HL Deb 09 May 1967 vol 282 cc1312-9

2.38 p.m.

LORD WALSTON moved, that the Draft Fertilisers (United Kingdom) Scheme, 1967, laid before the House on April 18, 1967, be approved. The noble Lord said: My Lords, I beg to move the Motion standing in my name. In essence, the Scheme is similar to the previous ones approved by the House regularly since 1952, but there has, of course, been a change in the rate of subsidy. This will give a saving of just under £2 million a year. Put another way, the cost will be 6 per cent. less than it would have been had the subsidy for the fertiliser year of 1967–68 remained at the level at which it was previously.

As before, subsidy will be paid upon the phosphoric acid and/or nitrogen content of chemical fertilisers bought in lots of 4 cwt. or more for use on agricultural land or on crops or for growing mushrooms. No subsidy is paid on potash or on fertilisers wholly derived from organic matter. The cut in subsidy, which is a small one, was agreed at this year's Annual Price Review. It follows the general trend of past Reviews. I understand that expenditure on this subsidy during the next fertiliser year is expected to remain at the figure at which it runs during the current year—that is to say, £30 million. Incidentally, that is very much the same as it has been over the past eight years. This scale of contribution represents approximately 25 per cent. of the gross cost of those fertilisers on which subsidy is paid. Taken together with the improved returns to agriculture resulting from the other changes made in this year's Review, I am certain farmers will be well able to maintain and improve the productivity of their soil. At the same time it is proposed to give extra assistance, up to 50 per cent. of the cost of fertilisers, which will cover the cost of spreading, to those who qualify for grants under the Hill Land Improvement Scheme which we intend to make as soon as the Agriculture Bill becomes law.

Apart from this slight reduction in subsidy, as your Lordships know, manufacturers' prices for fertilisers have recently risen. The increase, however, was very thoroughly examined and reported upon by the National Board for Prices and Incomes, and the Government have accepted the findings of the Board. In spite of this rise, compound fertilisers are still cheaper per ton of plant food than they were ten years ago, and this is a point worth emphasising. It is a tribute to the efficiency of our fertiliser industry in this country. It is gratifying to know that since 1952–53 the use of fertilisers eligible for subsidy has gone up in terms of plant nutrients as opposed to gross tonnage by nearly 85 per cent. Apart from using a greater quantity of fertiliser, farmers now use different types, and they use especially the higher nitrogen applications, either through straights or compounds. At present, well over 75 per cent. of all plant nutrients in subsidised fertilisers are applied in the form of compounds. The concentration of such nutrients in fertilisers has gone up from under 27 per cent. in 1952–53, some 15 years ago, to about 42 per cent. to-day. In other words, the concentration has been nearly doubled.

This, of course, represents a very large economy to the farmer, since because of this higher concentration he has far less bulk to handle, and the merchant has far less bulk to transport to the farm. Put simply, to have distributed the 1966–67 plant nutrient tonnage at the 1952–53 concentration rate, merchants, manufacturers and farmers would have had to handle an additional 1½ million tons of product on top of the present movement of about 4¾ million tons—in other words, nearly one third more as regards actual bulk.

As to the future, there is no question that farmers now realise the benefits which they obtain by the use of the right kinds of fertiliser. A farmer's main problem is to judge how much more fertiliser he could profitably use in his own special personal circumstances. On the whole, I believe that farmers make the right decision in this matter, but in certain cases—I am thinking particularly of grassland—farmers are still perhaps inclined to be a little cautious, and they could, with benefit, use rather more fertiliser on their grassland with worthwhile returns. All the same, more and more farmers realise the good return that the sensible use of fertiliser gives them, and I am certain that the increased supply, especially of nitrogen, which is now available will encourage this trend still more. I am sure that the demand for more concentrated forms of nitrogenous fertiliser will go on increasing, and so will the supply. An added incentive to the use of straight nitrogen is that this is not affected by the recent price increases; there has been no rise there. A high and ever-growing rate of fertiliser use is essential if our agriculture industry is to maintain its record of productivity. The subsidy which is the subject of this Order encourages this. I therefore ask the House to approve this Scheme and to enable the subsidy to continue for a further year.

Moved, That the Draft Fertilisers (United Kingdom) Scheme 1967, laid before the House on April 18, 1967, be approved.—(Lord Walston.)

2.45 p.m.

LORD NUGENT OF GUILDFORD

My Lords, may I thank the noble Lord, Lord Walston, for explaining to us the purpose of this Statutory Order. I should like to comment on the major point which he made, that this year the Government have in fact made a reduction of about £2 million, about 6 per cent., in the rate of subsidy. I would point out that this coincides with the moment when the fertiliser manufacturers are increasing their prices, as the Prices and Incomes Board is now allowing them to do. I understand that this price increase is also, by coincidence, 6 per cent. One might have expected the Government to have increased the subsidy by 6 per cent., but No. So the total effect is that the farmers will have to pay 12 per cent. more for their fertiliser, which is quite a big increase in price. I suggest to the noble Lord that this could be a significant disincentive to the use, and indeed the greater use, of fertiliser which he so rightly advocates. My impression is that, despite the great increase in fertiliser used in the last decades, there is still a considerable under-usage, and indeed the noble Lord confirmed that this was the case on grass land. I should have thought that it applied to arable land as well.

If the noble Lord could give us the figures, it would be interesting to know how the Ministry of Agriculture's specific estimate of the tonnage of fertiliser for optimum application in Great Britain compared with the actual application. I suspect that there is a quite big discrepancy. Does the noble Lord not think that the effect of what he is doing now may be to cause a levelling off in the usage of fertiliser rather than bring about the increase about which he spoke? In fact there has been a reduction in the amount of fertiliser subsidy in the last couple of years. It was running at about £33 million a year and is now running at about £30 million a year, so that already there appears to be a reduction over the last couple of years as compared to the quantity being used before. Perhaps the noble Lord will be able to give the details of the actual figures of fertiliser usage in the last couple of years as compared with the figures for previous years of this decade.

One other point in this context is in relation to yields. It is noticeable that the yields of cereals have fallen in the last couple of years. There was in earlier years a certain levelling off in yields for wheat and barley, while there was a very spectacular increase in yields in the 'fifties. Has the levelling off been due to a check in the application of fertiliser? Perhaps the noble Lord could tell us whether this is so, or whether there is some other cause. Again, I ask: is this the right moment to make a 12 per cent. increase in price?

As we are about to continue with the very important debate on the Common Market, it is perhaps not inopportune to remind the noble Lord that if entry into the Common Market is accepted and we therefore have to adopt the E.E.C. agricultural policy, there will be a quite dramatic effect on arable farming, with a great increase in wheat prices of 40 per cent. and in barley prices of 25 per cent. Perhaps even more significant, the cost of imported grain into this country would, of course, go up very substantially. In fact the cost would rise by about 50 per cent., due to the application of the levy system; and bearing in mind that we import something over 10 million tons of grain a year, this would seem to involve a levy of about £100 million of which about 90 per cent. would then go to the E.E.C. So that for both of those two reasons there would be an enormously greater incentive to increase the arable acreage of this country. Therefore this again would seem to be a reason for looking very carefully at the fertiliser application, because the extension of acreage in this country would have to be on the less good land, and, of course, on land in the hands of the less good farmers. Again, I would ask the noble Lord: is he sure that this is the right time to start giving a disincentive to fertiliser use?

Finally, would the noble Lord, when he is asking his right honourable colleague the Minister of Agriculture to look at fertiliser policy, also ask him to look at the possibility of extending the subsidy to potash, which clearly will be very much more important if we are going to bring back into cultivation the less good land, most of which is very deficient in potash. Is it a fact that the old monopoly argument still applies to extending the fertiliser subsidy to potash?

I do not wish to detain the House any longer on this subject, although it is a very important one and may be even more important in the future, but I would conclude with these remarks. I should have thought it was always rather objectionable to make a disincentive to fertiliser use, and certainly it would be hard to find a time when it was more inappropriate than now. I would therefore ask the noble Lord whether he will most cogently convey to his right honourable colleague the Minister of Agriculture that this matter should be studied closely in the next Price Review, in order to see whether it would not be wise to continue to give the maximum incentive to greater fertiliser use, rather than tapering it off. With those rather critical remarks, I would reluctantly agree that the Order should be passed.

LORD INGLEWOOD

My Lords, may I ask the noble Lord one question? In order that we may judge the effect of this Order as against the effect of last year's Order, can the noble Lord tell us what will be the extra cost to the farmer, assuming that the same levels of fertiliser are used? He has told us that there is a 6 per cent. decrease in the value of the subsidy and, I believe, an increase in the price which the farmer has to pay. What, in simple terms, does that really mean to the farmers' pockets, taking the country as a whole?

LORD WALSTON

My Lords, I must say that I am rather surprised at the point of view put forward by the noble Lord, Lord Nugent of Guildford. It seems to me the antithesis of what I always understood he and his friends stood for politically. But perhaps I can deal more specifically not with the political philosophy behind these matters, but with the questions which he has raised. At the same time, perhaps I can answer briefly the question of the noble Lord, Lord Inglewood. My information is that the reduction of subsidy will mean an additional cost of about £2 million, as the noble Lord said, whereas the rise in manufacturers' price will add a total of £6 million to the farmers' bill, making a total of £8 million, or approximately 8 per cent. extra, which has to be paid for fertilisers. I think that answers the question of the noble Lord, Lord Inglewood.

So far as the under-usage (a curious expression, if I may say so, which the noble Lord used) of fertilisers is concerned, the fact is that very few farmers use the optimum amount of fertilisers. A few use more than they should and waste it, and the crops may go down, but the vast majority use rather less than they should. I do not know of any estimate of the amount, and it would be a very subjective estimate if there were one. My own purely personal guess, taken more or less out of the air, is that on our present cropping we could increase our use of fertilisers by at least 25 per cent. and still get an economic return. But I emphasise that that is my own personal view, my own guess, rather than any considered view of Her Majesty's Government or of the Ministry of Agriculture.

So far as the fall in yields is concerned, as the noble Lord knows well there are many reasons for that—climatic being very prominent among them. But I would say that it is more of a levelling-off of yields than a continuation of the spectacular rise which took place in the 'fifties. Far be it from me to suggest that the spectacular rise which took place in the 'fifties was due to Governmental action in the late 'forties, though we all know that there is a certain delayed action; nor should I like to suggest that any decrease in yields two or three years ago was due to Governmental action during the preceding decade.

I think that another possible reason, putting that aside, is the fact that during the war years, and the years immediately following, there was an enormous increase in the skill of farmers and in the techniques. The techniques of the best farmers were adopted and became the average techniques, due very largely to the National Agricultural Advisory Services and also to the admirable work of the plant breeders. We have now reached a levelling-off stage, which I hope will be followed in a few years by another surge forward. The present position is certainly not due to a decreased use of fertilisers.

I have the full figures here, which I shall gladly show to the noble Lord afterwards. May I simply read out the figure of nitrogen utilisation in 1951–52 and compare it with 1966–67? In 1951–52 it was 181,000 nutrient tons, and in 1966–67 it was estimated to be 630,000 nutrient tons; in other words, something over three times as much. Phosphates rose from 277,000 tons to 477,000 tons—not quite twice—and potash rose from 172,000 tons to an estimated 430,000 tons—about two-and-a-half times as much. The total of them all rose from 630,000 tons to an estimated 1,537,000 tons; in other words, over twice as much nutrient tonnage—not gross tonnage—is expected to be used in 1967 as compared with the figure for 1951.

The main point which the noble Lord, Lord Nugent of Guildford, made was when he asked me: is it right at this stage to reduce the subsidy? Of course, that really depends on what philosophy you hold. If you believe that the "gentleman in Whitehall knows best" and can dictate to the farmer what he should use, then obviously you should retain the subsidy in the hands of Whitehall as a weapon for encouraging what one might call an artificial use through artificial prices. If, on the other hand, you believe that after the initial stimulus for adopting new techniques, for making use of fertilisers and so on, it is really the farmer who should make the decision, then it is far better to lower the subsidy on fertilisers and raise the price, as we have done, on the finished product, on the crop itself, and leave the choice to the farmer. That, I believe, is the correct method to follow, and I repeat that I am a little surprised that the noble Lord suggests that it is really the "gentleman in Whitehall" who knows better than the farmer on the ground what fertiliser should be applied. I shall not detain the House any longer pursuing this rather fascinating subject, and I am thankful to the noble Lord for his qualified support.

LORD FORBES

My Lords, if the use of fertilisers decreases, will the Government raise the subsidy at the next Review?

On Question, Motion agreed to.