HL Deb 06 March 1968 vol 289 cc1373-81

4.10 p.m.


My Lords, with permission I should like to repeat a Statement made by my right honourable friend the Minister of Agriculture, Fisheries and Food in another place about this year's Annual Agricultural Review, the details of which are in a White Paper available in the Printed Paper Office. It is as follows:

"Since the last Annual Review net income and net output have risen in spite of a sharp increase in cost. Productivity has also recovered and there have been encouraging developments in most of the commodities. The effects of the exceptional determinations we made last year are thus clearly beginning to show.

"At this year's Annual Review, the Government have felt it necessary to strike a balance of many considerations. We want to see the upward trend in production maintained, so that agriculture can make its full contribution to import saving on the broad lines of the selective expansion programme. On the other hand we must conserve national resources and keep public spending as low as possible. For this reason agriculture, like other industries, must be expected to bear a reasonable proportion of its cost increases, assessed this year at £68½ million, out of rising productivity in the way envisaged in the assurance given by the Government at the 1966 Review.

"Cereals production has been increasing but, as I informed the House in December, we believe that further expansion, particularly of wheat, is necessary to contribute to the growth in demand. We have therefore decided to abolish the standard quantity for wheat and to increase the price by 1s. 6d. a cwt.; to raise the standard quantity for barley by 750,000 tons; and to raise the price both for barley and oats by 5d. I know that the industry will welcome, in particular, the major changes we have made on standard quantities.

"On potatoes we shall be increasing the guaranteed price by 7s. 6d. a ton, and we have also undertaken, if support buying should become necessary for the 1968 crop, to make an additional contribution towards the cost, up to a limit of rather more than £1 million. We are raising the price of sugar beet by 3s. 6d. a ton.

"Production of eggs must be kept in line with the increase in demand, and the guaranteed price will be reduced by ¼d. a dozen.

"As a result of the decisions we took last year a recovery in the pig herd is now well under way. We want this maintained. Our aim is to keep prices stable over the coming year at a rather higher level than producers are currently getting. We have therefore widened the middle band by 300,000 at each end, and have increased the basic guaranteed price by 1s. a score. As a result pig producers need not fear that further expansion will lead to an early cut in the price. The raising of the top of the middle band, like our decision on the standard quantities for cereals, shows that we are looking for increased production.

"The beef and milk herds have been severely hit by the foot-and-mouth outbreak. Even so, expansion has gone on. We want to see this maintained. The guaranteed price of milk will be raised after allowing for the standard quantity adjustment, by 1¼d. a gallon. This takes into account the 'dilution effect' of expansion of the dairy herd in the interests of beef production. To cover this and higher distributive costs, the milk retail price will be raised from 10d. to 10½d. a pint at the beginning of July. We have recognised the need for a further substantial incentive for beef production. We are therefore raising the guaranteed price for cattle by 11s. a cwt to £10 a cwt. and, in view of the particular importance of cattle rearing to parts of the United Kingdom, adding £2 to the hill cow subsidy and 30s. to the beef cow subsidy.

"Finally, there has been some further decline in the total sheep flock. Nevertheless, there has been some expansion of the flocks in the hills and uplands, which should go further in the light of the changes we made last year in the hill sheep subsidy. This year, in order to maintain an effective outlet for store sheep as well as to assist fattening elsewhere, we are raising the guaranteed price by 2½d. a lb.

"In making these determinations, we have concentrated on end prices, since it is here that the impact is likely to be greatest. Overall, they amount to £52½ million. This is a big sum. But the additional costs which the industry has to bear are also very high. The industry is being expected to bear about one-quarter of these costs, but fanners will still retain about half of the gain from their increasing productivity to improve income and provide resources for further investment. The Government believe that the determinations reached, taken together with those at the 1967 Review, will enable the industry to sustain the encouraging forward momentum that is now under way, and are fully consistent with the needs of the economy as a whole. Our decision has not been easy but I think that it is fair and right."


My Lords, I should like to thank the noble Lord, Lord Beswick, for making this Statement. May I ask him four questions? First, can he tell the House the reaction of the National Farmers' Union to this settlement? Secondly, is the noble Lord aware that we very much welcome the increases of net output, and should like to congratulate farmers and farmworkers on achieving them—all the more so in the face of the very steeply rising cost increases of £68½ million, to which the noble Lord referred? In passing, may I say that this is the highest since 1951 and is a sidelight on the Government's economic failure.

My third question is this: Is the noble Lord aware that the figure of £52 million will undoubtedly make the headlines in to-morrow's daily papers as, "An extra £52 million for farmers"? But, in fact, fanners are going to be £16 million worse off before allowing for the annual deficiency factor. My fourth question to the noble Lord is to ask whether he is aware that this award, although, as he has observed, large in itself—and skilfully allocated, if I may say so—is unlikely to be enough, in my judgment, to finance the big further food expansion that we want, and further emphasises the need to change to the Common Market system of import levies. Will the noble Lord please say whether there is a prospect of his colleague the Minister of Agriculture starting consultations with the N.F.U. with a view to making a changeover next year?


My Lords, may I first of all thank the noble Lord for his selectively fair approach to this Statement. In answer to his question about the N.F.U., I understand that they have not been able to give a formal agreement to the Review, but on the other hand they have not positively disagreed with it. The noble Lord pointed out that the cost increase is the highest ever this past year, and of course I accept that this is so, although I do not agree with the noble Lord's allocation of the blame. He will also, I am sure, accept that last year we saw, I think, the highest award of all time since the 1948 Act. Certainly the net result to the farmer is the highest since 1948. That exceptional award was a pump-priming operation, and its consequences will continue this year, with the additional encouragement given in the present Review award. I quite agree with the noble Lord that the figure of £52½ million is a very large sum and it can be misrepresented in the Press. I have no doubt that some people may misrepresent it, but I hope he and others will ensure that a proper appreciation is made, and that the award will be seen as giving the best bargain to any urban consumer in Europe, certainly if one judges things by the price of food.

The noble Lord also said that, although this is a large figure, the farmers will be £16 million out of pocket. I am almost tempted to refer to the time when I was in a police court during the war, and the Duke of Marlborough, who was on the bench, charged me with having my motor car side window halfway down and I told him that in fact it was halfway up. In this case, although it can be said that the farmer is £16 million out of pocket, it can also equally fairly be said that he is £15 million in pocket, since he retains half of the £30 million increase in productivity.

The noble Lord finally suggested that this was an inadequate award, and that we ought to be considering an entire change of policy in these matters. I do not necessarily agree with him that we should be considering the change that he suggested, but my right honourable friend is in close touch with the N.F.U., and if consultations or discussions are called for I am sure he will be ready to listen to what they have to say.


My Lords, I want to be slightly less grudging than the noble Lord, Lord Nugent of Guildford. I and my noble friends feel that against the economic background this is a very good Review. It may be that we are wrong for the reason that we have these Price Reviews every year, they are the subject of months and months of close negotiation with many interlocking details, and we are then given them in the form of a Statement. So it is really impossible to decide, except by a very snap judgment, whether they are good or bad and we cannot put any meaningful questions at all. I admire the way the noble Lord, Lord Nugent, put some meaningful questions; I am sure that I cannot. Nevertheless, it seems to me that these Price Reviews are peculiarly unsuitable to the form of a Statement, and I wonder whether it would be helpful to try to bring them out in future in some totally different way. Having said that, my snap judgment is that this is as good a Review as we could possibly expect under the present economic circumstances.


My Lords, I am much obliged to the noble Lord. I quite agree with him that there is a case for what ha says, in the same way as there is a case against an annual Budget, in so far as we now have to look at these things over a period of more than twelve months. I have no doubt that what the noble Lord has said will be considered, and I thank him again for his fair assessment of what is intended to be a fair Review.


My Lords, may I ask my noble friend whether it is not important that this Review—I was not quite sure whether he said that his right honourable friend had received the full approval or agreement of the National Fanners' Union, but I think it is a good one—should lay the foundation and create adequate incentives for doing what the economic position of the country urgently requires; that is, to enable the agricultural industry considerably to increase its productivity to take the place of the imports, some of which are unnecessary, which are coming into this country?


Yes, my Lords. I think I can safely agree with what my noble friend has said.


My Lords, may I ask my noble friend just one small question on milk prices? As I jotted it down, I think he said that the price was increased by 1¼d. a gallon and that the retail price from October would go up by ½d. a pint. If that is correct, it means that the retail price of milk is going up at the rate of 4d. a gallon for half a year, or 2d. a gallon spread over the whole year, in respect of a rise of 1¼d. a gallon to the producer. In other words, the retail margin has at the same time been increased in this Review. Perhaps my noble friend will confirm that I am right, or will tell me if I am wrong.


My Lords, what I actually said was that to cover the award of 1¼d. a gallon, the milk retail price would be raised from 10d. to 10¼d. a pint at the beginning of July.


My Lords, in thanking the noble Lord for the Statement which he has made, may I ask him whether he is aware that the economic conditions of the country, which have been referred to and which have, as it were, been prayed in aid as giving this Review a rosy reflection—cause the farmers of this country to look, and to look in vain, in this Review for a really bold decision by the Government along the lines that have been mentioned by my noble friend who sits behind the Front Bench. The industry is once again left to carry this very considerable burden of £16 million or more—and that is quite a lot to carry—and it has been carrying these loads for year after year after year to an extent that perhaps no other industry in this country has been expected or prepared to absorb.

At a time of national personal stringency this is not a question of having an increase in personal incomes. It is a question of the industry having the wherewithal to make an investment, to service the fixed capital and working capital investment that it has already made, and to replace the imports and get more from our natural resources. I am quite sure that, in ratio terms, there have been many worse Reviews than this one, but this is an occasion when there ought to have been boldness on the part of Her Majesty's Government. But this boldness is lacking, and I have tried to show the reaction of the fanning community. I am sorry to have to cast this rather damp reflection on what has been received by others—perhaps others with a little less experience and practical involvement in this—


My Lords, may I say that we should have made a great many of these very points, if it had been the custom of your Lordships' House to do so after a Statement.


My Lords, I am much obliged to the noble Lord, Lord Henley. It is of course the practice to ask questions, and not to make speeches on a Statement of this kind. May I just say, in reply to what I take to be a question by the noble Lord, Lord Woolley, that I am sorry he has made the remarks which he has, because I know that a number will tend to follow his lead, and I think he was being rather unfair. He said that year after year we have left the farming community to carry a burden. In point of fact, if his memory goes back that long, last year was a very good year. The Review was an exceptionally good one, the award was an exceptionally good one, and the momentum created by that award is continuing, and we think it will continue with this present fair award.

Finally, knowing the general attitude of the farming community, my own view is that the farming community, like most other people in this country, are prepared in the present difficult situation to make an effort and to back Britain. Even though the farmers are asked to absorb £16 million out of their increased productivity, they will still have an extra £15 million as an increase in their income or for extra investment in their farms.


My Lords, in bearing in mind the inevitable grumbles of the farming community, will my noble friend also bear in mind that when we open our county papers each week and read the column headed, "Wills of the week", we are staggered by the enormous fortunes that farmers are leaving.


My Lords, I shall continue to steer a straight course between partiality and impartiality.


My Lords, would my noble friend observe from a quick breakdown of these figures, which I think are reasonably generous, that cereals, sugar beet and beef, which are the main increases, are all to increase the fortunes being made regularly by the large farmers, and there is precious little—only 1½.—to help the small farmers?


What the awards are also doing, my Lords, is to increase the contribution towards import saving.