§ 4.19 p.m.
§ LORD BESWICKMy Lords, with the permission of the House, I will now repeat a Statement that is being made in another place about this year's Annual Farm Price Review. It is as follows.
"As a result of the bad harvest weather in many parts of the country cereals production has fallen. This has been one of the main causes of the fallback last year of both net output and net income. Costs are up by £40 million, and the gain normally expected from greater productivity was not realised in full. But with average conditions this year, output, productivity, and income are expected to improve.
"The Government have made it clear that they wish a selective expansion of agriculture to continue on the basis of rising productivity. Beef and pigs, wheat and barley are the commodities where expansion is wanted. We need more acres in cereals, more livestock on a smaller grassland acreage, and more pigs both for pork and bacon.
"The Government have considered this year's Review against this agricultural background, and against the difficult economic situation with which the country is faced. I now turn to the determinations.
914 "On beef, the dairy herd is increasing fast enough to meet our objective, but the rate of expansion of the beef herd is slowing down. We are, therefore, making a substantial increase of 15s. per cwt. on the price, and increasing the beef cow and hill cow subsidy each by £1, while making a neutral determination on milk. This will avoid stimulating too rapid an expansion of milk production, while dairy farmers will of course get the benefit of higher prices for their calves. Moreover, as I have already announced, we are giving greater stability to the milk products market through the agreement on voluntary restraint on cheese imports reached with our major suppliers.
"Pig production is increasing, and to maintain this trend we are raising the guaranteed price for pigs by 6d. a score and increasing by 400,000 the number of pigs to which this higher price will apply.
"As I have said, we want more wheat and barley. So we are raising the guaranteed price for wheat by 1s. 7d. to 29s. per cwt., and barley by 10d. to 26s. per cwt. We are also abolishing the standard quantity for barley. These changes come on top of the large increases made on these commodities last year.
"For the rest, we are putting per 1½d per lb. on sheep which, with last year's increase, will assist the industry to secure our objective of maintaining production. We are also leaving the wool price unchanged. Our aim of self-sufficiency for main crop potatoes is being secured, but because of the cost increase on such a labour intensive crop, we are putting 5s. a ton on the price. In accordance with our announced policy of phasing out the subsidy over five years, we are making the maximum cut on eggs. Oats and sugar beet, where we are not seeking expansion, will still be unchanged. To contain rising expenditure the fertiliser subsidy rate will be reduced by £3 million, but expenditure will still be over £30 million a year.
"The increase that we are putting on the four commodities where expansion is wanted—namely, beef and pigs, wheat and barley—is about £37 million, so giving a significant injection 915 of capital and an incentive on top of costs for these commodities. This is a positive review giving the necessary encouragement where it is needed. The net effect is to increase the value of the guarantees by £34 million."
§ 4.23 p.m.
§ LORD NUGENT OF GUILDFORDMy Lords, may I thank the noble Lord, Lord Beswick, for repeating that Statement for our information here. May I also thank him in so far as he was responsible for the considerable supplementary information that we have been given in the Press over recent days? There are four points about which I should like to ask the noble Lord.
First, in view of the obvious tightness of this award, have the National Farmers' Unions agreed it? Secondly, is there a reduction of net income in the current year, following the exceptionally difficult circumstances of last year—with the bad harvest and foot-and-mouth disease—estimated at £39 million, which would bring the net income for the year to £471 million? If there is, it will be of historic interest, because it means that the net income this year will be less than that in the last Review under the Conservative Government, in 1964, when the figure was £476 million. Thirdly, against this background of financial stringency in the agricultural industry and this Review, which provides no additional finance, plus the under-recoupment of increased costs, is the noble Lord aware that the total effect will be taken to mean that the Government are abandoning the food production expansion programme announced by the Minister last November? Lastly, is the noble Lord aware that as this expansion programme was estimated by the Minister of Agriculture to save £160 million a year net on our food import bill by 1972 this change of policy will cause very general disappointment?
§ LORD BESWICKMy Lords, I am sorry that the noble Lord opposite, who speaks with such authority on agriculture, has been misled by the Press reports that he has seen. I appreciate his disappointment that the Statement which I have made is by no means as pessimistic as he has been led to believe. He asked me whether the National Farmers' Union have agreed this Review. I understand 916 that they have not agreed it, although the actual statement which they will make has still to be made. The noble Lord asked me, if I understood his second question aright, whether the total net income is less than it would have been under the last Review of the régime of Mr. Soames and the Conservative Government. I am sure the answer is, No. I cannot conceive that it is, Yes. But I do not have the figures with me and I must look at the point. The fact of the matter is that the net income has gone up each year until last year. But I will certainly check on that figure.
The third and fourth questions are really one. The noble Lord asked me whether we are abandoning the expansion programme. The answer is, No. The fact of the matter is that the Statement which I have just made gives support to those commodities in which we need expansion, and we believe that these figures will enable the farmers to meet the target set out in the Statement which was made in this House and in another place in November of last year.
§ LORD NUGENT OF GUILDFORDMy Lords, may I trouble the noble Lord with one further quesion, in the light of his answer on my last point? Does he remember that the "little Neddy" on agriculture, which reported on the possibility of expansion in the industry, estimated that the capital needed by the industry to meet this expansion would average about £155 million per annum by the end of the four-year period? Does the noble Lord really maintain that, after under-recouping the increased costs, these figures give any possibility of providing the extra finance needed to get the expansion that we want?
§ LORD BESWICKMy Lords, if the noble Lord were to ask me whether I think that extra capital injected into the industry could have secured an even more rapid rate of expansion, I would agree with him. But if he is saying that the awards do not enable an expansion to take place, then I disagree with him. The fact is that the awards directed to these priority commodities enable extra capital to be injected into the industry in respect of those commodities. I have not seen the statement from the National Farmers' Union, but I should be very surprised if the farmers criticised the awards that have been made in respect 917 of beef or cereals. The fact is that in those two cases—and they are the two most important cases on which we are depending for expansion—the award is quite generous.
LORD HENLEYMy Lords, I do not think that the award is quite generous in respect of these commodities. It may be generous for cereals, but I certainly do not think that 15s. on beef will be enough to enable a switch to take place. It ought probably to have been more like £1 before it could begin to have any effect. And similarly with sheep meat and mutton. There the increase is 1½d. per lb., and probably should have been 3d. Does the noble Lord really think that this is going to enable selective growth to take place in the industry? It is impossible to reconcile what the noble Lord has said with what the Minister of Agriculture said in November. It was suggested then that, in order to give some kind of selective expansion to save £160 million a year in imported foodstuffs, there would have to be something rather better than what the noble Lord is offering now. This will not give any confidence at all to the industry.
§ LORD BESWICKMy Lords, the noble Lord is always very fair, and I listen to him with great interest on these matters because he knows far more about them than I do. But if he is fair he cannot say that there was any figure quoted in the Statement of November of last year. It is wrong to say that the award on beef is less than was stated last November. No figure was stated then. This is in fact the highest award on beef that has been made for 20 years; and, as I said, I should be very surprised if the National Farmers' Union were very critical of this particular item.
LORD HENLEYMy Lords, on the particular item of beef, I agree with the noble Lord; but taking the whole figure, the agreed cost is up by £40 million and the Government are offering £34 million, so we are not even keeping pace. And I do not see how this can mean expansion.
§ LORD BESWICKThe noble Lord should take into account the fact that there has also been an increase in efficiency, which will yield a saving of £30 million in the coming year. He should also take into account the fact that, if he 918 is considering commodities only, the actual extra value of the award on these commodities is £37 million a year. There has been a saving on fertilisers certainly of £3 million a year, which brings the liability down to £34 million. But on commodities the figure is £37 million a year; and in fact it is the third highest award in the last 20 years.
§ BARONESS PLUMMERMy Lords, I should like to ask my noble friend a question more on general lines than on detail. Noble Lords know that there have been prolonged discussions and heartrending negotiations which have resulted in this Award. I should like to ask my noble friend to inform the House of the total value of the five Awards under the present Government compared with the last five Awards of the previous Government. Moreover, can my noble friend also comment on the fundamental disagreement which now exists between the N.F.U. and the Conservative Party over major elements of that Party's agricultural policy?
§ LORD BESWICKMy Lords, on the first part of my noble friend's question, the Awards over the last five years, allowing for costs and efficiency, amount to £105 million. The Awards for the five previous years, under the previous Administration, also allowing for costs and efficiency, amount to £62 million. So that, again, I really cannot see why noble Lords opposite should be so indignant as they purport to be. On the issue of the National Farmers' Union as against the Common Market policy which the Party opposite would wish to see adopted here, as I understand it the National Farmers' Union are against the situation in which the cost to the housewife would go up, the demand would probably go down and the industry would go back to the sort of insecurity and instability which they knew before the 1947 Act.
LORD INGLEWOODMy Lords, may I ask the noble Lord a question about what the Statement calls "the neutral determination" for milk, which I assume is a new and fancy way of saying that there is no change proposed in the guarantees? The noble Lord has referred to this as a positive Review. Is he aware that over recent years, when Price Reviews have included modest increases in the price 919 of milk, the imports of dairy products at absurdly low prices have dragged down the price of manufactured milk, so that over four years the prices farmers received have shown virtually no change at all? Since this year he is not proposing a small increase, can the noble Lord say by how much farmers can expect the actual price which they will get for their milk to drop?
§ LORD BESWICKAs a matter of fact, my Lords, the question is not particularly good, especially coming from a member of the Conservative Party: because if there is one weak link in the policy which they propose for agriculture it is in respect of dairy products. This phrase, "a neutral determination", does not mean "no change". I am sorry; but the noble Lord cannot get away with that. It means, in fact, that the standard quantity will be reduced. That will be offset by an increase of 0.4d. a gallon extra, so that the yield will be the same. Although I know the point which the noble Lord makes about the depreciation of the pool price by virtue of the poor prices obtained by the manufactured milk, the fact is that under the voluntary agreement reached yesterday by my right honourable friend with the main suppliers of cheese the situation on manufactured dairy products should be considerably improved.
§ LORD BESWICKNo, my Lords; I am referring here only to cheeses.
§ 4.36 p.m.
VISCOUNT MASSER EENE AND FERRARDMy Lords, is the noble Lord aware that in the figures which he gave for the Awards under the present Government and for those under the Conservative Government he has of course forgotten to take into consideration the great depreciation in the purchasing power of the pound under the present Administration, as well as the increase in costs?
§ LORD BESWICKMy Lords, I am lost in admiration for the sharpness of mind of the noble Viscount opposite. He is quite right: there has been a depreciation of the currency. But it is not sufficient to explain the difference between 920 the £62 million in the Awards during the five years under the Conservatives and the £105 million in the Awards during the five years to which I have referred under the present Government.
§ THE EARL OF DUNDEEMy Lords, arising from the noble Lord's answer about last November's increased productivity programme, may I ask him whether the Government have considered that an 8 per cent. bank rate means a 10 per cent. bank overdraft interest in Scotland, and nearly as much in England? Do the Government really consider that this rate of interest, payable on a farmer's overdraft, combined with these very tight increases which they have allowed, will enable anything like the £155 million of extra capital required for this year to be forthcoming?
§ LORD BESWICKMy Lords, the noble Earl knows my view about the high rate of interest. This is an unfortunate factor, but the increased cost which results from that increase in bank rate has been taken into account in these determinations, and the total cost includes the extra cost of borrowing at this rate of interest.
§ THE EARL OF SWINTONMy Lords, may I ask the noble Lord whether his answer has taken into account the disastrous effect of recent weather on production, particularly in the North of England, where lambing is taking place at the present moment under four or five feet of snow? Obviously, any normal calculation as to what future developments are likely to be must be knocked endways by the prospects, not only there, but also in the Eastern counties on cereals, following the flooding.
§ LORD BESWICKMy Lords, the noble Earl is quite right: this has been a dreadful year for farmers, and this is a factor which my right honourable friend has pressed with great force in order to secure, in this very difficult year, the £34 million to which I am referring.
§ LORD BALERNOMy Lords, in view of the fact that bad harvests seldom come singly, may I ask the Government on what grounds they are so assured that the harvest season of 1969 will be a good one?
§ LORD BESWICKI am not quite sure what the noble Lord is getting at. The reason why I think this year will be a good one is that I do not believe the weather can be as bad as it was last year, plus the fact that these awards for these commodities should give encouragement to the farmer.
§ LORD DONALDSON OF KINGS-BRIDGEMy Lords, may I ask my noble friend two questions? First of all, having given what I believe, in contrast to the noble Lord, Lord Henley, is generous encouragement to the four commodities where we actually require what they are producing in excess of the present level, does not my noble friend think that it would be dangerous to add very much to the price of either eggs or milk since eggs are already in oversupply and milk is on the edge of it? Does not my noble friend think that we did great damage in the past to the egg situation by over-subsidising producers when we had already reached oversupply? And is he trying to avoid that here?
Secondly, could we have some clarification on the question of recoupment? I do not understand what was said from the other side. As I understand it, the efficiency factor is agreed by the Farmers' Union from the Government at £30 million; the costs are agreed at £40 million, leaving £10 million to be found. It is a convention that has grown up over the last few years (and I have the figures for the last five) that in ordinary circumstances the efficiency factor should be shared between the public and the farmers—which means that we have 15 plus 10, which is 25, and the settlement is another 9, which is a modest injection of capital. Is this the right way of looking at it?
§ LORD BESWICKMy Lords, on the question of eggs and milk I think it is generally agreed that there is no need, that it would be a disservice, to encourage production of milk more than has taken place in recent years. As for eggs, I agree with my noble friend that it is right to discourage over-production. I am fortified in this feeling that we are right on eggs by what has already been said by the noble Lord, Lord Nugent of Guildford. So, with the saving that we have made on eggs, we are able to inject into the other commodities a figure of 922 £37 million. Again my noble friend is right. One has to take into account here the efficiency factor agreed with .he Farmers' Union. If one takes that into account, I am then able to say, as a matter of statistical fact, that this Award is the third best Award in the last 20 years.
§ LORD NUGENT OF GUILDFORDMy Lords—
§ LORD SHACKLETONMy Lords, we have had quite a long session on this Statement. I realise that there are many farmers in this House, on both sides, but I think that we ought now to get back to our main debate. I hope that the noble Lord will not press his question. We have gone a very long way in this Price Review, and my noble friend Lord Mitchison has been waiting to make his speech on the Motion before the House.
§ LORD NUGENT OF GUILDFORDMy Lords, I was about to ask whether the noble Lord, Lord Beswick, is aware that we are far from satisfied with his valiant efforts to reply and that we shall wish to return to this with a debate as soon as possible after Easter?
§ LORD BESWICKMy Lords, I am grateful to the noble Lord. I am sure that the possibility of debate can be discussed through the usual channels.