CEREALS (PROTECTION OF GUARANTEES) (AMENDMENT) ORDER 1966 (Hansard, 17 May 1966)

§ LORD HILTON OF UPTON
My Lord, I beg to move that The Cereals (Protection of Guarantees) (Amendment) Order 1966 and the Cereals (Guarantee Payments) (Amendment) Order 1966, which were laid before this House on May 3, be approved. I hope that it will be for the convenience of the House if the two Orders are taken together.
The main purpose of The Cereals (Guarantee Payments) (Amendment) Order is to make two modifications in the guarantee arrangements for wheat which experience has shown to be desirable. The first modification relates to moisture content. As noble Lords are aware, the guarantee payment on wheat is made on the tonnage sold by growers and certified for payment by authorised merchants. To qualify for the payment, the wheat has to be millable. There is a long-established definition of millable wheat and this has worked reasonably satisfactorily over the years. It does not, however, deal specifically with moisture content, and it is now generally accepted, both by farmers and by the trade, that it would be desirable to lay down some maximum standard for this.
For the last two years the authorised merchants have been applying a voluntary code of practice, and the effect of this has been that wheat has not been certified as millable if the moisture content has exceeded 18 per cent. Experience has shown that this requirement works satisfactorily and, after consultation with the Wheat and Rye Deficiency Payments Advisory Committee, on which both the farming and the trade interests are represented, we feel that the time has now come when the code of practice should be made mandatory. The Order therefore supplements the present definition of mill-able wheat by providing that in addition to the existing criteria the moisture content must not exceed 18 per cent. We regard this as a reasonable maximum for the purposes of the guarantee arrangements but it has, of course, no direct bearing on the requirements of commercial users. In many cases these call for wheat of a lower moisture content.
903 On the other hand, there are some commercial uses for which wheat of fairly high moisture is required. There is a growing commercial demand for rolled and flaked wheat which has to be processed damp. In this state, however, it cannot be accepted as millable, either under the current definition or under the amended definition. We must avoid a situation where wheat required for rolling or flaking has first to be dried in order to qualify for guarantee payment and then damped so that it can be processed. This is covered by the second modification which the Order makes in the guarantee arrangements. This enables a payment to be made on wheat otherwise millable but with a moisture content in excess of 18 per cent. It will, of course, be necessary to take account of the excess moisture in the payment and this will be done by basing this on an adjusted weight. This will be calculated by reducing the gross weight in proportion to the excess of moisture subject to the operation of a tolerance which will be kept under review. The detailed arrangements will be set out in amendments to the Cereals Deficiency Payments Scheme, on which we shall have the benefit of the advice of the Wheat and Rye Deficiency Payments Advisory Committee. The Committee have been fully consulted on the modifications to which the Order gives effect.
We are also taking the opportunity in the Order of correcting a purely technical error in the wording of the Cereals (Guarantee Payments) Order 1964, relating to the operation of the standard quantity arrangements. The purpose of the standard quantity mechanism is to reduce the guarantee payment in any year when production exceeds the standard quantity. The present wording, however, gives the Minister power to make a larger payment in these circumstances, and although it has not prevented him from operating the guarantee arrangements in the way intended, the Order now before your Lordships' House puts the wording right by simply transposing the words "production" and "standard quantity".
The other Order before the House amends the Cereals (Protection of Guarantees) Orders by requiring merchants to keep a record of the moisture content of the wheat they purchase. This Order, which is consequential on the Order that I have been describing, is 904 necessary for the purpose of our regular audit checks on transactions attracting guarantee payment. The Order does not go beyond what is strictly necessary for this purpose. Noble Lords will note that where the moisture content of the wheat as purchased does not exceed 18 per cent. the merchant need record no more than this. It is only when he has purchased wheat at over 18 per cent. moisture that the exact figure is relevant to the calculation of the guarantee payment; it is only in this case, therefore, that the merchant will be required to record the exact figure. I hope that I have been able to show that the provisions of the Orders will lead to useful improvements in the guarantee arrangements for wheat and I commend them to your Lordships' House for approval. I beg to move that the first Order be approved.

EARL FERRERS
My Lords, may I thank the noble Lord again for introducing yet another agricultural Order. This is again fairly straightforward, but perhaps he would clarify two points for me. He said that the purpose of these Orders is that farmers who sell their wheat with a moisture content above 18 per cent. should not have the deficiency payment on that. What I am not clear about is whether that means that that wheat is not subject to the guarantee, or merely that the percentage above 18 per cent. is not subject to the guarantee. In other words, if the farmer sells it with a 19 per cent. moisture content, is it merely a mathematical calculation that will give him the deficiency payment, or will the moisture content have to be brought down by drying to 18 per cent. before he is entitled to any subsidy? I should be grateful if the noble Lord could explain that.
There is another point which he did touch upon, which I tried to follow but which I did not quite understand, and that is on the Cereals (Guarantee Payments) Order, Paragraph 2, sub-paragraph (b). It has this curious place where it transposes the words, and it says … that the standard quantity bears to the annual production shall in fact read that the annual production bears to the standard quantity. 905 This is a reversal which I am sure makes sense, but it sounds in a way very fundamental, and if the noble Lord could explain it I should be grateful.

§ LORD HILTON OF UPTON
My Lords, I thank the noble Earl for what he said at the beginning. With regard to the 18 per cent. I would say that this is the percentage which is to be aimed at. So far as I can understand the Order, it is intended that if the moisture content is over 18 per cent. it should be brought down to the 18 per cent. before it qualifies for the payment. With regard to the other question, I quite agree that as it is in the Order it is a contradiction in words. It is very difficult to understand, and personally I cannot give the noble Earl a straight answer on this matter. I think, in all honesty, I had better get the proper definition—I quite agree it is a mixture of words—and I will write to him.