THE DAIRY INDUSTRY

HL Deb 16 January 1974 vol 348 cc1005-36

5.25 p.m.

VISCOUNT MONCKTON OF BRENCHLEY rose to call attention to the problems of the dairy industry; and to move for Papers. The noble Viscount said: My Lords, I beg leave to move the Motion standing in my name on the Order Paper. My speech will be reasonably short: the facts are clear and the deductions obvious. Farmers are in difficulties but they, like all of us in this country now, realise that we have to take some reduction to our income by the very nature of things going on around us. Dairy farmers, however, are in an almost impossible position and something must be done now if the country wishes dairying to go on. My noble friend Lord Brookeborough, who has withdrawn from speaking in this short debate, has told me that the same applies to Northern Ireland. I imagine that that is the shortest speech he has made in your Lordships' House.

I must declare an interest: my wife and I are dairy farmers and we are losing money. We breed a naturally polled pedigree British Friesian cow and we are cutting our milk production and cutting the numbers in the herd. This, as I will show later on, has an effect on the beef availability to this country. Part I of the 1947 Agriculture Act stated as its aim: … promoting and maintaining … a stable and efficient agricultural industry capable of producing such part of the nation's food and other agricultural produce as in the national interest it is desirable to produce in the United Kingdom …". I take it that that is still the aim of the Government's agricultural policy. In ten months of 1973, the food and feed import cost was £500 million higher than in the same ten months in 1972. Also in 1973 milk production dropped—the first drop in any year since 1964. It could come to a point where we will have to import liquid milk from the E.E.C., adding yet more fuel to our balance-of-payments trouble.

Not only milk and its products are at risk. When dairy farmers go bankrupt or move out of dairying they are not going to go back. It also means that beef is going to be short. Milking cows are now being sold for slaughter, not letting them calve on to produce the 50 per cent. of bull calves that a normal herd produces. In this same month of 1973 our own herd had 309 head, that is from calves to bulls, and in this month in 1974, 284 head. In other words, we are producing less milk and about 12 to 14 less bull calves for the beef market. From August to November of this last year there were 2,000 fewer calves that went through the market monitored by the Ministry of Agriculture. One farmer in Devon put in a Friesian bull calf—a good one weighing 112 lbs.—which was sold for auction for £12. That is for a 112 lb. calf! We sold two calves yesterday, both four weeks old, one for £23 and the other for £15. Last year they would have been £50 each for certain. So I did not quite understand this increase in the prices of livestock. With us in the dairy industry it is a decrease for the bull calves, for the culled cows and those that are being sold barren for slaughter. The margins per cow on the Milk Marketing Board figures are 60 per cent. below 1972–73. We are almost back to the depressed levels of the 1960s and in real terms the margins are the lowest since the war. In the Government figures the prices for milk were expected to be right at the 1973 Price Review when food prices were much lower, and even then expected to fall.

The food costs now are nearly double. On our own farm in January last year we paid £35 per ton for dairy cake; this month this year it was £63 per ton with 2 per cent. less protein in that cake. In other words, we are going to produce less milk, less good quality milk, and yet pay very nearly double in the cost of cake. Input costs for the industry on a full year basis at the last Price Review were £350 million to £400 million increase; that is without the increase in wages and the two hour cut in the standard week and excluding the present wage award to come this next week. Incidentally, may I say here that no dairy farmer I know grudges any increase in wages to the men working on his farm. But may I say also what a help I personally have found the National Union of Agricultural Workers in my own section in Kent, both on advice in regard to labour and indeed on advice on the farm itself. I have always tried to tell them that it was about time that the N.F.U. and the N.U.A.W. got together. Their interests are so close in our own case that this might be the real breakthrough in labour relations. Total costs, therefore, are likely to increase by the Price Review time to between £400 million and £450 million. That sum equals the total income from the dairy industry a few years ago. Of this sum, £335 million relates to feeding costs alone.

The Government guessed that income was going to be up by 26 per cent. I reckon this is rather doubtful, and indeed irrelevant, because much of that increase must have been for the cereal farmers—I am told that barley to-day is £63 per ton. But, my Lords—and this is really a most important point—two-thirds of all the dairy farmers in this country do not grow cereals. It is becoming a much more specialised industry. We spend a fortune on our machinery, housing and feeding, but many, two-thirds, have no cereals to recoup their losses on the purely milking side. It seems that for the dairy farmer Phase 3 is working very unfairly. Manufacturers' profit margins are limited to a 10 per cent. increase; the dairy producers' margins have been cut by 60 per cent. by feedingstuff increases, but the price of milk is held down.

The Prime Minister made a statement saying that it is difficult to help dairy farmers because the income is expected to go up by 26 per cent. I have already shown that this figure is doubtful. Even under the strict control of Phases 2 and 3 manufacturing companies have not had their prices held down because other companies were doing well. The dairy farmers are being held down because the cereal farmers are doing well. Milk producers never really recovered from the 1973 Review. That was hopeful because of calf price increases and because foodstuffs were lower in price. The opposite has in fact occurred. I would point out, my Lords, that the livestock industry accounted for 70 per cent. of all agricultural output, and milk for 20 per cent. of all the returns of farm sales. In these times I would have thought that increased farm output was of paramount importance. I think the Prime Minister said on October 8 that the sudden and steep increases in imported food and raw material prices were a major factor in the national economic difficulties. Therefore to increase our milk output and the production of beef calves should help the economy, and this will not happen unless the dairy farmer is helped. If livestock numbers are down, meat prices go up.

After working as a farm labourer I went to Cambridge to study the theory of farming and the first lecture was the "shock" lecture, "Gentlemen, agriculture is a mixture of immorality and dirt", and we knew, or know now, what that meant. The dirt can be seen on my farm to-day, and the immorality is the way we arrange the matings of our animals and the inbreeding and line breeding which go on to produce the perfect cow. But is it morally right for the Minister to say to us that the long-term prospects for milk producers are excellent? They are "going bust" in that period of waiting for the long-term prospects. Many milk farmers are "going bust". Have not dairymen a right to compete on level terms with the E.E.C. countries? If so, how do we justify the similar costs we have with the E.E.C. with 5p per gallon less return for the milk we produce?

My Lords, may I quickly give you one or two costings from farmers in Kent who have authorised me to give these costings? This is one from Blacketts Farm, in Tong. Their increase in feeding costs in the year 1973–74 was £12,293; the increase in the milk cheque, £2,017. In March, 1973, they sold three barren cows for £501; in October 1973, six barren cows fetched £454—a real reduction in livestock prices from a dairy herd. In March, 1973, their Hereford cross calves fetched on average £31 each; in October, 1973, they fetched £14.20 average, a real drop. And the farmer is paying 151½ per cent. for his overdraft and losing money. The second is from Manor Farm, Kingsnorth, Ashford, Kent, where the farmer, with ten more cows in the herd, is producing 584 more gallons a month but is worse off by £273 per month on feed and wages bill alone. On this farm the farmer would get no income at all, and in fact is making a loss. And the last example—from New Street Farm, Great Chart, Ashford—shows that the farmer's total extra costs increased by 6.14p per gallon or £52.60 per cow. All dairy farmers, therefore, except those with large cereal acreages as well, are now losing money. We may have to import liquid milk.

Many of your Lordships will say that it is a way of life, and of course it is a good way of life; but you cannot have a way of life unless you can make a profit to live on. Another trouble is that land has become more valuable. None of us wants to sell land; most of us are short of land for dairying, but the increase in the value of the land has made it more difficult, and in fact virtually impossible, to hand on to a farming family and keep it in that family. I am sorry that my noble friend Lord Rowallan is not here. He would, I am sure, have spoken on the problem of brucellosis. We have not yet had a proper eradication scheme and this prevents those of us who are pedigree breeders from exporting to the E.E.C. We hope that something will be done at least to encourage markets to go for one or the other. At the moment you go to a market and find that the right-hand side is brucellosis-free but that on the left you get the most appalling reactors. I cannot believe that any sound veterinary officer would agree that that is right.

I have made no mention so far of the obvious other increases. The food increase is so important that it dominates the whole picture. Of course the next one is fertilisers, nearly all of which are derived from oil. The dairy farmer makes an enormous use of nitrogen, in particular, and not many of us have clover in our pastures because of the intense use of nitrogen to produce the grass necessary for a large herd. I hope, my Lords, that the Government will be able to avoid the power cuts on an area rota basis. They would be disastrous for the dairy farmer. They would mean starting up all those little petrol engines to try to keep the supply going. My Lords, I promised that I would be short. I have reached thirteen minutes and I will not be more than two more. We need 5p per gallon more for milk to break even, without making any profit. We want it retrospectively to help those who are "going bust" or have already "gone bust". We can produce more milk to narrow the balance-of-payments gap, but unless help comes soon milk will be reduced again. We are now worse off than all the farmers in the EEC. My Lords, I beg to move for Papers.

5.40 p.m.

LORD HOY

My Lords, we are grateful to the noble Viscount, Lord Monckton, for introducing this Motion. Agriculture is certainly having a day out in your Lordships' House to-day. However, there are some compensations after that dramatic statement by my noble friend Lord Maelor that he did not know a ram from a ewe. I was encouraged when my noble friend Lady Phillips said to me, "You know, you start off with a great advantage in this debate because you can distinguish between a bull and a cow". I thought that was an advantage.

Every time we talk about retrospective legislation in this House noble Lords on Government Benches hold up their hands in horror and say: "The last thing we should ever do in this House is to have retrospective legislation." But the noble Viscount's last claim was for an extra 5p a gallon retrospectively. He will be lucky if he gets 5p a gallon; he will certainly be more than lucky if he gathers it retrospectively. I do not know what the Government are prepared to do about it, but this is within control of Government. The Government and no one else control the price of milk.

When it was my duty to defend the Government for doing it I never lacked advice from the Benches opposite who told me why the Government should give it up and allow milk to play a free part in the market, and that the least I could do was to put a penny on the pint. I remember them arguing specifically that Jersey milk ought to be taken off control completely. I do not know what the position is to-day, but so long as we were in Government we held prices under control. Whether milk is still controlled to-day or not I do not know, but there was always a demand from the Benches opposite that it should be decontrolled completely. It is true that beef prices have gone up enormously; it is true that many cereal farmers must as a consequence of this be doing rather well. I do not know how well they are doing at the moment; they are not doing as well as they were, but certainly for a period of time they were doing rather better than well. Obviously, at the other end the dairy farmer was paying a price for that in animal feed. We would not deny this. If the situation gets as difficult as certain farmers assert, the responsibility must lie with the Government to deal with it.

Many of your Lordships may have received a letter in the post this morning, as I did. This letter is a copy of a letter sent to the Minister of Agriculture from the Northampton County Farms Tenants Association. Writing to the Minister, they said this: The Northampton County Farms Tenants Association would like to draw your attention to the serious situation which faces its Members as set out hereafter. The Association is composed of a group of tenants of Northamptonshire County Council all farming statutory farms, mainly milk producers whose total herd size comprises some 1,672 cows producing approximately 1,839,200 gallons annually, and over 1,000 beef calves plus followers for the dairy herd. We are obliged to use purchased concentrates to maintain production and estimate that the cost of this concentrate has risen from approximately £40 per ton in the winter of 1972–73, to £74 per ton at the present time. The additional cost is, therefore, in the region of £51 per cow per annum. The receipts from calves have dropped approximately £20 per head and culled cows approximately £100 per head but the increase in milk prices has been nil. Fixed costs have risen drastically. We now find with these prices we are no longer running viable businesses and insist that immediate steps be taken to rectify this drastic situation. Noble Lords who have much greater knowledge of this particular industry than I will be able to make an analysis of these figures and say whether they are correct, under-estimated, or exaggerated. I am certain that no one would deny that costs have risen tremendously and have made it very difficult indeed for such people to carry on their business. I do not want to detain your Lordships, but I thought it right to put my voice to this complaint, which was fortified by the speech delivered yesterday by the President of the National Farmers' Union. Sir Henry Plumb in his speech was saying that they had had to put up with promises over a great number of years. I say this because he was talking about all Governments, not just one Government or this Government.

He said that industry was now reaching a stage where it had no faith in any promises that were being made. But if they were going to be asked to undertake increased production then the Government of the day, irrespective of which colour, ought to make it economically possible for them to do so. He was asserting, and rightly, that if you were going to call on the industry for increased production, obviously you had to provide the capital that was required. I would not go so far as the noble Lord. Lord Maelor, and say that that should be 100 per cent. If you are going to be in business at least you ought to have a financial interest in it. I do not think that is asking too much. But if you are going to ask an industry of this size to undertake that task, it not only avoids increasing your imports bill, but the more you can produce for your own use and for your own customers, the less dependent are you on foreign supply. You are independent to that extent. That is easily seen in the field of oil production. If we had oil flowing from where we think it is going to flow we should not be so dependent on other people to supply it to us. The same argument can be used with regard to food.

So, my Lords, I am happy to say some words in support of the noble Viscount's Motion, and I thought the best way to put it was to repeat this letter which I received this morning. If the situation is as they say it is, then we shall expect the noble Earl who is to reply to have something more substantial to say to us because this is something over which we ourselves have control. We are not dependent on certain other people to be able to take action; this action lies within the power of our own Government, and I can only hope that before this debate is over some encouragement will have been given to associations of this kind, and to the industry as a whole, who are finding life particularly difficult at the present time.

5.48 p.m.

LORD SWAYTHLING

My Lords, first may I join the noble Lord, Lord Hoy, in thanking the noble Viscount, Lord Monckton of Brenchley, for having put down this Motion which allows us to discuss such an important subject. Having been a dairy farmer connected with milk production for well over forty years, I propose to deal chiefly with the problems of the production side of the dairy industry as opposed to the distributive side. During these years I have seen the dairy industry prosper and go from strength to strength. Admittedly, there have on occasions been problems but, generally speaking, the dairy industry, headed by the excellent Milk Marketing Board, has a record second to none—increased production, improved quality, unequalled service to the customer and a relatively peaceful relationship between employers and employees. It is an industry of which the nation should be genuinely proud.

Unlike other industries, dairying has not been disrupted by strikes. Can any housewife remember her daily "pinta" not being delivered? Perhaps as an industry, the producers, processors and distributors have been too successful. They have not threatened the nation by industrial unrest and possibly this has led to their being taken for granted. But the dairy industry, through no fault of its own, is facing a grave crisis—far more serious than I can ever remember. The industry is one of the most efficient and heavily capitalised sections of agriculture which, if allowed to develop, could serve a vital role in the future economic recovery of this country. As a natural dairying nation, we have one of the finest opportunities in our history to compete in the vast European markets with quality products second to none.

Until recent months, the world demand for beef has to some extent helped to relieve the burden for owners of heavier types of dairy cattle. Producers of top quality milk who maintain lighter pure dairy breeds, have however not had the same benefits and find themselves in an even worse plight. It is very apparent that the Government are concerned not to increase prices to the consumer, but if nothing is done to ease the present burden, the consumers will have no option in the quality of the product because there may be none of the best quality to buy. It is vital that our mature dairy breeds should not be allowed to suffer extinction through lack of foresight in the current economic crisis, which threatens the provision of milk and dairy products for the whole nation and imposes an immense financial burden on the livelihood of milk producers.

During 1973 all the costs of producing rose alarmingly. The price of feedingstuffs, as has already been mentioned, has risen by 40 per cent. since January 1973, contrary to the expressed forecast of the Minister of Agriculture, and further price increases must be expected. The cost of labour has equally risen. The latest award by the Agricultural Wages Board becomes effective this month. Fertilisers since January, 1973, have gone up by some 40–50 per cent. in price and further increases are known to be in the pipeline. In answering the Government's call to extend and modernise their enterprises livestock farmers have invested heavily in stock, in buildings and in equipment, often involving considerable amounts of borrowed capital from bank and other loans. Interest rates in December, 1972, were 8 per cent., and were no less than 13 per cent. in December, 1973. This represents a rise of about 60 per cent.

I am told that the Milk Marketing Board calculate that the cumulative effect of these and other increases in the costs of milk production means that any milk produced this winter will be produced at a loss. The result has been a crushing blow to producers' confidence at a time when the nation badly needs every gallon of milk for cheese and other dairy products which otherwise would have to be imported. Last Christmas, I am told, what was required for the liquid market fell, leaving a reserve of only 165,000 gallons, which is negligible. At the same time, it has been calculated that if one person in every 400 had ordered an extra pint at Christmas, the nation would have been short of milk for liquid consumption, and cream.

The future is grim and it is reported from numerous markets throughout the country that farmers are selling dairy cows for slaughter in large numbers, even when in calf. I am informed that the Milk Marketing Board's artificial insemination service has been dropping steadily month by month. In September the number fell by 1.7 per cent.; in October, by 2.4 per cent.; in November by 5.2 per cent., and in December by 7.9 per cent. These decreases occurred at the time of year when inseminations are normally rising. Over the last four months of 1973 total inseminations, both beef and dairy, in England and Wales were 31,777 below those in the same period in 1972. This is an overall decline of 5.6 per cent. From this it follows that cows expected to calve next autumn will show a substantial decline and have an automatic effect on milk supplies. In the longer term the size of the national dairy herd will be significantly reduced.

The number of registered milk producers in England and Wales has declined rapidly. In 1950, there were 161,937 producers; in 1970, these had reduced to 80,265. In 1972, there were 72,271, and in 1973, 69,357—and the reduction continues. In 1972–73, 183 million gallons of milk were used in the manufacture of cream. It is doubtful whether in 1974, even if the whole of this amount were used for liquid consumption, there would still be enough to provide the public with the milk it required; and that, of course, would leave no margin for the manufacture of butter, cheese and other dairy products.

This comes at a time, my Lords, when very large sums have been spent by the dairy industry to stimulate the consumption of liquid milk and ironically an increased budget for advertising was only recently announced. Owing to this publicity and other causes the consumption of milk and of dairy products is rising. This is partly due to the growing population and partly to the relative cheapness of milk as a food compared with other foods that have been allowed to rise in price. It is important to remember that there is this statutory control on the price of milk and producers are precluded from passing on any part of their extra costs to the consumer. This, if not unique, is almost unique in present-day economics. Owing to the number of dairy farmers who are ceasing to produce milk, it has been estimated that there will be a shortfall of 110 million gallons of milk in 1974, and it could be more. The cost of importing milk products to replace this would be in the neighbourhood of £25 million.

I should like to mention to your Lordships the proposal recently made in Brussels, that a tax of 2 per cent. should be raised on all output of milk above 2.000 gallons per year per farm. For years the Government have been urging the small producer to throw in the sponge and the remainder to increase production. As always, the dairy farmers of this country have responded to the Government's appeal, but now Brussels propose to punish milk producers for producing more than 2,000 gallons a year. If this is the policy and thinking in Brussels I hope that the Government will do all in their power to oppose it.

The noble Viscount, Lord Monckton of Brenchley, has referred to the absence of Lord Rowallan, and in his absence I am going to mention brucellosis. There is one other small problem on which I feel the Government should be able to help milk producers. It is the problem of brucellosis, which in itself is not a small problem but I use that word as being small in comparison with the other matters I have been speaking about. The brucellosis eradication scheme was started by the Royal Association of British Dairy Farmers, of which Association I have the honour to be Deputy President, and was taken over by the Government; but the dairy farmers feel now that it is not being pursued with all the vigour and effort it should and that the complete eradication of brucellosis is being considerably slowed up. I know that there is a shortage of veterinary surgeons, but this is an important matter and should be pursued as thoroughly and as swiftly as possible.

My Lords, to sum up, I feel that I can do no better than quote from a letter that has this week been written by the Royal Association of British Dairy Farmers to the Minister of Agriculture—and I quote: This Association is deeply concerned and believes that the outcome of the Price Review will be crucial to the future of the dairy industry for many years to come. Unless producer-prices are raised substantially to cover both extra costs which have already arisen and those which are anticipated in the immediate future, the trend away from milk production will undoubtedly accelerate dramatically. This would have tragic consequences for other sectors of the agricultural industry and for the nation's balance of payments as well as for countless farming families whose income depends solely or primarily on the sale of milk. I quote further: Many are already withdrawing from the industry, unable to sustain heavy weekly losses. Many others are economising by reducing the nutritional level of their cattle feeding, with a consequential lowering of yield. Others are culling less productive cows or are failing to retain calves, both of which will have a devastating effect on the dairy cow population of the future and on calves needed for home-produced beef and veal. If the current decline in production is not halted, the industry will be unable to fulfil its obligations to the public in milk for liquid consumption. There will be no balance of milk for even the production of cream, let alone manufacture into butter, cheese and other dairy products. I can only add, my Lords, that unless the Government agree to an increase of, as has been said, at least 5p to the price of milk during the current Price Review the results may be disastrous.

6.0 p.m.

LORD STANLEY OF ALDERLEY

My Lords, I know that I ought to thank the noble Viscount, Lord Monckton, for initiating this debate. Due, however, to a certain nervousness in addressing your Lordships for the first time, I am not quite so sure that this would be entirely truthful. I therefore crave your Lordships' indulgence for this my maiden speech, not only because it is my maiden speech but because, although I have been a tenant farmer of New College for twenty years, I am not in fact a dairy farmer. I discovered 21 years ago that this was far too much like hard work. And although I farm some acres in Anglesey, and therefore might have spoken on the previous debate, I do not think that Anglesey can quite be classed a hill area, though there is a case for her being similarly treated because she is a long way away and the transport costs are very high. It is despite this lack of knowledge on the specific subject being debated to-day that I feel I must speak, because there is an absolute need to realise that you cannot consider the problems of the dairy industry without realising its effect on the rest of agriculture, and in particular on beef production and, eventually, believe it or not, on the arable production.

If I now stray off the specific debate of dairying I hope that your Lordships will understand my reasoning. If you do not, I know from having listened to your Lordships that you will tolerate, indeed you may even forgive, my naughtiness, at least far more so than the Almighty does when I farm badly. The problems facing our dairy industry have been, and will be, spelt out by other noble Lords far better than I could. I should therefore, with considerable temerity, like to put to your Lordships a few suggestions as to how the position might be put right.

First, what the livestock industry needs, indeed what all agriculture needs, are long-term guarantees for continued production. By "long-term" I mean seven years or so, and by "guarantees" I mean financial help in the form of a satisfactory price tied to costs. We have as farmers been told to stand on our feet and get our returns from the market. Although I am in favour of the European Economic Community as an institution, I dislike most intensely the Common Agricultural Policy; and suggest that a guaranteed price tied to costs is a better way of getting the right amount of food at the right price, even though (and I am sure somebody is going to slaughter me) we may have to subsidise food occasionally, than the "free for all" we are now engaged in. And I speak as a mainly arable farmer who, I am told, being a professional pessimist, has to admit that the 1973 harvest was not too bad—and of course a damn' sight better than the 1974 one will be!

Secondly, I believe that, in order to keep the price of the end product, be it milk or meat, within the reach of the housewife, increased use of grants to drainage and to buildings, maybe even to stock and machinery, is essential. I should like to ask the noble Earl why, when livestock production is so essential, the fencing grant was removed. The only reason I can think of was to let the bull escape among the cows. Thirdly, I believe the long-term answer to our dairy industry, and indeed the whole of arable production, lies in the profitability of our meat production. Too much milk is not then produced; too much barley is not then produced, and, more important, the fertility of our land increases without massive use of fertiliser, something which is obviously going to increase.

I accept that at the moment we are not producing enough of anything anywhere. But that is why, in my opinion, it is so important at this time to keep milk and meat production profitable; otherwise it will be all barley again, and it is so very difficult, as has been mentioned before to-day, to get back into livestock pro- duction, particularly dairying. Alas! it looks as though, due to excessive profits in cereals—and I am glad I got that phrase off me; I feel a lot better now that I have admitted it; and I should like to ask as a byside here whether there have not been some funny dealings in this market by speculators, perhaps abroad—we are returning, unfortunately, to the old cycle. This time it will be dairy cows being slaughtered and switched into beef, possibly aided and abetted by the E.E.C. beef conversion scheme, which incidentally I hope the noble Earl will try to alter. An increase in the beef cow subsidy would in my opinion be better. As a result of this, as night follows day, a shortage of dairy products will follow, and a temporary glut in beef due to the slaughter of dairy cows will in turn encourage beef producers to give up, which in turn will encourage a shortage of beef.

If I took my accountant's advice, I would to-day kill my beef herd, plough up every acre, sack two men and a gaggle of women, and go on holiday. My Lords, is this really what the country wants me to do? I am sure the environmentalists do not, and I am not at all sure that the Secretary of State for Employment does. These long-term assurances must be implemented if such a situation is not to occur in both the dairy and the beef herds. So far as short-term help is concerned, I must say I sympathise with the Government in their present predicament. I believe that farmers are more than prepared to tighten their belts yet once again, more so perhaps than anybody else. We have so much to lose through strife. Maybe the Government could consider averaging farm income over five years back-dating it—I am sorry, my Lords—to 1972. A precedent has been set in the recent Finance Bill with regard to capital gains tax liability on land.

My Lords, I conclude by repeating that it is not possible to consider the dairy industry's plight without taking into consideration its effect on the rest of agriculture, particularly beef production. Although short-term help is necessary, I am convinced that it is long-term assurances we want. May I platitudinously remind the Government that it is food we are talking about, and until we all turn into Dr. Who's Daleks or something, food will remain an essential to our livelihood, more so even than oil. And despite all the much talked of benefits to land owning—and I am not particularly a landowner—of letting cottages, of speculating, of even having lion parks, a farmer's first job is to produce food, and to do this satisfactorily he needs long-term assurances. My Lords, I am sorry if I have read my speech. I did so because I did not want to say something that I did not mean to say—though no doubt I have done so, anyhow. I thank your Lordships for your attention.

6.8 p.m.

THE DUKE OF MARLBOROUGH

My Lords, I am happy and pleased to be the first speaker who is able to congratulate the noble Lord, Lord Stanley of Alderley, for his excellent and interesting maiden speech. He has indeed passed with flying colours what I personally found quite an ordeal—and still do, for that matter. I am sure I speak for many of your Lordships when I say that I hope we will see and hear much more of him in the future. I, too, should like to thank the noble Viscount, Lord Monckton, for initiating this debate. I, too, must declare an interest because I also have dairy cows.

The main problem, as I see it, in the dairy industry is that the profit margin for the producer has been very severely reduced, especially for the majority of producers, the small family self-employed farmer and the specialised, intensive farmer. The reasons, as many speakers have already pointed out, are quite clear; namely, the big increase in costs during the past two years of fertilisers and feeding stuffs. They have nearly doubled—or, in the case of fertilisers, are about to double—over the past two years, while the price of milk to the producer has increased very little indeed. Some may argue, quite rightly, that the price of calves, and culled calves, has also increased significantly during that time. But this is only partly true because during the past four months we have seen a considerable drop in the price of calves and culled calves. Therefore to the dairy producer there are two possibilities: one, to get out of milk production or, secondly, to stay in, hope for a higher price of milk and improve the efficiency of his unit. With regard to the first, getting out of milk production, right now that could be considered to be an attractive possibility with higher prices on the arable side of farming and beef as a substitute livestock enterprise, but long term results from this would be a depressed dairy industry which would mean the loss of cross-bred beef calves. In addition, many producers might turn to summer milk. This would result in higher beef prices, an over production of summer milk and a grave shortage of winter milk and the possibility, as has already been brought out, of liquid milk having to be imported from the Continent, which would be detrimental to our already serious balance of payments problems.

With regard to the second possibility—better efficiency and a higher price for milk—there is still room for higher efficiency, but before higher efficiency can be persuaded with enthusiasm there must be confidence in the future—I repeat, confidence in the future. In my opinion there could be improved efficiency in general grassland management, better quality silage and more grass production with increased usage of fertilisers; but we must remember that with to-day's prices the extra capital that would be required to produce this improved efficiency could produce a far better return from, for instance, cereals.

So far as higher prices are concerned, in the present inflationary climate anybody who would argue for higher milk prices should take a long, deep and responsible look before doing so. But the milk producers' dilemma is a serious one. Unfortunately, I believe that one will only get improved confidence and efficiency by the Government showing their backing for the dairy farmer, and that can only be done by increasing the guaranteed price of milk.

Some of your Lordships may recall a cartoon that was produced, I believe, during the First World War, at the time when white feathers were being sent to young men who did not go to the front on active service. This cartoon depicted a young man sitting at a cow, milking it, and an old lady standing by who said to him: "You ought to be at the front". He replied "But. Mum, there ain't any milk at that end". Well, my Lords, there will not be enough milk at the correct end unless the Government do something about the problem quickly. I sincerely hope that the Government will show their confidence and faith in the dairy industry; they must not allow it to become a depressed industry.

6.14 p.m.

LORD WISE

My Lords, I should like to add my congratulations to the noble Lord, Lord Stanley of Alderley, for an excellent and most interesting maiden speech. It is a good thing for us to have more noble Lords in this House who can speak with such a practical knowledge of the agricultural industry. I hope we shall have the benefit of listening to him on many occasions in the future.

I feel it is important that our dairy herds shall continue to provide enough milk to supply home demand. It would surely be disastrous, not only for the industry but for the country as a whole, if this were not so, but I am certain that there is a very real danger of this happening. We have heard this afternoon some dismal speeches on the state of the dairy industry at this time, and unfortunately I agree with them. The British dairy farmer is inevitably very worried at this moment. As we have heard, food costs are now pretty well double what they were twelve months ago, and I shudder to think how all the other variable costs for fertilisers, machinery, fuel, labour, and so on have risen also, whereas the price of the end product has risen by only about 2 per cent.

The escalating costs also of beef fattening have reduced the demand for the culled cows and the surplus dairy calves. This has caused a consequential fall in prices for these calves. This further aggravates the situation for the dairy farmer. In an effort to keep going, farmers are cutting down on their concentrate usage; but obviously, this is causing a fall in production and, also most important, farmers are meeting troubles in regard to the quality of milk.

The Government have placed great emphasis on the need for increased production and increased investment in the dairy industry. They are telling farmers to "hang on". But surely there is small consolation to the dairy farmer to be told that he can look forward to a good future when he is finding it pretty well impossible to meet his current bills out of income. It is impossible for this situation to continue indefinitely: it is a fact that farmers must receive more money for their milk, or just give up production. I hope this fact will be recognised during the Price Review deliberations which I understand are going on now. The price that the farmer receives for his milk is about half the price paid by the consumer. It seems to me that generally with all farm products the farm gate price bears little relation to the ultimate price to the consumer. I know little of the wholesale or the retail trade and, in particular, of the distribution trade of milk; but as a layman one wonders whether in this instance it would not be possible for a reasonable increase in price to be made to the producer to enable him to stay in business. He must have a better price. Can he not have this price without an overwhelmingly large increase in price to the consumer? I think perhaps this could be so.

6.18 p.m.

LORD BURTON

My Lords, may I add my congratulations to the noble Lord, Lord Stanley of Alderley. Although I am sure we can all understand his nervousness I feel that he had no need for it and we shall all wish to hear him many times again. I should also like to thank the noble Viscount for having introduced this debate. Many of your Lordships will have heard of the dream of the West Highlander: Oh! that the peats would cut themselves, And the fishes jump upon the shore. I would suggest that the dream of many farmers to-day is: Oh! that the cows would milk themselves And would not muck upon the floor. Surprisingly enough, the debate to-day has rather revolved around the financial situation in the dairy industry, but I feel that an even more serious problem is the labour situation. This is becoming chronic. I nearly gave up my pedigree Jersey herd last spring, mainly through the difficulties of getting the herd milked. Three things saved the day: first, the reluctance to give up a pedigree herd of some years establishment; secondly, that I am the only source of Channel Island milk and, I think, the only source of milk in the area which has not been homogenized, pasteurised or in some way tampered with, so that the loss of this milk would be greatly felt by the consumer.

Thirdly, the other saving grace was the arrival of a New Zealander who has milked the cows since then. Unfortunately, his work permit runs out in June, so I am likely to be back in the same predicament. The problem is what to do about this. I believe that youth employment officers going round the schools are encouraging children not to go into agriculture. They say, "It is a bad job; you can do better for yourself. You want to be a five-day week boy with a white coat. You want a white-collar job, or something like that." I hope that this will be looked at by the Government to see whether this is the case.

My Lords, the situation, which is already serious, is also deteriorating. Only last week I was listening on the car wireless to that country programme called "The Archers", and I was rather disappointed to hear that they were elaborating on how the agricultural workers' lot was very much worse than youth employed in other spheres. This is not in any way an encouragement for the youth of the country to go into agriculture. I think it is a great pity that this sort of propaganda should be put about. Agriculture can be a good and profitable job, and I hope that this type of propaganda will not continue. The labour situation, which is one we have heard about to-day, is a most serious problem, but no less serious is the feedstuff situation. I understand that the official margin over variable feed costs, in terms of price, is officially now under 4p per gallon. If the average is under 4p, it means losses for some people. Feed costs have risen from 11.7p per gallon last December to over 20p per gallon this December. In fact, feed costs have nearly doubled within the year.

If one looks to the month of March, as I understand one is likely to have to do (we do not know what is going to happen after that), undoubtedly costs will go up. As was mentioned by my noble friend Lord Monckton of Brenchley, the minimum increase required in the price of milk will be 5p per gallon. I am a little concerned about this because, unlike the noble Lord, Lord Hoy, who stated that this was in the gift of the Government, I understand—though I may be wrong; and I hope I am—that it is not in the gift of the Government. Under the E.E.C. agreement which the Government made, I understand that under the transitional arrangements they have only 1.6p which they can give away. They must go hot-foot to Brussels to ask for a relaxation of this agreement. I trust that we shall have an assurance from the Minister to-day that the Government have either already been, or are preparing to go, to make these bargains with our fellow members in the European Economic Community. On the Continent farmers are already receiving 5p to 6p per gallon more than we are, and to-day's papers tell us that they are seeking a 12 per cent. increase on their already enhanced price. The transitional arrangements for entry into the European Economic Community made allowance for the price of milk to rise steadily over a five-year period, but made no arrangement to reduce producers' costs over this time, which have risen within the first year to Continental prices.

My Lords, one cannot allow a debate like this to pass without a mention of another controllable cost; that is, the health of our cattle. We have already heard about brucellosis, but there is another scourge—mastitis, which one hopes the Government will do all they can to control by advice to our farmers. Already a great deal is known, but this is largely a matter of herd management, and a good deal more can be done by educating the farmer. With regard to brucellosis, there are miles of unnecessary fencing littering our countryside because of lack of Government action. Hours of time are being wasted daily on our farms because the Government are so lethargic about eradication. There are hundreds of cattle still being infected and having to be slaughtered because of the slowness of eradication. We hear about the shortage of vets., but we should make greater use of laymen. There is no reason why lay people should not take blood samples. Already lay people analyse the blood, once it has been taken, and there is no reason why a great deal of work should not be done by people other than vets.

Then we have another problem, the supply of artificial fertilisers. Grass is possibly our cheapest feedingstuff, but maybe we shall be unable in coming years to produce anything like the grass we require. I have not had time to check this, but I understand the position to be that Shell are unable to produce any fertiliser at present because they produce it in Holland and the petroleum situation there does not allow of the production of fertilisers. Imperial Chemical Industries have had some fault with their manufacturing plant, and it appears that they are unable to supply at present. I wanted 150 tons of nitrogenous fertiliser, but I am able to get only 30 tons this month, and perhaps 30 tons next month, from Fison's. This is well short of what one requires. Fertiliser costs could well he up by 40 per cent. in June. Moroccan phosphate has gone up in price by nearly 200 per cent, since last year.

My Lords, what is to happen? Let us take the example of what has happened in Nairn, in the Scottish Milk Marketing Board area. In Nairn, in spite of the fact that milk is being imported, the quantity of butter made in the six months from July to December is equal only to what was made in three days last May. The writing is on the wall. If there is not urgent Government action to relieve the dairy industry, there will be a serious and grave shortage of dairy products in this country. Increasing the price of milk to the farmer now will not be as inflationary as if one allows the dairy industry to run down. Our imported dairy products have to be imported at European prices, which are substantially ahead of ours. But I do not want to end on a despondent note, my Lords. If artificial fertilisers go, we may have a welcome return of the partridge and other birds to our countryside.

6.28 p.m.

LORD RATHCREEDAN

My Lords, may I raise one point? I was wondering whether it would be possible for the Government to consider raising the incentive given under the voluntary brucellosis scheme, because this would encourage the efficient milk producer, and also encourage more farmers to produce brucellosis-free milk. I would also point out that the cost of becoming accredited as brucellosis-free has increased enormously since the last incentive price was fixed, because the cost of fencing and of providing calving boxes and other buildings has also risen enormously. A method by which the Government could encourage the efficient producer would be by giving an increase in the incentive in the voluntary scheme.

6.29 p.m.

EARL FERRERS

My Lords, I think that this has been an important debate, and it certainly is an important subject. There were not many bouquets flying around for the Government to-day. I am bound to say that I did not think there would be, because all noble Lords who have spoken this afternoon have called attention to problems which are at present affecting milk producers. I would agree with them that in recent months dairy farmers have had to face an unprecedented increase in feed costs. Other costs also have gone up, and returns from the sale of calves and cows, as was explained by the noble Viscount, Lord Monckton of Brenchley, have gone down. The price of milk, on the other hand, depends essentially on arrangements which for a considerable time now have run for a year at a time. I should like to thank my noble friend for being, as I would expect him to be, completely fair over this, and for generously agreeing that the price of milk was right at the 1973 Review, which indeed I think was the accepted feeling of most dairy farmers. He went on to say that we have E.E.C. costs but not E.E.C. prices. Of course, what we have is the prices not of the E.E.C., but prices which have been affected by world prices. Yet we have the advantage—and I know one has to look for advantages sometimes—of seeing that our milk products and our milk are not running at world prices but at E.E.C. intervention prices.

Faced with a combination of circumstances, all dairy farmers, and particularly the specialist producers, I accept, have been hard hit recently. It is equally true, of course, that other people in other sectors of industry have been confronted with substantial cost increases, often as a result of developments on world markets which are totally outside Government control. The dairy farmers who rely heavily on compound feeds have been particularly affected by the quite unprecedented rise in world cereal prices. I would say here and now that the Government fully recognise the particular problems which dairy farmers are at present facing. My right honourable friend the Minister of Agriculture has made this very clear in all his recent meetings with farmers and those who represent them. I do not, therefore, regard it as part of my job this afternoon to argue that case against my noble friend or indeed against anyone else.

Many of the factors which have been clearly set out by your Lordships this afternoon have an important bearing on the future development of the dairy industry, and none of us, and that includes me, would wish to dispute this. But I find myself, needless to say, in a bit of a fix, because I am sure my noble friend will understand, and indeed I hope other noble Lords will too, that I do not see it as part of my job this afternoon either to anticipate the decisions on milk which the Government will shortly have to make in the light of the results of the Annual Review of the industry which is now taking place. Many noble Lords have referred to the fact that an increase in the price of milk is essential. I understand that; I take note of the point, but needless to say I can say no more than that.

I should like to make it perfectly clear that it was very largely because of the need to consider the position and the prospects of the dairy industry in depth, and as soon as possible, that my right honourable friend decided, in consultation with the farmers' representatives, that the Annual Review discussion should be started on December 6, and that was far and away earlier than usual. An initial meeting which was devoted specifically to the dairy sector was held with the leaders of the industry on December 13. Further discussions on milk have taken place since then, and there is a good deal still to be done in order to ensure that the Review is completed as soon as possible. My right honourable friend hopes to be able to announce the Government's decision on prices for 1974–75 earlier than usual, and if possible before the end of February.

My noble friend's initiative in tabling his Motion to-day has therefore provided an opportunity for a fairly wide-ranging debate and—this is the important thing—before conclusions have been arrived at. I think, however, that it is right that I should set out the main factors which in the Government's view are of major importance in considering both the present position and the future prospects of the industry. The issue about which producers are most anxious is undoubtedly the increase in production costs and more specifically, as has been mentioned I think by nearly every noble Lord, the increase in feed costs. This concern is perfectly understandable when feed grains form the substantial proportion of production costs, and their price has shown a most dramatic increase. The rise in grain prices was not, of course, the result of developments either in the United Kingdom or in other countries of the European Community. The big rise in prices was, as we all know, due chiefly to poor harvests in other parts of the world, notably Russia. These were followed by heavy buying both by Russia and China with consequential effect on world prices. It is true that there have been better harvests this year.

There is also the encouraging prospect that additional acres will be put under grain in some of the main producing countries. The longer-term supply prospects, therefore, seem to be reasonably good. But I think it is only fair to recognise that we may continue to be faced with a relatively tight situation on the world market for some time yet. It is particularly difficult at present to try to predict how world grain markets will in fact develop in the immediate future. Experience shows that reliable forecasts are always difficult to obtain, and this is particularly so at present partly because of the oil crisis and its possible repercussions on the movement of supplies, which has injected a further element of uncertainty into the situation.

Available supplies of protein feeds, on the other hand, have increased substantially since the middle of last year. At that time, the United States felt forced to ban exports of soya bean meal in the interests of its own livestock industry. Prices rose to £260 a ton. Fortunately, however, supplies improved and the ban was soon lifted, and prices for soya bean meal, which is the major source of protein feed, have now fallen back to less than half last July's figure. The increases in feeding stuffs are of course only part of the picture, although they are undoubtedly the most important part. The Agricultural Wages Board has announced an increase in the basic minimum wage which will come into force on January 22. There have also been significant increases, as my noble friend Lord Burton said, in the prices of fertilisers and of fuels and other important materials. The Government also recog- nise the cost which high interest rates have imposed on agriculture, as indeed they have on other industries. These changes are all of considerable importance to dairy farmers.

LORD HOY

My Lords, would the noble Earl allow me to intervene. He is talking about all these costs. One of the things he overlooks—and I do not want to make too much of it—is that it was the present Government who decided to let the pound float—if "float" is the right word in view of the position of the pound to-night. As a consequence of this, anybody who wants to buy to-day is in fact now paying something like 20 to 25 per cent. more as a result of the devaluation following the decision of the Government to float the pound. This has got to be taken into account. This was done neither by our overseas competitors nor by anyone else; it was a decision by the Government to float the pound, and as a consequence we are paying to-day about 24 to 25 shillings—I use the amount we were all used to when we had real currency; when we dealt with shillings and pounds rather than pence—which is approximately 25 per cent. more for every pound's worth we buy as a result of that one decision by the Government.

EARL FERRERS

My Lords, I do not propose to accept the noble Lord's offer to widen the debate into a form of economic debate. All I am saying is that whatever the floating of the pound may or may not have done, whatever good or bad it may or may not have done, the fact is—and this is not necessarily restricted to the floating of the pound—that costs have gone up, costs of imported materials as well, and these have affected the dairy farmers' costs.

I would make it perfectly plain that the Government fully accept that it is the specialist dairy farmer who has been most hit by the present difficulties. The non-specialist dairy farmer, while he is still faced with similar problems, has nevertheless the advantage of diversification and can at least benefit from the increases in returns which have been evident in some crops. On the other hand, not all forms of farmers produce nothing but milk. As the noble Lord, Lord Hoy, said, many produce some cereals, and where this has happened there is the possibility that the high returns from these enterprises can help to offset the reduced profits from dairying. This is not the time for me to examine in detail all the changes affecting the dairy industry, or to try to give a full assessment of their effect, because this is precisely what is being done at the moment in the Price Review talks.

There have been some suggestions from some parts—I do not think they were actually made in this form to-day, although two noble Lords were very near to it—that the Government should not simply have speeded up the Review but should have made an immediate increase in the guaranteed price of milk. Two noble Lords said that they hoped that any increase in price would be made retrospective. My right honourable friend considered the proposal that in the Price Review we should have made an immediate increase for milk, but he came to the conclusion that it would be wrong to take this kind of decision before we had studied all the information that will become available during the course of the Review.

I thought that with the noble Lord, Lord Rowallan, not being here, we might not have discussed brucellosis. However, that was too much to hope, because not only the noble Lord, Lord Swaythling, but also my noble friend Lord Burton, and the noble Lord, Lord Rathcreedan, referred to this. I do not accept that there is this terrible lethargy over the brucellosis scheme. We had a debate about it only a short while ago. I would tell noble Lords who are quite rightly interested in what is an important subject to the dairy industry, that by the end of October, 1973, about half of all the herds in Great Britain—83,243 herds—were in official schemes, with 67,211 herds of accredited status. That is not a bad effort. I would also tell noble Lords that it is anticipated that the date when the brucellosis scheme is finally completed will be the date anticipated before the scheme first started. Satisfactory progress is being made in brucellosis eradication. The situation of course has to be re-examined from time to time, and there will be a review of progress in the spring of next year.

My noble friend Lord Monckton of Brenchley said that dairy farmers' incomes have fallen. This may be so in individual cases. He may have been referring to individual cases over the last few months. Actual sample farm accounts show increases for specialist dairy farms in England and Wales of 26 per cent. in 1970–71, 78 per cent. in 1971–72, and for 1972–73 a further increase similar to that of 1970–71 is expected. In these three good years incomes have risen on average by around 40 per cent. a year. Even with some reduction in 1973–74, there seems likely to be a substantial annual increase on average over the four years to 1973–74. My noble friend Lord Monckton also quoted some very low calf prices which he said he had received. Again it is difficult to rely on individual cases too much. The Ministry of Agriculture prices record prices as still being broadly £35 to £45 per head on average.

I should like to congratulate most warmly my noble friend Lord Stanley of Alderley on his maiden speech. It was an excellent maiden speech, and it showed that he is a person of individualistic approach, and that will always be welcomed. He may have found it an alarming experience. Indeed, I agree with the noble Duke, the Duke of Marlborough, who said. "Who didn't, and who doesn't". He asked a number of questions, all of which were germane. I congratulate my noble friend, and I hope that he will frequently come to your Lordships' House and speak on matters other than agriculture and with the same individualistic approach as he showed to-day.

My noble friend asked me why fencing grants were removed if in fact the Government wished to see the dairy herd increase. Of course life is full of compromises. The grants for lowland fences were ended as part of a package whereby certain items were taken off after the general review of the capital grants scheme. Any Government have to operate within severe restraints, and in order to give emphasis to drainage grants other items had to be removed. Nevertheless, fencing is of particular importance in the hills, and it has been maintained with grant support. However, in the lowlands fencing tends to be done in various parts of the country, and the removal of the grant is unlikely to affect this practice very much.

LORD HOY

My Lords, the noble Earl was boasting a little earlier on, when we were dealing with another subject, about the increase of drainage grants to the farming community compared with what we had done. He did not give an example of this, but he was talking about something having gone up from 60 to 70 per cent. One thing he did not say when he was making that observation was that this had been done at the expense of fencing grants. I am certain that the noble Baroness, Lady Elliot of Harwood, would have had something to say to him if she had understood that she was getting a little more for this and was going to have her fencing subsidy taken away from her. If the noble Earl is claiming credit for putting this grant up 70 per cent., is he going to tell us by how much he reduced the fencing grant? What did the Ministry say in the process of increasing one and reducing the other?

EARL FERRERS

My Lords, when he gets hold of a point the noble Lord, Lord Hoy, sometimes reminds me of a Jack Russell; he argues it backwards and forwards.

LORD HOY

My Lords, this is a new point.

EARI FERRERS

My Lords, I am not going to be drawn on that. The fact is, as the noble Lord knows perfectly well, that sometimes grants go up and sometimes they go down, and I am merely trying to tell my noble friend that the grant had to be removed for lowland fences but was kept for the hill fencing where this was considered to be more essential.

LORD DAVIES OF LEEK

My Lords, may I follow up the drainage point, and not from a Jack Russell or Walter Mitty point of view. The Oxford conference on agriculture, to which the Parliamentary Secretary spoke last week, and articles from the N.F.U. and the Farmers' Weekly and Stockbreeder point out the paramount importance of this drainage. In view of the fact that it is now about thirty years since we tackled the drainage problem from the military point of view, in order to produce as much food as possible, is it not about time that a committee investigated the possibility of the maximum amount of help possible being given to draining Britain's land in view of the prospective possibility of 25 million tons more grain going to Russia and China over the years to come? In view of that, surely this is an exercise worthy of any Government in power.

EARL FERRERS

My Lords, I agree with the noble Lord that that is a very important point. This is one of the reasons why the drainage grant is being kept substantially higher than almost any other grant, because we fully recognise that land that is not drained where it should be drained is well below its potential.

My noble friend Lord Stanley asked why taxation could not be spread over five years. I gather that the question of averaging farm profits for tax purposes has been considered several times in recent years, and the conclusion reached is that quite apart from considerations of tax principles any benefit accruing would not justify the administrative costs and the complexity involved, and that averaging would be likely to create more problems than it would solve.

My noble friend Lord Burton referred to the limitations that he considered might be put upon the Government with regard to an increase in the price of milk in the Price Review negotiations. There has been a good deal of speculation about the Government's freedom to raise the guaranteed price, in view of our Community obligations. My right honourable friend has said a good deal about this subject, and I am afraid that I cannot add to his comments last week which were widely reported in the Press. The issue has to be discussed in Brussels, and at the Annual Review the Government will have established what figure is fair and right, and thereafter it will be for them to ensure that it is achieved.

LORD BURTON

My Lords, may I interrupt before my noble friend leaves that point? I am sure we all hope—I do not suppose he can give us any assurance—that the Government will not be so tight-fisted as the Government mentioned by the noble Lord, Lord Hoy, which gave away one old penny in real money, as the noble Lord would call it, whereas this Government will be giving away more than one new penny.

EARL FERRERS

My Lords, I told the noble Lord, Lord Hoy, that I would not be drawn on that subject, and I say to my noble friend Lord Burton behind me that I will not be drawn now because that would be quite improper. The debate has concentrated attention on the immediate issues. That was quite understandable and almost unavoidable in the circumstances. I do not under-estimate the short-term problems but, on the other hand, farming is a long-term business. It is therefore important to consider the longer term prospects, and there is no doubt in my mind that the efficient dairy farmers in this country have good grounds for confidence. I accept that their present difficulties are acute, and no one seeks to deny that, but I suggest that these should not be allowed to obscure the prospects for dairy farmers in the longer term.

We shall be moving towards the Community's target price which is much higher than our pool price. Our dairy farmers are well placed, in terms both of climate and of efficiency, to meet the conditions of free competition in the enlarged Community. As my right honourable friend the Minister said last week at a meeting of farmers, this must mean a satisfactory level of return for British farmers in the years ahead. With the brighter prospects ahead—and I accept that these are in the longer term—I should hope that dairy farmers would not retrench and would not produce less milk, because the Government remain committed to the objective of expansion. This is in the interests of individual dairy farmers and of the country. My right honourable friend is aware of the difficulties of dairy farmers and expansion may falter this year, but it need not and should not collapse. I believe that those dairy farmers who continue to farm efficiently will see their persistence amply rewarded, and I for one expect expansion to continue over the longer term.

6.53 p.m.

VISCOUNT MONCKTON OF BRENCHLEY

My Lords, I am grateful to the noble Lords who have taken part in this debate particularly the noble Lord, Lord Stanley of Alderley, whom I congratulate on his maiden speech. I also congratulate him on not being a dairy farmer at the present time. I now know where dairy farmers may go to borrow money in future. I am particularly grateful to the Minister for his kindness and consideration. We are unique in the dairy industry in that our costs are completely uncontrolled but our prices are controlled, not by the Price Commission but by the Government. We have had this debate to show that the present state of affairs is "up the pole", and if that message has got through I shall be glad. If the Ministry of Agriculture do not know that the price of dairy bull calves has plummeted down, then I almost despair. They must read the farming Press, they must listen to "Farming Today" and they must go to Ashford Market and think. But I do not want to end on a discordant note. We have had this debate at a good moment and I thank all who have taken part. My Lords, I beg leave to withdraw my Motion.

Motion for Papers, by leave, withdrawn.