Minister's initial answer were anything but encouraging to a rational ear. He said:When I met the Board and representatives of the unions concerned, I carefully considered their case and came to the conclusion that there was no need to panic at this stage."—[OFFICIAL REPORT, Commons. Vol. 706 (No. 54), col. 357, February 10, 1965.]The whole conception of a "need to panic" is a curious one in itself to most minds; but now, of course, we know, we have seen, that the present Government considers and employs panic as a political weapon. What has also become evident is that it is a double-edged and expensive weapon. and that this present experience may on a smaller scale prove the same.
My noble friend's Question refers to the way in which the Potato Marketing Board has carried out its duties, but it is, of course, as he has said, the Government who enable the Board to carry out its duties when it comes to intervention on this scale. What I think the noble Lord, Lord Champion, will have to do, in answering my noble friend, is to satisfy the House, if he can, that his right honourable friend was justified in rejecting the advice of the Board when it was given, only to change his mind later when events had taken a perfectly foreseeable course but after considerable and undeserved financial harm had been done to some individuals.
§ 5.53 p.m.
§ THE MINISTER WITHOUT PORTFOLIO (LORD CHAMPION)
My Lords, I have been asked some questions to which, of course, I must endeavour to make a reply. The noble Lord, Lord St. Oswald, was particularly forceful. I am bound to say that I think he blossoms in Opposition. I sincerely hope that he will have a long time in which not only to blossom, but to bear fruit. But I doubt whether his attack to-day will be one which will help him in the future, because it really was very badly founded. This attack upon the Government in relation to its actions on the potato position is one which requires examination, and of 1323 course it is my job to try to justify what I have said.
I am grateful to the noble Earl for having put his question, as he always does, in a very thoughtful and, I would say, telling way, because he got down to the facts of the difficulties which potato producers have felt over the past few months. If I were called upon to answer in the manner of another place the Question which is on the Order Paper, "Are we satisfied that the Potato Marketing Board has carried out its duties in the best interests of its members during recent months?", I might be tempted to use the words, "Yes, my Lords" and sit down. But because we are not used to such brevity in this House, I should probably add the words, "We are satisfied, so far as it is possible to be satisfied with a human institution which has to deal with the complex problems of marketing a product the yields of which are notoriously variable and dependent upon the vagaries of our weather." But, my Lords, I cannot get away even with that, because an Unstarred Question here is, of course, a debate and I cannot answer in quite the manner that I should have done in another place.
The Government says, and my right honourable friend says, that we think that the Potato Marketing Board is doing a first-class job under the chairmanship of Mr. Rennie—a hard-headed Scot known to many of your Lordships, and I am sure to the noble Lord, Lord St. Oswald, as a man who is capable of acting as chairman of a Board of this sort, and to do it in the interests of the potato producers of this country. I wonder, sometimes, what would be the problems of this part of our agricultural industry if we did not have such a Board as the Marketing Board which was set up in 1934 under the Act of 1931.
What would happen? I am fairly sure that this would happen. Following a year of very high yield and consequent surplus, leading to a disastrous fall in potato prices, acreages would be severely cut by the farmers, and if such a cut were accompanied by a bad potato year prices would soar and producers would, in the following year, plant acreages perhaps exceeding those of the high surplus year. It would be the old trouble 1324 of the pig industry. I remember in the inter-war years when I kept a few pigs, that pigs were either copper or gold. That is the phrase we used to use about them. When pigs were gold, everybody rushed in, and the result was copper very soon; and when it was copper, of course, the people got out, shortages occurred, pigs again became gold, and so this silly sort of circle continued.
I cannot pretend, and I am sure that the noble Lord, Lord St. Oswald, with his experience in this industry and in the Ministry cannot pretend, that any marketing board for this type of produce can hope to adjust acreages to produce yields which will exactly match demands. In the nature of things, this simply is not possible. This is regrettable perhaps, but it is very true, and it is one of the facts of life of the Potato Marketing Board and the Government. But a prosperous potato industry would be quite inconceivable without a marketing board to stabilise acreages and to help to solve the problems of surplus. Without it, we should be back in the anarchy of the old days, bringing disaster to the people engaged in the industry.
But I am asked by both noble Lords opposite to look at the circumstances of last year, as they have led up to the decision by the Minister to engage in support buying announced in February. What were the circumstances of last year? In July, the market was overloaded and prices were correspondingly depressed. What happened? The Board—wisely, rightly, and in the interests of the potato producers—immediately committed the funds at their disposal to a buying programme. The result was that producers' prices improved, but at a cost of some £200,000 to the Board's accumulated funds. The Board, of course, seeing that this happened last July, in their report of November last, wisely and properly called attention to this fact, and warned producers for subsequent years—that is, this year and subsequent years—against overloading the July market for earlies. It is a warning which they repeated only last week, and it is rather hoped that this will have some effect, because we do not want to see this situation arising again in July of this year.
The next thing that happened was that in December, as the noble Earl, Lord Kinnoull, mentioned, there were signs 1325 that the market was weakening, and the Board then committed up to £l½ million of its own funds. Here, I would say to the noble Earl that I think he has his facts wrong. The Government were not at that time asked by the Board to engage in a joint buying programme. They were not asked at that time to do that, but only to permit the Board to commit its own funds—funds that in fact it could use without reference to the Government, except in so far as the Government give a general approval.
What has happened since then? In January, when prices began to fall, the Board urged the Government to authorise a further buying programme, financed, as to two-thirds, by the Government, and, as to one-third, by the Board. This was in January of this year. Now the noble Lord asked, as, of course, he was quite entitled to do: why did the Government not immediately respond to that request? That is a fair question, and I am not going to try to shrug it off.
The Government considered the whole question, and they told the Board on February 3, and confirmed it on February 8, that the Government at that time did not feel that the situation justified a joint buying programme—that is, a joint buying programme with the Government meeting two-thirds and the Board meeting one-third of the cost. They took the view at that time that it was not right to assume that the unduly low prices which were then operating would continue between January and the end of the season. And it must be remembered that the average weekly price at that time was still above the guaranteed price of £14 a ton—and, of course, the noble Earl was quite right in saying that the guaranteed price stands at £14 per ton. In fact, the average market price for the week ended January 30 was estimated at £14 11s., and the cumulative price for the previous six months had moved up to about £13 9s.
As the noble Lord, Lord St. Oswald, knows perfectly well, as a potato producer himself, prices normally move up towards the end of the season, so that that tends to raise the average for the whole of the period. In connection with the possibility of surplus, and the rest of it, there is a further consideration. If the weather in late January and February 1326 had produced a succession of heavy frosts, any possibility of a surplus might well have disappeared. Indeed, the sort of weather that we are getting now may well have an effect—and I hope the noble Lord has not too many of his potatoes still remaining in the clamps.
§ LORD CHAMPION
If the noble Lord had kept them a little longer, he might have got the advantage of the better price; but he might also have suffered from the fact that he would have lost his "spuds" because they had been affected by frost. But this is always a factor in this business of calculating the size of the surplus, and it is one which the Government have always to take into consideration. The market prices continued to fall, and in the second week in February, for the first time since October, the average price fell below the guaranteed price.
Now what the Government had to consider here was what caused this. What caused this fall in the price to this figure? My right honourable friend believes that the fall was caused by exaggerated rumours about the size of the surplus. This is a market of which it is said (and I believe it to be true) that it can be affected more by rumours than by the facts. This is what was happening in this case—or, at least, so we think. Nevertheless, despite this, the low prices prevailing suggested that the average market price for the season might not reach that of the guarantee, and so my right honourable friend decided to authorise a joint buying programme, which was announced, as the House knows, on February 22.
My Lords, it has been said (I do not remember if anybody actually mentioned it here, but it has been said in certain quarters) that my right honourable friend blamed the Board for "talking down price". But it is not true that my right honourable friend blamed the Board for depressing prices. It is the normal practice of the Board to disclose the results of their end-December stock census. What appears to have happened is that some people drew the wrong conclusions from the Board's statement of January 26. What they failed to do was to make proper allowances for the effect of the 1327 higher riddle, greater demands for human consumption, wastage and the Board's buying programme. Consequently, there were exaggerated rumours about the possibility of the surplus towards the end of the season.
So far as the Government are concerned, the Minister—and I support him in this—emphatically repudiates any suggestion of vacillation or undue delay. After all, to authorise the use of taxpayers' money to support the market to the extent of between, perhaps, £1 million and £2 million is not a decision to be taken lightly. This is taxpayers' money and must not be committed lightly to any section of our community, although we want to secure a reasonable standard of living for the noble Lord or for anyone else who engages in the job of producing potatoes.
LORD ST. OSWALD
That is extremely good of the noble Lord—I am sure he is sincere—but would he agree with me (and I think he can do it without any loss of face) in considering how the taxpayers' money must be used here and guarded? The end result could be that, because of a very high deficiency payment at the end of the year, a delayed intervention could cost the taxpayers more than in fact an intervention at the right moment.
§ LORD CHAMPION
Yes. The noble Lord's experience would teach him that this is always a balance of consideration. It is always a Minister's job to try to get his balance of consideration absolutely right. Despite the words which the noble Lord used about us, I believe that this Government is the kind that will do pre- 1328 cisely that. I am glad to say that the announcement of a joint buying programme has already improved the tone of the market. I think we shall be able to look forward to a steady improvement in prices in the next few weeks. I do not know if I have completely satisfied noble Lords; but I am satisfied that what I have said is the truth of the situation, and that the Government could not very well have acted in any way different from the action which my right honourable friend the Minister of Agriculture took upon this extremely difficult matter.