CEREALS (GUARANTEE PAYMENTS (AMENDMENT) ORDER 1968 (Hansard, 12 June 1968)

§ LORD BESWICK
My Lords, I beg to move that the Cereals (Guarantee Payments) (Amendment) Order 1968 be approved. The Order amends the Cereals (Guarantee Payments) Order 1964 in relation to the arrangements for calculating and paying to growers deficiency payments on wheat and barley. The amendments of course follow the determinations announced in the 1968 Annual Review White Paper. These provisions are designed to encourage a further expansion of cereal production, particularly of wheat, to meet the growth in demand, while maintaining necessary safeguards for the Exchequer.
The Order provides for the abolition of the standard quantity for wheat, the ending of the arrangements under which, in certain circumstances, the deficiency payment on wheat or barley is increased if the average realised price exceeds the target indicator price, and the ending for wheat, but not for barley, of the arrangement under which, when annual production is below the standard quantity and the average realised price is below the target indicator price, the deficiency payment is abated within a range of production determined by Ministers. The provisions relating to rye, oats and mixed cereals remain unchanged.
I may be asked why barley production is not encouraged to the same extent as wheat, bearing in mind the fact that home produced barley also saves imports. The answer is that experience shows that barley does not need the same encouragement. Its production has been increasing rapidly, partly due no doubt to the fact that it is less susceptible to disease 204 hazards than wheat and can be grown in more northerly and westerly areas. Nevertheless the import saving potential of barley is recognised, which is one reason why the standard quantity of barley has been put up by three-quarters of a million tons—the biggest increase ever. It is also relevant, as noble Lords will know, that wheat rather than barley can more easily be substituted for maize in the relevant compounds. This Order is a necessary step if we are to fulfil the intention of expanding cereals production, especially of wheat, and I commend it to the House.

§ LORD NUGENT OF GUILDFORD
My Lords, I should like to thank the noble Lord, Lord Beswick, for explaining to us the purpose of this Order and the background to it, and to say that we welcome it. It is a very good story to tell. The increasing cereal production, which reached its record level last year, is something which I suppose makes a more direct contribution to solving our balance-of-payment problem than anything else. I may say, in passing, that it reflects great credit on the farming community that they should have been able to continue this great expansion in cereal production, which results from a number of technical advances—in plant breeding work, fertiliser usage, cultivation, and, of course, the economics of production, because, broadly speaking, the price return for these cereals has been kept pretty stable over the past ten years in the face of substantially rising costs. So this is a very good tale to tell, and I am sure the Government are right to continue with further encouragement for the coming harvest.
I thank the noble Lord for his explanation of why the Government do not propose to remove the standard quantity limitation on barley, and I should think that the increase of three-quarters of a million tons is probably sufficient for the time being. No doubt this will be watched, to make further increases if necessary, in the future. I hope that in this year, 1968, and indeed in the years ahead, the harvest may show a further expansion.
205 Having commented on this very favourable picture, I should like to sound a slight note of anxiety which has some relationship to this Order. It is that, as the picture of cereal farming goes steadily ahead, with obvious profitability for those engaged, the picture of livestock farming is by no means keeping pace in terms of profitability. Probably the reverse is happening, and the profit margins of livestock farming, whether it is for milk, pigs, beef, lamb or eggs, has been progressively narrowing in recent years, with eggs and pigs having an especially chancy time. This, again, makes a contrast between the prosperous East of the country, the big corn-growing areas of East Anglia, and the less prosperous West, with the smaller farms and mainly livestock husbandry. One tends to get an increasing tendency towards the big cereal farmer, who is prosperous and very efficient—and I am glad that he is prosperous—contrasted with the small livestock farmers in the rest of the country, many of whom are undoubtedly struggling in order to get a living.
It is perhaps stretching this Order a little wide, but if the noble Lord, Lord Beswick, has any comment to make on this growing disparity—which would grow even bigger if we went into the Common Market, with their higher cereal prices—I should be interested to hear what the Ministry think about it, and whether there is any action that can he taken. We certainly do not wish to slow down this admirable increase in cereal production—we want it to go on—hut what can we do to prevent this disparity from growing? I have much pleasure in supporting the Order.

§ LORD WALSTON
My Lords, perhaps I may intervene, quite briefly, following the noble Lord, Lord Nugent of Guildford. I certainly do not disagree with him when he speaks of the difficulties of, as he described them, small West County livestock farmers compared with the large-scale and (I am glad he said) very efficient East Anglian corn-growers. I think it is certainly one of the problems which the Government must face. They have to a considerable extent faced it already by certain things they have done, and I hope they will heed the noble Lord's words and give still more thought to it.
206 I think that perhaps the noble Lord. Lord Nugent of Guildford, gave one clue, possibly unintentionally, when he stressed the fact that the West Country farmers are small and the East Country farmers are large. That is a generalisation, but it is one that I accept. I am afraid it is one of the facts of agricultural life we have to face that scale and profitability go closely together. Once one moves r p from the really small family farm, employing only family labour, then, within pretty wide limits, the larger the unit is, whether it is livestock or something ease, the greater its efficiency, the lower its costs and the greater its profit, not only in total terms, but in terms per acre of labour employed. That is why I think the general policy of the Government in encouraging the amalgamation of small farms and giving assistance to make them into larger and more efficient units is the right method of attack for this fundamental problem.
I would, however, sound one note of warning. I would not dispute the noble Lord's contention that the profits of the East Anglian cereals farmers (and I suppose that I should here declare an interest, as I have a certain amount to do with a farm of this sort) compared with those of livestock farmers are high. But compared with those of other industry demanding the same amount of skill and the same amount of capital, I do not think they are at all high. But one thing that is beginning to worry the large-scale corn-grower at the present time is the spreading incidence of cereal disease in corn crops, due to a large extent to over-cropping.
It may be said that over-cropping is due to the fact that cereals are so profitable that farmers grow more than they should. In my view, however, that is not true. The reason why the East Anglian farmer grows an unduly high proportion of cereal crops is because, in order to meet his high outgoings—not necessarily of labour or machinery but outgoings of rent; or, if he is an owner-occupier who has bought his land recently at the very high prices that obtain at the present time, because interest charges, mortgage charges, on the capital involved are so high—he must have a far larger proportion of his land in cereal crops than good husbandry dictates. I am afraid that we may well see a more rapid spread of cereal diseases and, over the years, a decline in yields unless it becomes profitable 207 in one way or another for farmers to grow a smaller proportion of their land in cereals.
I may point out that in the last Price Review the introduction by the Government of encouragement in subsidy for bean crop is a step in the right direction; and the more the Government can search round for methods of encouraging alternative crops, which are still profitable and still can be grown with the minimum of labour and minimum of special equipment, the better it will be, I am sure, in the long run for all those concerned in agriculture, and of course for the final consumer who over the years has to pay the price of any diseases and difficulties which arise.

§ LORD BESWICK
My Lords, the noble Lord, Lord Nugent, paid a very deserved tribute to one section of the farming community, including my noble friend Lord Walston. I thank him for it, and I am very happy to endorse what he says. The noble Lord sounded a note of anxiety about the imbalance which he thought may develop between the large-scale East Anglian farmers and the smaller livestock producers on the other side of the country, and he was good enough to express this anxiety to me previously. I have been looking at what in fact we undertook to do in this year's Review award, and I think that if he considers the picture as a whole he will find that the Government certainly cannot be accused of favouring cereal growers at the expense of livestock producers.
After all, a major proportion of this year's Annual Review award went to the livestock sector. The hill cow subsidy was raised by £2 to £16 5s. per head; and the beef cow subsidy by 30s. to £9 per head. The guaranteed price for fat cattle was also increased by 11s. per cwt. to a total of 200s. in order to help all farmers who take animals for fattening from either the beef or the dairy herd. The total value of the milk guarantee was increased by lid. per gallon; the guarantee for fat sheep was raised by 2½d. per lb. This will be of direct benefit to fatteners in all areas. It will also benefit farmers rearing store sheep on the hills by maintaining an adequate outlet for those animals which they could 208 not reasonably hope to fatten themselves. On pigs, the Government widened the middle band which made it unlikely that pig producers would suffer a cut in the basic guarantee this year, and the basic guaranteed price itself was raised.
Therefore, whilst I appreciate the thought behind the noble Lord's remarks, and although it remains true as a generalisation that the cars in East Anglia are slightly longer and glossier than those which the farmers elsewhere in the country have, nevertheless I hope it will be accepted that we have not forgotten the important livestock producer. However, my Lords, this Order refers to the cereal producers, and I hope that the House will be able to accept it.