HL Deb 18 March 1970 vol 308 cc1153-60

3.36 p.m.


My Lords, with your permission I should like now to make the Statement about the Annual Farm Price Review. Details are in a White Paper now available in the Printed Paper Office. The Statement is as follows:

"During 1968–69 the agricultural industry had a difficult eighteen months largely as a result of poor weather and the aftermath of the foot-and-mouth epidemic. These factors, coupled with the tight credit situation, affected the momentum towards expansion. Even so, progress towards the objectives of the selective expansion programme continued, although in varying degree. It is against this background that this Review has been conducted, and the Government's aim is to ensure that the industry is enabled to overcome these problems.

"There are also some encouraging signs on this occasion. This year net output and net income are forecast to have risen substantially. Output in the 1969–70 farm year is expected to reach as high a point as it has ever done. Net income at over £535 million is expected to be the highest ever. We are anxious to maintain this momentum of production so as to make further progress towards the objectives of the selective expansion programme. In order to do this and to tide the industry over until this year's improvement has worked through, certain of the industry's needs must be met. These needs are clear: to replenish cash resources, to contain costs and to increase investment. This cannot be done simply by sticking to the traditional Annual Review methods of price adjustment and production grants. The leaders of the industry have recognised the importance of the Government's willingness to adopt a more flexible approach and to design the measures to meet the real need.

"The four-point package we are introducing is this. First, commodity prices. We are again making effective increases for the priority commodities —beef, pigmeat, wheat and barley. Because of the special circumstances this year we are doing the same for milk, sheep and potatoes. The increases on these seven commodities will not only offset costs but give farmers money over and above this. They amount to about £54 million. In accordance with our policy we shall reduce the guaranteed price of eggs by l.43d. per dozen. We are ending the Small Farm (Business Management) Scheme which has run its course.

"Second, extra resources in the way most quickly to hand. We are raising the rates of fertiliser and lime subsidies for the next 12 months. Nearly all farmers use fertilisers and we calculate that, depending on uptake, this will put an extra £10 million into the industry.

"Third, we shall introduce new incentives to eradicate brucellosis through premiums on milk and on beef cows in accredited herds. These should amount on average to £5 million annually in the first years. They will automatically increase as more herds become accredited. The impetus to eradicate the disease will also help further to reduce costs. There is public concern about this disease and I am anxious to make rapid progress to eradicate it.

"Fourth, there will be further incentives and resources directly linked to investment. We shall raise substantially for two years the rates of the agricultural capital grant scheme. The injection of cash through our other measures will, I believe, enable farmers to take full advantage of this improvement. The increased rates of capital grant should make available another £20 million or more for direct investment over a period of about two years.

"The Orders providing for increased rates of fertiliser and lime subsidies and of capital grants will be laid before the House at once. The changes will come into effect tomorrow.

"This four-point package cannot be precisely evaluated in conventional Review terms. But the measures more than recoup costs as an exceptional arrangement this year and leave the industry with its efficiency gain in full.

"In total, very substantial resources have been committed to the agricultural industry as a result of this Review. These, including the increased capital grants spread over a period of about two years, amount to about £85 million. We have provided the opportunities and conditions for the industry to keep up and to improve the momentum of selective expansion. I believe that farmers will respond. The trends to greater production and productivity must then result in a substantial move towards their income objective this year and the achievement of the selective expansion programme."


My Lords, may I thank the noble Lord, Lord Beswick, for repeating this Statement in this House. Is the noble Lord aware that we welcome the news of the increase in production, and indeed some of the innovations in this Award? At £85 million, it is in fact the highest Award that has ever been given, but it has to cover about £60 million worth of increased costs, so that the net gain is relatively small. Is it a fact that the National Fanners' Union have refused to agree it? If this is so, is it because the purchasing power of farmers' incomes will still be lower after this Review than it was after the last Conservative Government's Review in 1964? Have further cost increases that will have to be faced later this year, arising out of the current wage awards throughout the economy, been taken into account in making this Review?

On a more cheerful note, may I ask whether the noble Lord is aware that I welcome his capital grant scheme, which will undoubtedly be a help to expansion? Is he also aware that the brucellosis incentive scheme will be generally welcomed; and may I ask him whether it will be joined shortly by an area eradication scheme, which of course will be needed as soon as possible? Is he aware that I am sure this will bring great satisfaction to the noble Baroness, Lady Summerskill, and to my noble friend Lord Rowallan, in their splendid campaign on this account?


My Lords, may I thank the noble Lord, Lord Nugent of Guildford, for his generous welcome. I doubt very much whether it was thought possible a month or two ago that anyone on the other side of the House would have found himself able to give a general welcome to the proposals which my right honourable friend has been able to make. The noble Lord made some calculations about the net gain in income. I am not sure that his arithmetic or his method of achieving this figure is absolutely fair. Much will depend upon how fanners respond to the additional grants that have been given. Their net income will be a result of the efforts which they make. It will not be determined by any simple adjustment in prices; it will be determined by the way they use the additional capital which is being made available to them.

I was asked about the brucellosis scheme. The proposals which are embodied in this Review package are, of course, in addition to the area eradication scheme. There will be additional costs in relation to that scheme—compensation for the slaughter of animals, for example—but of course the incentive given here will enable that area scheme, when it is started next year, to be more effectively implemented.


My Lords, may I ask the noble Lord just one supplementary question on this matter? Is he aware that my assessment of the net income effect is based on a well-informed article in the financial section of The Times last week, which indicated that the purchasing power of farmers' incomes had been falling over the last five or six years; that it is less by some 5 per cent. than it was in 1964–65, and that all the calculations which his experts will make will show him that that could not possibly be picked up by the net effect of this Award?


My Lords, I know that some complicated calculations have been made as to this, but I am simply saying to the noble Lord that I do not think, from the figures I have given about the estimated cost of this package, that one can deduce what the net income of the farmers will be. Their net income at the end of next year will be a factor of their utilisation of the opportunities that are being afforded to them.


My Lords, I rise from the Liberal Benches to welcome this Review, but I would ask: has it gone far enough? We are now entering negotiations to join the Common Market, and the sooner a large home agricultural expansion takes place the less the cost is going to be for us in joining the Common Market. I welcome the brucellosis scheme, and I am glad to hear that the eradication and slaughter policy has not been abandoned. Can the Government give me an assurance on two points? Brucellosis in cattle, and also in humans (when it is known as undulant fever), should be a notifiable disease. The other point I should like to ask is whether the Government will make undulant fever an industrial disease.


My Lords, the noble Lord asks whether this Review goes far enough. I have no doubt that it does not go far enough for some farmers; but it goes a long way. As for the notification of brucellosis, we debated this matter at some length on a recent Order and I am afraid that the position as then stated is not affected by this Review Award.


My Lords, the noble Lord said that this Review goes far enough for some farmers. Could he answer my noble friend's question and say whether it goes far enough for the National Farmers' Union?


My Lords, I am not sure that the noble Lord heard me correctly. I said I had no doubt that it does not go far enough for some farmers. As to the attitude of the National Farmers' Union, this is not an agreed Award but they accept that it represents an imaginative approach to their problems.


My Lords, in view of my noble friend's most welcome statement on brucellosis, may I ask him whether there is any chance of a special area being designated this year, without our having to wait until next year?


My Lords, we have debated this matter, as I have said, at some length. The scheme which will start next year is geared basically to the availability of veterinary skill. The effect of this voluntary scheme which is now being started, or encouraged, by these incentive payments will mean that the areas selected will be more easily designated, and the progress with the compulsory scheme will be expedited by the progress made by the present voluntary scheme.


My Lords, while I am glad to see that the Government have put emphasis on financing long-term improvements and re-equipment which are impossible in this age of inflation without quite exceptional help, may I refer to the questiton of income and ask the noble Lord whether it is not true, looking at the departmental figures which are published in last year's White Paper, that whereas he may say, correctly, that farm income last year reached the highest figure ever, in fact it is only 4 per cent. up on the figure of two years ago, and that without allowing anything for the drop in the value of money. Is that in accordance with the Government's policy for industry?


My Lords, it is not in accordance with the Government's trading policy to reduce anyone's income, but if the noble Lord wishes to get an absolutely accurate assessment of the net income to farmers he should also take into account that the total figure is divided among fewer farmers.


My Lords, while welcoming most sincerely the results of this Review, may I ask my noble friend three questions? The first relates to the capital grant. This is an admirable means of providing, in effect, cheap capital for farmers, but would not my noble friend agree that it is now time to consider means of providing cheap credit, not only for farm buildings but for all forms of agricultural capital requirements, on the analogy of the cheap credits which are provided, for instance, for the ship-building industry, and also on the analogy of the special cheap credits provided in most of the countries of Europe through their agricultural credit corporations. Secondly, can my noble friend give an assurance that the increased subsidy on lime and fertilisers will in fact result in cheaper fertilisers for farmers, rather than in higher profits for the fertiliser manufacturers? Thirdly, would not my noble friend agree that the time has now come to call a halt to this annual farce which is called the Price Review and which really results in very little other than wasting the time of extremely busy and usually (possibly I should say "unusually") intelligent men, and to consider the desirability of having this Price Review every three or every five years?


My Lords, on the question of cheap credit, I recognise that there is a very—I was going to say "plausible" case, but perhaps persuasive case is a better term, for cheap credit; but if the credit were to be made available for this industry, as distinct from other industries, there would be an element of subsidy. It is the view of the Government that this subsidy is better employed in this selective way. What we really want is cheaper credit all round, and I am glad to see that there has recently been an improvement in that direction.

As to the fertiliser subsidy, the point raised by my noble friend is a relevant one. My right honourable friend took the precaution of consulting with the principal fertiliser manufacturers and has received from them an assurance that there will be no increase in the current prices of fertilisers over the next 12 months unless there are exceptional circumstances, and even then there will be full consultation with the Government and the farming interests.

I was asked about an annual review, as against a biennial review—


My Lords, I referred to a triennial review.


My Lords, if there are problems and difficulties and rises in temperature over the annual reviews, I hesitate to think what would happen if everything were stored up for a three-year review.