HL Deb 17 March 1965 vol 264 cc370-8

3.59 p.m


My Lords, with your Lordships' permission, I should like to make a Statement similar to that which my right honourable friend the Minister of Agriculture has just made in another place on this year's Agricultural Review, the details of which are given in a White Paper available in the Printed Paper Office. If I may, I will use his own words, which are as follows:

"One of the Government's aims in this Review has been to promote developments in agricultural policy which we believe must be made if the industry is to go on increasing productivity, and so improve its income while reducing its need for Exchequer support. One of agriculture's main problems is the wide differences between farms. There are many farm businesses which already provide a satisfactory full-time livelihood. But there are far too many others which, because they need better management or are too small in size, cannot do so at reasonable prices. Our objective is to create conditions in which such farmers can raise their standards.

"In this Review we are making a start on these longer-term developments by introducing a number of new production grants and revising some of the existing ones. We shall help the smaller farmer to improve his farm business by making better farm management the essential object and condition of a Small Farmer grant. At the same time we shall extend the upper limits of the schemes so as to make them available to many more farmers, particularly the smaller dairy farmer and livestock rearer.

"We are also introducing wider agricultural credit facilities and providing grants for agricultural co-operative marketing. In addition, we are concentrating more help on the hill and upland areas. The hill sheep subsidy will be made an annual grant on a flat rate; the hill cow subsidy rate will be raised; and we are bringing in new winter keep arrangements. There will also be an urgent review of the more fundamental long-term problems in the hill and upland areas.

"These measures will give help to those in special need who are willing and able to help themselves. But many of the smaller farm businesses, if they are to succeed, must also obtain the advantages which come from larger scale production or marketing. We are, therefore, planning measures to encourage an increase in the size of holdings on a voluntary basis and to extend further help to agricultural co-operation over a wider field.

"Turning now to the present position of agriculture generally, actual farm income for this year is expected to be £472 million, a record figure, and £63 million more than last year. Adjusted for normal weather conditions the forecast for this year is £456½ million—about £30 million more than last year. Output is up substantially, and the growth in productivity has continued.

"Coming to the commodities, let me deal first with milk. A number of producers are still giving up dairying, but the fall in the dairy herd now seems to have been checked, and production has risen slightly. Producers' prices have gone up appreciably. In view of the importance of the dairy herd, not only for milk but also for beef, the Government have decided to increase the guaranteed price by 1d. a gallon. This change, together with increased distributive costs, will require the retail price to be raised by one half-penny per pint with effect from August 1.

"After a temporary decline, the beef herd is now recovering. But, in view of future world prospects, we are encouraging expansion of home production by an increase in the guaranteed price of 4s. per cwt. At the same time we are widening the calf subsidy to bring in more calves and increase the rate by 10s. We are also increasing the Hill Cow Subsidy by £1. The sheep breeding flock continues to grow and no change will be made in the guaranteed price for fat sheep or for wool. The new flat rate subsidy for hill sheep will be 18s. compared with an average of 9s, 6d. over the last five years.

"Pig numbers have considerably increased, and a further substantial rise is forecast. For much of the last year, however, the market for pigs has been reasonably strong, and, in view of this, the Government have decided to raise the middle band—in effect the standard quantity—by 900,000 pigs. We are also widening the middle band, and the steps on either side of it, so as to make changes in the guaranteed price less frequent. The decision first announced two years ago to abolish separate stabilising limits and to reduce the quality premiums will now be implemented. The combined effect of all these steps would considerably increase profitability and so run the danger of encouraging too high a level of pig production. As some offset, the basic guaranteed price will therefore be reduced by 1s. 7d. per score, but the immediate net effect will be that on average pig producers will be getting 1ld. per score more than at present.

"This year egg production has outrun demand. Although there are signs that production next year may be somewhat less, technical efficiency is still increasing. To try to avoid a return to surplus, the guaranteed price for eggs will be reduced by 1d. per dozen.

"Cereals production has risen to a very high level this year. In consequence we are obliged under the cereals agreements on minimum import prices made by the previous Administration to take remedial action with the purpose of restoring a fair and reasonable balance between home grown and imported cereals. The standard quantities for wheat and barley will be increased to take account of the growth in consumption, but the guaranteed prices will be cut by 1s. ld. and 1s. 4d. per cwt. respectively. The guaranteed price of potatoes and sugar beet will be increased by 5s. and 2s. 6d. per ton respectively. The fertiliser subsidy will be reduced by £2 million, and the lime subsidy by £750,000.

"The net effect of the Review decisions will increase the total value of the guarantees by over £10 million. This will mean that in the present circumstances of the national economy, the agricultural industry will, like others, be expected to absorb this year through their increasing productivity a large part of their increased costs of some £29 million. The present determinations will, however, give the industry the opportunity to improve its income, and a start has been made on policy developments of great importance to the industry in the longer term."


My Lords, I thank the noble Lord for giving us the repetition of this Statement. All the same, I have to suppose that in the light of my mild but protestingly-received strictures earlier in the Session the noble Lord, Lord Champion, must be very grateful at this moment that he is not an Agricultural Minister. The noble Earl the Leader of the House may well be grateful he has no Minister on his Front Bench at whom the finger can be directly pointed as being responsible for the utterly depressing review outlined in the Statement.

The Statement, after one or two long, pious and amorphous passages at the beginning, makes it clear that the contrast between Socialist promise and performance in agriculture is likely to be at least as stark as in other responsibilities of government. After all the conflated undertakings (there is nothing like using a new word as soon as possible after you hear it) of the gentlemen who are now Ministers of the Crown immediately before the Election, we have this poor, shivering town mouse creeping out through the protective portals of the Ministry of Agriculture and scuttling down Whitehall. How I pity it when it gets out into the open country! The only encouraging figure in the whole Statement is the record of income for the present agricultural year, £472 million, an increase of £63 million. If ever there was a success story written in black and white, here it is; but it is a success story of the previous Administration's agricultural policy, and I hone the Government will recognise that inheritance.

I do not wish to impose unendurable agony on the noble Lord, Lord Champion; indeed, who would? I wish only to ask two or three delicately probing questions. First of all—somewhat rhetorical in the circumstances—was this Review agreed? Secondly, why, hand in hand with the declared policy of encouraging beef, do the Government cut the Fertiliser Subsidy by £2 million? Have they any reason to think that this may be matched, or even relieved, by a price reduction on the part of the producers? Thirdly, what has happened to the long-term policy for beef, so widely and exuberantly advertised before the Election? That is not identified in the Statement. The closing words may refer to it, but it is not identified. I should like to know whether in fact it appears in the White Paper.

Fourthly, my mathematics are not up to working out at short notice whether the ls. ld. cut in the wheat guarantee and the ls. 4d. cut in the barley guarantee are in fact the maximum cuts permitted by the 1957 Act. My impression is that they are. My recollection is that the previous Administration never cut to that maximum. Fifthly, is the noble Lord's right honourable friend aware, or does he happen to know whether he is aware, of the pure irony of saying that in view of the importance of the dairy herd, not merely for milk but also for beef, he will increase the price by 1d. a gallon?


My Lords, the noble Lord has, as I expected him to do, tended to add to the excellent speech that he made just now on a totally different subject. He rather sympathised with me. I do not need his sympathy.


The noble Lord has not yet heard from the farmers.


My Lords, I I should not worry about this Statement, even if I were deeply involved in this particular Ministry, because this is no mouse of a Review. It not only adds £10 million to the guarantees, but also holds out what I regard as immensely important in this consideration, a tremendous promise for the future. When the noble Lord tends to say: "You have not done too well considering your promises before the last Election", all I can say is that I never expected that we should find the mess we did find when we came into office. These are factors which have to be taken into consideration.


You certainly did not find a mess in agriculture.


Shall I tell the noble Lord why? I will. Last year we had an exceptionally good year for farming weather. Then there was also a good Price Review. Why was that? It was because it came in an Election year. I remember speaking in agricultural constituencies during the last Election and saying, "If this Tory Government get back the best thing for the farmers to do is to try to ensure that they get an Election every year, and hope for the same sort of Price Review as farming had last year".

So far as the long-term policy for beef is concerned, this is a matter which we are considering. We have gone most carefully into this subject of beef, and we believe that the prices which we set out here are just about right when we regard the alterations in the subsidies for calves which we are including in this year's Price Review, and the further subsidies for hill cattle, which will particularly add to the beef that will be available to us in the future. But as far as the long term is concerned, this is, of course, a matter for further consideration.

Regarding the cut of ls. 1d. and Is. 4d. respectively on wheat and barley, I rather think that this is just about the limit that would be possible under the 1957 Act. It also carries out the intention of the last Government in regard to ensuring that there is a balance between imports of cereals and home production. I do not think that this is a mouse of a Review.


My Lords, would the noble Lord tell me how this Review compares with those of previous years? Can he tell me what the Minister has given to help the small farmer and those who farm in the hills? Can he tell me how much this award gives to the milk producer, and how this award compares with those of previous years? Can he further tell me who pays—is it the consumer or the State?


My Lords, so far as past years' Price Reviews are concerned, I may say that in the past 13 years, omitting the three Election years when, oddly enough, the Review was agreed, the Review has been disagreed five times out of ten. In five years out of those ten non-Election years the award, after allowing for costs, was less favourable than that for this year. So far as small farmers are concerned, we are helping the small farmer through the extension of the Small Farmer schemes which will bring in another 40,000 farmers, and through the widening of the credit facilities and grants for co-operatives. We are helping hill farmers by fixing a generous flat-rate subsidy for hill sheep instead of the present variable one, increasing the hill cow subsidy and the stocking ratio, and putting the winter-keep grant on a headage basis for England, Wales and Northern Ireland.

The noble Lord also asked me about milk prices and how they compare with those of recent years. This year's Id. a gallon increase, together with the increase in the standard quantity, will give the dairy farmers an extra £11 million. This is the largest single increase since the present system was instituted ten years ago, except for last year's General Election award. Indeed, by this increase of ld. we are giving the farmers just about as much again as the overall increase of the guaranteed prices over the whole of the period from 1954, when the present system started, right up to last year.


My Lords, is the noble Lord aware that this extra award of £10 million is about one-third of the additional burden laid on the farmers by the increase in the petrol tax?


My Lords, may I ask the noble Lord a question about the hill sheep subsidy? I think he said that it would continue for some years. Did he mean that it would continue at the present rate, which is, I think, 18s.?


My Lords, yes. In past years, the hill sheep subsidy has been a variable one and, as I said in my Statement, it averaged out at 9s. plus over the past five years. In order to prevent this variation difficulty, it has been decided that in future, without having regard to weather conditions or anything else, it will be at a flat rate of 18s. per head.


My Lords, may I ask the noble Lord whether the Minister has given serious consideration to the effect of the reduction of the egg subsidy on the medium-scale producer? Does it not mean that this is going severely to affect the small producer and encourage the factory production of eggs, which undoubtedly is responsible for the surplus of eggs? What many of us would question is whether it produces the quality.


My Lords, we have given considerable thought to this matter of the small producer and the subsidy on eggs. Egg production can be highly profitable under the present subsidy and price arrangement. What we had to do in this Review was to avoid over-production, which would be bad for everyone. I cannot accept that all small egg producers are doing badly. Those who sell directly to the consumer, for example, will not be affected at all by this cut. We have to remember that this Annual Review is not merely a matter of handing out taxpayers' money; it is bound to be also a regulator, and must be used to regulate the production of the crops which the farmers of this country can provide.


My Lords, may I ask the noble Lord what effect the Government think all these changes, including the 1d. on milk, will have on the dairy herds? Do the Government think that the dairy herds will continue to decline, or that these changes will arrest the decline?


The decline in milk production has already stopped. Indeed, we think that this balance will be just about right to keep the production of milk to just about the standards which we require, particularly for our liquid milk consumption, without adding unduly to that portion which goes for manufacture in this country.


My Lords, may I ask the noble Lord whether he is aware that the increase in price to the consumer of ½d. a pint is equivalent to 4d. a gallon, and that the additional sum to the producer is being raised by only ld. per gallon? Is he aware that this will probably mean that after next August there will, in effect, be no subsidy, or a very small subsidy, for milk?


Yes, my Lords. I am aware of this. Some of this, of course, will go to the retailer. The retailer's position is something which my right honourable friend is looking into. We are not entirely satisfied that the margin which at present exists for retail is quite right, and my right honourable friend is, in fact, at the moment instituting inquiries into this very matter.


My Lords, can the noble Lord elaborate on one point? He said, I think, that Her Majesty's Government were going to encourage small farmers to increase voluntarily the size of their holdings. Could he explain how this is to be done? If it is to be done by amalgamation, is there to be some form of financial inducement for small farmers to give up their farms for the advantage of others?


This is a matter on which I cannot pretend to have the answer ready. I recognise, with the noble Earl, that it is extremely difficult to get people to give up voluntarily the farms in which they live. Something of this sort will have to be attempted, but it must be done voluntarily—I particularly stress that. Certainly, so far as I am concerned, I would never be a party to the compulsory amalgamation of small farms. One must do it by encouragement, by help, and I hope, perhaps, by some of the means which the noble Earl clearly has in mind.


My Lords, I do not think the noble Lord actually answered my question on whether the Review was agreed. I quite understand that he hardly thinks it necessary, but I think that we ought to have it on the record.


Perhaps I did not answer that, but I was so anxious to show that many of the Annual Reviews over the past years were not in fact agreed, and what happened in those years.