HL Deb 02 July 1974 vol 353 cc233-80

THE EARL OF DUNDONALD rose to ask Her Majesty's Government what further measures they propose to take to rectify the increasingly acute financial situation affecting the breeders and fatteners of beef cattle in England, Scotland and Wales and Northern Ireland. The noble Earl said: My Lords, since I put down this Unstarred Question the position of the beef breeder and fattener has deteriorated further and is now critical, particularly in the hill farming areas of Scotland, Northern Ireland, the Principality of Wales, and the West Country. The subject matter has repeatedly been given national Press coverage, and every television programme concerning agriculture has stressed the predicament of the breeder. In fact, the Government are well aware of the position.

I listened very carefully to the Minister last Wednesday during the debate on agriculture in another place. I have since read the report of his speech and that of the Secretary of State for Scotland in winding-up the debate. I really do not feel that either of those speeches gave substantial confidence to the industry. The words of the Minister on June 26 at column 1585 of the OFFICIAL REPORT were: … we are determined to do everything that is necessary to restore confidence to the industry and to regain the momentum of expansion that was lost last winter.

Later in the debate at column 1590 the Minister said: I come to the beef situation, the area where our immediate difficulties are greatest. It is, of course, the beef situation which is at the root of most of the current problems. The tone of the beef market sets the pattern for the meat market generally.

I entirely agree with that last statement. The Minister came forward with only one major proposal, which was to give the producers the assurance over a period that their returns would not drop below £18 per live hundredweight for clean cattle. I have already to-day had a word with the Minister and I should be grateful if, in his reply, he could clarify that that figure is, in fact, £18, and not about £18.

The Minister in another place went on to say that it would be necessary to arrange for a countrywide certification of cattle in living and deadweight centres. This would take time but he hoped to have arrangements completed in about a month. I personally, as a breeder in a small way—and I declare an interest—am not fully conversant with the slaughtering end, and I hope that some noble Lords who will kindly be speaking after me will speak with particular reference to this end of the cycle. I have, however, been advised from England in the last two or three days that the economic figure is between £22 and £23 per live hundredweight, and that recent slaughterings have fallen as low as £12 per live hundredweight. Therefore, the Minister's proposals in another place would be partially plugging a leaking hole. When I was in Wales last week on a family matter, which unfortunately prevented me from speaking on the Motion of the noble Viscount, Lord Thurso, on Scottish Transport. I had confirmation from very reliable sources that certain hill farmers in Wales have gone bankrupt.

I do not intend to speak in a repetitive manner on points which have already been made in the past, except where I feel that they need re-stating, and I shall try to keep my figures and calculations to a minimum. As a backdrop to my, remarks, I should like to remind your Lordships of the television excerpts shown both before and after Easter, where cattle, including cows in calf, in the West Country were slaughtered because the farmers could not afford to feed them. It is a very sad position, which is hound to affect our future breeding stocks. To make matters worse, the slaughtered animals were in such poor condition as to make them unfit for human consumption. This position has persisted and deteriorated.

As a breeder, I should now like to set out the position as I and some other breeders see it. Farming, as a whole, is by far the largest industry in this country and, as was mentioned by the noble Lord. Lord Walston, during the debate on his Motion on agriculture earlier in the year—and the noble Lord has informed me with regret that he is not able to speak on my Question this evening—the total farming output of livestock and livestock products this year is calculated to be in excess of £2,500 million, which is three-and-ahalf times the value of farm crops. However, the products of all farmers are inter-related and if one or more links in the chain become weak or break the consequences can, be severe, not only to the farmer but also to our balance of payments and, naturally, to the housewife.

I should now like to set out some facts and suggestions under certain simple headings. First, there is energy. The present price of fuel is without question a formidable cost incurred by all farmers. I believe that from 1973 the cost of diesel fuel has risen by 250 per cent. and, as all motorists know, the cost of petrol has risen to 50p a gallon plus V.A.T. in the urban areas. In the rural areas it is higher, because of the increased transport costs. Here I wish to emphasise a matter of significance to the farmer. The motorist—and I have no grudge against the weekend motorist—can well say. "With the present price of petrol we will not take the car out this weekend." The farmer cannot do that. Diesel fuel is his lifeblood, for his tractors and for all diesel driven machinery. He cannot cut down on his ploughing, haymaking and harvesting. As the present Government have seen fit to subsidise the price of cheese, milk and other foodstuffs to the housewife, would it be beyond the bounds of possibility for the Government to consider subsidising the farmer for a small part of his diesel fuel consumption?

In the Business of your Lordships' House on Wednesday, June 19, I do not think that my noble friend Lord Massereene and Ferrard was given a comprehensive answer to his Question about freight charges to and from the Isle of Mull, as they affect the farmers. Surely a directive could be given to MacBraynes to level out the position so that a tourist with a car and caravan, occupying the same space on a boat as a cattle float, pays equal fares. At the moment, the differential is approximately 12 to 1. Following that in the debate on the Motion of the noble Viscount. Lord Thurso, my noble friend Lord Glenkinglas drew attention to the high ratio of cars to people in Orkney. This subject may not be appreciated by the urban dweller, but in the Highlands and the remoter areas of Wales and the West Country, and I believe to some extent in Northern Ireland, where distances are great and in many cases farms are remote, a car is a necessity. The cost of transporting fuel to these remote areas further increases the prices which are paid by the motorists in or near the urban areas.

Again, as was pointed out by the same speaker, the cost of lorry transport in particular has increased immensely in the remoter areas. I was glad, however, to note during the same debate that the noble Lord, Lord Hughes, said: The policy now being followed is to pay a subsidy for services to small and remote places where revenue cannot be expected to meet operating costs."—[OFFICIAL REPORT, 19/6/74; col. 934.]

I hope that transport to the Highlands in Scotland and to the remoter areas will fall under this heading so far as farmers are concerned.

I shall now deal with farm machinery. To my personal knowledge, during the last 12 months the cost of new machinery, spares and all akin matters, has risen by between 15 and 20 per cent. These costs have to be borne by the farmer if he is to keep up-to-date and stay in business. Fertilisers have risen immensely. I am advised that by next year they will have risen again by a further 50 per cent. Electricity costs, as we all know, have increased and, although marginal savings can be made by farmers, crushers and dryers have to be driven and I cannot see a method by which these costs can be alleviated.

I now wish to turn to the sore subject of cattle feedstuffs and prices. Until the mechanical cow is perfected, as mentioned in an earlier debate, we cannot do without feedstuffs in the winter. The cost of hay, for those who could not make enough of their own, rose in the Western Highlands from about £20 per ton in the autumn of 1972 to £50 per ton, both delivered, during the autumn and winter of 1973. The total cost of cattle cake, of feeding a cow, increased by £40 per cow last winter. The latest figures I have from the West Country yesterday are that hay, bailed, can be bought now—provided you can afford to pay for it—at £40 a ton. That is an appalling figure for any farmer who has to make such a purchase.

In the Western Highlands, if I may revert to Scotland for a moment, we cannot afford to carry through the winter all our weaned calves. We rely on fair to good prices in the autumn sales. During the autumn sales of 1973 we obtained good prices after a fair two years and a poor three years. Prices for good weaned calves were about £90 to £100, then the bottom fell completely out of the market due to partially increased costs but largely due to the soaring costs of feedingstuffs which the purchasers of the store cattle just could not afford to pay. This spring, for those who sold weaned calves, the lucky ones got between £30 to £40 and the grass was just starting to grow. The fatteners could still not afford to pay and the bottom is still right out of the market. In fact, I have heard figures from England which are even worse than those I have mentioned to-day.

My Lords, to digress from costs and foodstuffs for a moment, as breeders we are naturally grateful for the additional subsidy of £10 per calf which we are to receive this year, as confirmed by the noble Lord, Lord Beswick, on May 1. In another place last week the Minister talked of £10 a head. I should be grateful, because some of us are not clear about this, to know whether the £10 a head mentioned by the Minister of Agriculture last week is an additional £10 or whether it is the same £10 which we had confirmed on May 1? Returning to the subject of feedstuffs I have read carefully the speeches made on the Unstarred Question of my noble friend Lord Onslow and I cannot find encouragement from any source that the prices will fall this year.

Later, I will mention briefly the E.E.C., although I find it a thoroughly confusing subject so far as agriculture is concerned. But irrespective of what the Council of Ministers say, or do not say, in Brussels, I see no alternative but for the Government to increase the figure of £18 per live cwt. to something between £22 to £23 per live cwt. There must be a further cash injection; and on that point I shall be very glad to hear the views of other noble Lords who are following me in this debate.

Now a word about subsidies. Generally speaking, and particularly in the remoter areas—in the Principality of Wales; in the West Country, where beef is bred; and in the Highlands of Scotland—we cannot change the use of our land. We cannot grow wheat and barley; we cannot change rocks. Our climate, with its heavier rainfall and with soil of a more acid nature, is suitable only for beef, sheep and, to a limited extent, dairy herds. Two of the few ways in which we can improve our land is by drainage and by slagging and liming. The matter of the lime subsidy was raised by my noble friend Lord Sandys in the debate on May 1; and I am very glad to learn, as stated by the Minister in the other place last week, that the lime subsidy, which I understand costs a total of £5 million a year, is going to be continued.

Now the E.E.C. I have here a document, emanating from Brussels, dated January 23, 1964, entitled Council Directive on Mountain and Hill Fanning and Farming in Less Favoured Areas. It has innumerable references; and I was advised that, by the time it had been processed by the linguists and lawyers, it was available in this country some considerable time later. The language is very flowery. I do not intend to quote from it other than to say, in plain English, that individual Governments can help the hill farmer. There is one rather entertaining annexure which converts bovine, ovine and capri-animals into livestock units. Goats, incidentally, are 0.15 of a livestock unit.

Reverting now to beef, in May the N.F.U. made the position very clear to the Government and, in particular, to Members of the other place who represent urban areas, so that they are acquainted with the acute position and with the Government policy then pertaining to the E.E.C. The British taxpayer is still providing finance to provide a fair return to farmers elsewhere in the Community, whose costs are more or less the same as ours, and those farmers are in turn dumping their beef on the United Kingdom market. The quality of the dumped beef, recently from Germany, in the main, is poorer, and the butchers do not want it. But when beef of a poorer quality is dumped at the bottom end of the scale, it also has an aggravating effect on the top end of the scale. My Lords, what further help are the Government going to give us?

7.23 p.m.

EARL FERRERS

My Lords, I think my noble friend Lord Dundonald has done a very great service in introducing this subject to-night by way of an Unstarred Question. He has explained the plight in which beef farmers and cattle breeders find themselves; and he has explained how, in some cases, the bottom has fallen right out of the market. I believe this to be a vitally important subject, and the Question is quite simple: what further measures do the Government intend to take to rectify the increasingly acute financial situation affecting the breeders and fatteners of beef cattle … "? Those words are well chosen because they are factual The Question is pertinent, and I suggest that the premise upon which it is based is entirely correct. The facts are that beef cattle farmers are losing money As my noble friend has said, their costs have risen, they are still rising, and they will continue to rise at an unprecedented rate. The returns for their product are wholly inadequate. They have got lower, and they have been getting lower; and, my Lords, confidence in the future, both short and long term, has been shattered.

The question is simply: what are the Government going to do about it? The industry is in a mess; and the farming community look to the noble Lord, Lord Strabolgi, for some kind of help and encouragement in his reply this evening. Because he is the spokesman for the Ministry of Agriculture I do not underestimate the value of the noble Lord's speech this evening. When things go wrong, one tends to find any peg upon which to hang one's hat. One blames the Minister, one blames the Government, one blames the European Community: one blames anyone, of course, other than oneself. Those who have in fact suffered most are those who bought their store cattle when prices were high some 18 months ago; but, of course, if you are in the game of fattening then you have to have the bulls with which to play irrespective, relatively, of what price the bulls are. But I wish to be entirely fair over this. I do not blame the Government for all this mess. Nor do I blame the previous Government. I certainly have criticisms of the Government on the way in which they have reacted to this mess: and I have also expectations of the Government, which I shall explain.

My Lords, what we are seeing now in the beef cattle markets is not peculiar to us nor is it peculiar to the E.E.C. It is a world-wide phenomenon, and it is shared by other countries, whether they be inside the E.E.C or outside it. It is also shared by America. It may be slightly encouraging to think we are not alone in this, but the fact that we are not alone is itself rather frightening. What it means is not that the Government are powerless to do anything but that the Government should do something. But, of course, the trouble is that, being a world-wide phenomenon, what action the Government take will possibly have less of an effect than it would otherwise have had if the problem had been one peculiar to us. All over the world the price of feedingstuffs has gone through the roof. This is really the nub of the problem. In fact, if you get down to the absolute basics of it, it is inflation. This is what has caused the problem from the point of view of feedingstuffs, from the point of view of prices going roaring up and then inflation in all commodities has been such that people have just found that they have not got the money to pay the correct price, and so we have had consumer resistance.

It seems almost unbelievable that only seventeen months ago the price of beef cattle was so high that everyone foreshadowed a permanent shortage of beef in the world, and that the previous Minister of Agriculture actually had to set up a Commission to find out why beef prices were so high and whether there was any undue profiteering on the way. Now we find, frankly, disaster. Prices of fat cattle and of store cattle have plummeted from a high of about £22 down to the figure which my noble friend quoted—and it is a chance figure—of £12. They have gone from £22 to £12 per hundredweight.

My Lords, this is not peculiar to us. Exactly two weeks ago I was in the United States, in Washington, and was trying to find out a little about the American agricultural problems. I arrived at a time when there was an almighty row going on—a political row and an agricultural row. This was simply because beef cattle farmers there were losing money hand over fist. Fifteen months ago their problem was the same as ours. They were then making money, and now they are losing money. I had the privilege to meet Senator Talmadge, who is the Chairman of the Senate Committee on Agriculture and Forestry, and also Congressman Poage, who is the Chair- man of the Congressional Committee on Agriculture. What these two gentlemen and others said in relation to beef cattle producers in the States might well have been said by any Member of Parliament or any Member of your Lordships' House with regard to cattle affairs in this country.

If I may, I should like to quote some of the remarks which Senator Talmadge made to the United States Senate on this very problem, because I believe them to be so vivid and because they so wholly reflect the situation here that, although his speech was delivered to a different audience in a different country, the message to us is vital. What he said on the day before I saw him was: I rise with a sense of urgency to-day to say it is not an impending crisis—it is an economic disaster. It must be quickly alleviated or the impact will spread throughout the economy. It is not just a question of farm profits or cows or pigs or chickens, but rather this is a human disaster. Already, we know of at least one man who committed suicide when he saw his life's work disappearing before him. Another man who called a Senator's office began crying when he related that his nine-year-old daughter couldn't understand why they had to sell their farm and home. These are occurrences that remind us that human beings are behind the monthly statistics. They are also fearfully reminiscent of the Depression. The spreading peril is evident in the closing of several small rural banks as their borrowers—livestock producers—failed. This signals the beginning of the total breakdown of the community. The demise of livestock producers is not entirely of their own making. Business failure is a normal risk in our free enterprise economy, but the harsh realities of the market has been made more savage by ill-advised governmental intervention and institutional relationships that have prevented normal adjustment while permitting ever-widening farm-retail price spreads. … Producers borrowed increasing amounts of money but at ever higher rates of interest. They passed up high slaughter prices in retaining heifers to assure the expanded future supply our Nation's people wanted and deserved. Their efforts, however, only met with repeated market disruptions in 1973, sky-rocketing feed costs—due to subsidised exports—and, finally, market imperfections that have prevented movement of meat to consumers at a price reflective of the farm price. Last week fed cattle prices were 25 per cent. below a year ago. This has broken the feeder calf market, where prices have plummeted in the past five months. Hog prices had fallen to half what they were a year ago. Egg and broiler prices were down about 25 per cent…. Consumers want and deserve stable supplies of meat at fair and reasonable prices. Producers want to supply it, but unless they can maintain economic viability neither objective can be achieved. So, my Lords, that is what happens in America and, in a curious way, it is very reflective of what happens here. When I was there, the situation was so bad that a Congressional Hearing on beef cattle was called by Congressman Poage to hear and discuss the plight of beef cattle farmers and, so important was it, that even the Speaker of the House of Representatives was called to give evidence. This is a most unusual occurrence and I was privileged to hear it. What he said was: The final factor to consider in this disruption of our agricultural economy is the cash situation of our producers and feeders. Cattle feeders require large amounts of capital to operate. Through normal banking channels, cattlemen obtain mortgages on their cattle, their land and everything else they own. If cash is not available then the whole system grinds to a halt. One manager of a federal land bank in Oklahoma reported to me that of 1,100 loans he has outstanding. 200 are in immediate jeopardy of default. Our small town banks, dependent upon loans to farmers, are faced with unknown numbers of defaulting borrowers, all to the detriment of our rural areas. What is the effect of this? In the narrowest sense, as costs continue to increase and prices continue to fall, the farmer's cash flow is disrupted. As his cash sapply dries up, debts begin to accumulate. He must refinance his loans. Having neither cash nor equity, the farmer is faced with bankruptcy or liquidation. He then goes on to say, You cannot divorce the cattlemen from the rest of the economy. It is like a row of falling dominoes. First one segment falls, then another, and another, ad infinitum. This domino effect reaches to the outer limit of the economy. Our small town business man is hurt because the farmer's income is reduced, the bank is hurt because of defaults, agriculture-related industries are hurt because the farmer, no longer in business, does not purchase products. As the dominoes fall, one by one, an additional segment of the economy is devastated. Finally, we reach the same result as before—bankruptcy or financial liquidation for many segments of agriculture in the entire economy. My Lords, that was what the Speaker of the House of Representatives had to say. Your Lordships may feel that has nothing to do with what is happening here. I believe that it has. I believe that it is indicative of what is happening and what may well happen here. I ventured to quote those words not only to show what is happening in another country, but also to show that we are not alone in this problem, and that is the more frightening because we are not alone. I wished to show what is the case there and what may well be the case here. I hope that the Government will realise that this could well have far more far-reaching effects than merely upon the price of cattle.

At a time when agriculture requires—as it will require this year—an extra 30 per cent. of capital to finance its own organisation in order to stand still, and at a time when upon that increase of capital farmers will have to pay 15 per cent. interest rates, it is difficult to see how we are to achieve the expansion which the Minister of Agriculture quite rightly wants. I recognise the problem to be very real and not to be easy of solution. My worry is that possibly the Minister is not sufficiently aware how serious this is and how very far-reaching it could be and I do ask the noble Lord to take this matter most seriously.

My Lords, I have said that I do not criticise the Minister for this situation, but I am bound to criticise him for the way in which he has reacted to it. I believe that he should be criticised for wholly removing the intervention system in March. We all know its limitations and its drawbacks, and I am as one with the Minister when he says that beef is for eating and not for freezing. Of course, he is quite right, but I believe it to have been irresponsible and highly damaging to have removed at the wave of a hand the support system which beef farmers had and to have replaced it with nothing at all. One cannot simply say (as the Minister did, and he repeated it the other day on television), "I do not like intervention," then proceed to remove a support system for an industry in toto and then be surprised when everything goes down the plughole—prices, confidence and all. I remember as a schoolboy getting a certain churlish pleasure out of seeing people stand on carpets whereupon one bent down and pulled the carpet quickly enough and the person as sure as night follows day fell on his hack, much to the applause of everybody. Of course one sees exactly the same thing happening in agriculture.

If one removes the support system upon which an industry depends all of a sudden and overnight, it is not surprising that the industry collapses. Not only did the Minister remove the principle of intervention but in March when the E.E.C. put up its guide price by 12 per cent. the Minister raised our guide price by only 6.3 per cent., while the intervention price is 7 per cent. below the guide price. I could understand him doing that if he intended to use intervention but did not want the guide price to be so high so that intervention would not bite so early; however, I cannot understand why he did that if he had no intention of using intervention, because it merely made larger the difference between the United Kingdom guide price and the European Community guide price, and it is this difference upon which the Transitional Compensatory Amounts are based. The Transitional Compensatory Amounts are the subsidies which are paid by F.E.O.G.A. to Common Market countries to enable their food to come into this country at competitive prices, so, when the difference between these two figures was raised by the Ministers' action in March from £3.80 to £5.16, the Common Market farmers automatically received a bigger subsidy on food which they sent to this country. He has therefore willingly permitted Continental beef to come in with an increased subsidy on it—a subsidy from F.E.O.G.A. to which, of course, we as a country contribute 25 per cent. of the funds. Mercifully he has now realised his mistake by putting up the guide price to £1925 and so lowering the subsidy by 3p per lb. But the point is that this kind of thing has knocked hard at confidence.

When one looks at what has happened in Northern Ireland one also feels concern, because, in March, Eire took the increase in the European guide price of 12 per cent. which it was allowed, and also the transitional step of 5 per cent., so that their guide prices were increased by 17 per cent. That is in Southern Ireland. But under our Minister's agreement Northern Ireland allowed only the United Kingdom increase of 6.3 per cent. In order, therefore, to stop steers from being shipped across the Border, the Minister announced an extra £1.76 extra cash for fat steers which were sold in Northern Ireland. For a 10 cwt. animal this would amount to something like £18 per beast. The rest of the United Kingdom had an additional calf subsidy of £l0—only about half as much.

But as from yesterday the Minister has removed the £1.76 from fat cattle in Northern Ireland and replaced it with an additional £10 calf subsidy. Why has this been done? The subsidy amounts to less than half what it replaces. The subsidy does not go on the end to the fat cattle seller; it goes to the calf owner. It therefore goes to a different person. That has yet further shattered an already depressed market. I ask the noble Lord why the Government did this and how they intend to restore confidence. At the moment, Eire is buying its beef into intervention. My understanding is that all the cold stores in Eire are full. My understanding is also that Northern Ireland has said that it will not provide cold storage for intervention beef from Southern Ireland. I ask the noble Lord this question: is the Intervention Board permitting beef bought into intervention in Southern Ireland to be stored in cold stores in the United Kingdom?

In all this beef problem confidence is vital. I do not blame the Minister for the general conditions, which I acknowledge are extremely difficult, but I criticise him for some of the things which he has done and for some which he has not done. Confidence is vital, because if there is no confidence there will be real cause for concern in two years' time, because there will be no beef cattle for sale. If the noble Lord thinks I am unfair about the Minister's actions causing a lack of confidence, let me also tell him that they can create confidence, too.

I was surprised, when talking to an auctioneer in Norwich on Saturday morning, to be told that he expected prices to be up for fat cattle on Saturday. In fact, he proved to be quite right and prices for various grades of steer increased between £1.30 per cwt. and £1.90 per cwt. Why was this? Of course there were a number of reasons, but one was the increase in the guide price which the Minister recently announced, and the announcement last week of a base price of £18. That created a little confidence. But if that created confidence, so also can confidence be destroyed.

I am surprised that what the Minister said last week created as much confidence as it did, and I hope that the noble Lord will be able to explain and amplify what the Minister said at column 1593, which was: I have instructed my officials to be in a state of readiness to undertake the necessary certification procedures for whatever arrangements arc decided upon. I know this is what my friends in the union want. We need to be in a position to give producers the assurance over a period that their returns will not drop below about f18 per live cwt for clean quality cattle. That is the right way to deal with the problem of short-term oversupply."—[OFFICIAL REPORT, Commons,26/6/74.] He did not say that there would be a base price of £18 per cwt. He said that there would be a base of "about" £18. That could mean £17.50. But this was to he a base only over a period, so that for a period it might go up to £18.50 and then might drop to £16.50. I hope very much that the noble Lord will be able to clarify this point, because people have taken the Minister's Statement as meaning that there will be a base of £18 for fat cattle. That is not what the Minister has said. If it is what he intends, then I very much hope that the noble Lord will be able to clarify it.

My Lords, can the noble Lord tell us why, if this is to be done, it is not possible to do it almost straight away? As I understand, and I may be wrong about this, there are already people who can carry out certification at abattoirs. There are meat inspection officers who carry out the inspection of meat to certify that it is fit for human consumption, and my understanding is that it is those people who have been used for certifying the beef for payment in the past. Is this so? If those people are there, can they not be used for certification? And how will the rate of £18 be achieved? Will it be £18 or "about" £18? Will it he done by a fiat-rate slaughter premium, or by a variable slaughter premium, or by both, or by a deficiency payment? How will this base rate be achieved? Will this be done with the agreement of the E.E.C., or even without it? And if it is the Minister's intention to achieve it without the agreement of the E.E.C.—if that is not available—then what is to stop him from doing it now? I also ask the noble Lord when he thinks that this base rate will be started.

These are vital questions, my Lords, and I believe that the noble Lord, Lord Strabolgi could help the beef industry this evening by giving some amplification. I ask him these questions because I believe them to be important. I know that if he could help to support the beef industry which is in a mess, he would wish to take the opportunity to do so. I make one final remark; that is, that the despair of the beef industry can be exemplified by the fact that in the area of Norfolk in which I live there are some fairly low-lying grasslands which are called marshes. Two years ago these used to be let for grazing for £10 to £15 an acre. This year they have let for £35 to £40 an acre, simply because farmers have not dared to sell their cattle and are prepared to pay anything for grass in order to hang on to them in the hope that conditions will get better. This is a serious state, and I very much hope that the noble Lord will be able to throw some light upon it this evening.

7.49 p.m.

VISCOUNT BROOKEBOROUGH

My Lords, may I begin by thanking the noble Earl, Lord Dundonald, for allowing me to attach to his original Question the words, "and Northern Ireland" because when the Question was originally placed on the Order Paper it referred only to the rest of Great Britain. It is unfortunate that we in Northern Ireland have our Parliament suspended, and so far as I am concerned this is the forum from which I must spell out the case for Northern Ireland. If I speak with special reference to that area, I feel justified in that other noble Lords are equally speaking with great knowledge about their own particular areas. I am a very small beef producer, especially small compared with the large-scale farmers in the rest of the United Kingdom. I speak for a constituency which is represented in another place which has a great many farmers, and an enormous proportion of the 40,000 farmers who are in Northern Ireland are directly involved in beef production.

My noble friend Lord Ferrers said that there were two matters which were important: first, the question of confidence; secondly, what are the Government going to do to establish confidence. I look forward very much to hearing the reply from the Minister, the noble Lord, Lord Strabolgi, which I hope will be as definite as he can possibly make it, because the confidence that was established by the announcement last week, which I very much welcomed, is a transitional confidence if it cannot be followed up by hard facts which clearly spell out what the future for the beef producer is going to be. I feel that there exists a great deal of uncertainty—certainly in my part of the country. We feel that the removal of the £1.76 subsidy, which was given on slaughtered animals in meat plants, is a breach of confidence. We were given to understand when it was put on early this year that it was likely to continue for 12 months. This is a further matter which gives rise to lack of confidence.

When the Minister says that the premium to be paid will be "about £18", every farmer translates that according to his own personal wish and experience. My noble friend Lord Ferrers asked how this is going to be operated. Is it going to vary between £16 and £25? If it is indeed a flat rate of £18—the figure given by the Meat and Livestock Commission of Great Britain which has been accepted as factual—then the correct price for beef produced in 1974 at about 9½ cwt. is £22.47 per cwt. If the Government are going to take a flat rate of £18 they are in fact saying that someone down the line, producing beef from birth to finish, is going to have a guaranteed loss of £20.

We in Northern Ireland have a land frontier which presents different problems from those existing anywhere else, and I sometimes feel that this is not taken sufficiently into consideration. When there is a surplus in any part of Great Britain the differential in the price which we get on the periphery, on the outside of the market, widens. When there is a shortage of meat the price we get is closely equivalent to the price in the rest of the United Kingdom. To-day, when I checked it up, the price in the market here is over £18 per cwt.; in Northern Ireland it is £16.50. We always suffer because we are on the outside of the market, with transport between us. The question which I should like to ask the Minister is: when we went into the E.E.C. it was accepted that Northern Ireland should have a separate calculation to arrive at a guide price and an intervention price. It is very important indeed that this £18 (if that is the figure) should be operated on a separate calculation just as the intervention price and the guide price are operated, otherwise we will be getting £16.50 while the rest of the United Kingdom is getting £18.

The next problem is this: with the land frontier in the South and the Southern Irish intervention price operating, our animals will in fact be sold into the factories in the South and our factories will go on short time or will close altogether because the intervention price is still above the £18 which operates. If the £18 is not a fluctuating rate according to summer or winter, there is no hope of preventing cattle from the North of Ireland going into the South. There can be times when the intervention price in the South of Ireland will be higher than the seasonal price, and that again will have to be a calculated position. If we take past experience of a fluctuating price running up to, say, £24 per cwt. in the winter and coming down to £18 per cwt. in the summer, then the intervention price which exists in Southern Ireland will draw cattle into the South.

These are problems which I believe are created by the abolition of the use of intervention. I believe that the failure to continue to use intervention buying as a floor price has created problems which are going to be very hard to overcome, and the point is whether in trying to overcome them we create more problems. The Northern Ireland calculation for the intervention price is made on dead meat in the factory and the Great Britain price is based on the auction price. I should like to have an assurance from the Minister that we will be separately calculated in Northern Ireland.

The next question raised by my noble friend concerned the fact that at present 75 per cent. of the meat being sold in the Republic is going into intervention. Where is this going? When you are in a surplus position in the United Kingdom even a small amount of not such good beef, or a small amount of extra beef coming into the area, has a magnifying effect on the price of beef in this country. While I know that the Government are committed to supplying meat to the consumer as cheaply as possible, in the end it is the farmers who have to produce that meat, and unless they have confidence in the future the future for the consumer will be black.

The next question concerns the immediate implementation of this scheme. The actual amount of £18—whether it is a fluctuating amount or whether it is graduated during the year—does not matter provided the certification is put into effect at once. I do not know the details of the position in the rest of Great Britain, but I can speak with authority in saying that because in Northern Ireland we have headage payments for sheep and cattle, the officers who apply certification throughout the whole trade exist, so there is no possible excuse for not applying certification to-day even if the rate to be applied to those cattle is not decided until after the meeting of Ministers in the E.E.C. If this is not done what will happen? Farmers will hold back cattle, factories will close, there will be unemployment and there will be a further increase in the surplus; there will be further buying of intervention in the Irish Republic. Therefore, whatever the premium may be, the announcement of certification must be made at once.

I do not want to keen noble Lords any longer but I should like to mention one other matter. My noble friend Lord Ferrers mentioned monetary compensation. The United Kingdom Government are providing 33 per cent. for subsidising beef and other foodstuffs to come into this country. This is a problem. It worries me to read about the "green pound", which means that the compensatory amount may be increased in the next few weeks by about 15 per cent. In point of fact we might get a further distortion of our market with the subsidising of our European partners by another 15 per cent. to induce them to send beef here. We might get to the point when, because of the devaluation of the pound, we are not only paying the Members of the Common Market but countries outside the Common Market, to come in and take our money from us and take our markets.

We are in a position of surplus. It may be that because of the oil crisis and other crises the consumer has changed the amount of money he spends on food as opposed to petrol, but the facts of the matter are that we appear to be in a world crisis and farmers are entitled to know what the Government intend to do in the long run. There is a surplus and it is not an easy job for the E.E.C. or the Government to say that we will ship the surpluses out for these four areas which are in intervention. Where do we ship them to? Because there is a surplus, who has enough money to buy them even at the lowest possible price? I would ask the Government to say quite straightforwardly what can be done to help. We were encouraged by all Parties to produce more beef, so we must ask: have the farmers overdone it? If so, where does the future lie? I feel very strongly that the future of the consumer cannot be bought at the expense of the farmer, because if it is the consumer will suffer in the end: in two years there will be no beef.

8.1 p.m.

LORD LLOYD or KILGERRAN

My Lords, I should like to join other noble Lords in congratulating the noble Earl, Lord Dundonald, for having introduced this most important subject on the plight of cattle breeders in the United Kingdom. Before the debate started, I had the privilege of speaking to the noble Earl. I have listened to the figures which he so lucidly set out in his introduction, and should like to endorse them. In the light of the circumstances, I hope to be brief, simple and perhaps not too blunt in speaking about the desperate plight of Welsh farmers and cattle breeders at the present time.

The Welsh cattle breeding industry is facing its worst financial crisis since the war. Hundreds of small farmers are facing bankruptcy. Hundreds of them who bought cattle in the autumn and kept them during the winter when the grass came rather late so that they had to introduce expensive feedingstuffs, are losing somewhere between £30 and £40 per head for cattle—if they can sell them. These are small farmers, family farmers. They arc not Texan farmers: these farmers in Wales have no large capital resources. They now have crippling liquidity problems and, what is worse, they have little confidence in the future of their industry.

A bank manager in Cercdigion told me ten days ago about his customers who were facing bankruptcy and of the farmers who wanted to sell up their farms and get out while they could. A solicitor in the same area told me that last year his firm was engaged in selling, or trying to sell, eight farms, whereas now the number is 80. What is more, in rural parts of Wales there is a growing view that perhaps the Labour Party is adopting a deliberate and heartless policy of squeezing the Welsh family farmer from the industry. I hope this view is not true and that we shall get a repudiation of it this evening, because I am sure that noble Lords opposite will agree with me that to stimulate the family life of the Welsh farmer is what is required, rather than to attempt, either through a deliberate policy or through inaction, to eradicate it.

When an industry is in this desperate plight, every bit of help is welcomed. Therefore I should like to congratulate the right honourable gentleman the Minister of Agriculture on the stand he has recently taken in E.E.C. negotiations on the Common Agricultural Policy. We on these Benches agree generally with the long-term package deal proposed to the E.E.C. by the Government, but this will not operate until at least next April. Therefore, above all we want the Government to act quickly now in relation to the Welsh industry and to deal with it sympathetically so that confidence may be restored to the small Welsh farmer.

I should like, if I may, to mention a few figures in order to place the Welsh industry in perspective in relation to the United Kingdom industry. I do not propose at this late hour to bandy figures, but I think it is necessary to understand the position of the Welsh industry in relation to that of the United Kingdom. Wales produces 36 per cent. by value of the total milk production of the United Kingdom. Wales produces 50 per cent. by value of the total likestock production of the United Kingdom. As the industry deteriorates, Wales will suffer to a greater extent than other parts of the United Kingdom. Agriculture is a major employer in rural Wales and nearly 60,000 people derive at least part of their livelihood from this industry.

THE EARL OF ONSLOW

My Lords, I wonder whether I may interrupt the noble Lord?

LORD LLOYD OF KILGERRAN

My Lords, I will gladly stand down.

TIIE EARL OF ONSLOW

My Lords, may I ask the noble Lord to clarify the statement that 50 per cent. of livestock is produced in Wales because, with the greatest respect, I think that figure must be challengeable.

LORD LLOYD OF KILGERRAN

My Lords, I was just going on to say that I extracted those figures from a debate on agriculture in another place. My noble friend Lord Onslow will find those figures quoted in Hansard and I understand that so far they have not been challenged in another place, although they have been challenged here tonight. I am glad to disclose some of the sources of my information. The figures are from reports by the Farmers' Union of Wales on the state of the farming industry. Another source is the Department of Agricultural Economics in the University college of Wales in Aberystwyth, which is an independent and objective source of information. I will gladly give the noble Earl those figures at any time in order to substantiate what I have quoted.

The position in Wales can be rectified fairly simply by the Government. It is a matter, as the noble Earl, Lord Ferrers, said, largely of restoring confidence so that there can be a fairly quick return to profitability in the near future—or a hope promoted among these Welsh farmers that there will be a return to profitability in the near future. In my view, the most important factor in restoring confidence would be for the Government to introduce firmer guarantees of prices than those which exist at present in relation to fat-stock of all kinds, perhaps with the level of prices linked to feedingstuff prices. This would stimulate demand in store stock which Wales produces, and would indirectly benefit both livestock rearers and milk producers.

In conclusion, may I make three positive suggestions to the Government so far as Wales is concerned. In the first place, the confidence of the Welsh farmer could be restored if the Government were to bring in a temporary guaranteed price for beef, with a deficiency payment to be paid by the State so that the housewife would have the full benefit of the cheaper price of beef at the present time. Secondly—and this may seem to your Lordships to be a small matter, but it is an important one to the small Welsh farmer—the Government should advance the payment of the hill cow subsidy, the beef subsidy and the calf and sheep subsidies so as to alleviate to some extent the desperate cash-flow problems now facing many hundreds of Welsh livestock farmers. Lastly—and this is a matter to which the noble Earl, Lord Ferrers, referred—they should increase the present rate of calf subsidies. I should be glad to hear from the noble Lord, Lord Strabolgi, of the present position in relation to calf subsidies, which was a matter also raised by the noble Earl, Lord Dundonald, earlier.

These are three simple suggestions. If adopted, they would bring vital confidence to the Welsh family farmer. And, if I may be politically controversial once again, there is the impression in Wales that this Government will give anything to the industrial unions but very little to the farming community. But in my opinion the Government could rectify the position by introducing this temporary guarantee which would replace the intervention price of the Common Market. The Welsh cattle breeder industry is capable of immediate improvement by a sympathetic Government, which can dispel uncertainty and introduce more confidence to the Welsh farmer by the three suggestions that I have presumed to put forward.

LORD RAGLAN

My Lords, before the noble Lord sits down may I, as a matter of elucidation, ask him whether he is suggesting these remedies for Welsh farmers only, or for farmers throughout the United Kingdom?

LORD LLOYD OF KILGERRAN

My Lords, I would not presume to talk about anything but Welsh farming, about which I know something. I know very little about United Kingdom farming, apart from that in Wales, and therefore I would leave matters relating to territories outside Wales to those more experienced than I am.

8.11 p.m.

THE EARL OF SWINTON

My Lords, may I also add my thanks to the noble Earl, Lord Dundonald, for asking this Unstarred Question and giving us all a chance to speak on this matter, which is dear to all of us. When I first went into farming, I was told that there were three ways to go "broke"—you could take up women, which was the pleasantest way; you could take up drink, which was the quickest way; or you could go into beef cattle which was the easiest way. Unfortunately, I did not heed that advice. I went into both breeding and fattening beef cattle, so I must declare an interest on both points. But this is not a laughing matter; it is affecting everyone in the beef industry. I must take up a point which the noble Earl, Lord Ferrers, raised, when he said that he could not attach any blame to this Government or the last one. My goodness! my Lords, successive Governments have been encouraging us to go into beef. Some Government somewhere must take some of the blame for the present situation.

EARL FERRERS

My Lords, may I clarify that point? I did not say one could not attribute any blame. I said I did not attribute blame to the Government for this mess.

LORD LLOYD OF KILGERRAN

My Lords, may I make it clear from these Benches that we blame the Conservative Government and the Labour Government.

LORD HOY

You would blame anybody but yourselves.

THE EARL OF SWINTON

My Lords, I have been encouraged by subsidies over the years to go into beef cattle, and a lot of other people have, too. The fattener gets hit very hard, not only because of the feedingstuffs, and the high capital cost of his buildings and plant. There is also the question of wages—which nobody has yet touched on—and the most iniquitous factor of all, the threshold agreement. You have to pay this out to your farm men if they are getting the basic agricultural wage, if they are getting £30, £35 or £40 a week. If you do not pay it to all of them, you do not—as I think the famous expression goes—"preserve the differential". On the whole, farmers do not tend to grumble about what they pay their men. I have never grumbled and most of my friends have not. They thoroughly appreciate the work that the agricultural workers do, and are very glad to see them. This is the first time that I have heard farmers grumbling and grudging the men what they are getting.

The wretched employer has just as much to pay for the steep rise in the cost of living as does the employee, and he also has to do it when he is losing money hand over foot. This, as we say in Yorkshire, is "Plain bloody daft ". Not only does the wretched fatstock farmer have to do this, but also from August 5 the graduated insurance contribution is going up, as also are the costs of National Health insurance stamps for the employer; whereas the employee, who by then will be even better off than he is now, is going to pay less. All I can say is, "Lucky employee!" These are the problems which hit the fattener.

The breeders do not have the same problems; they do not tend to be such high employers of labour. But they tend, like the hill farmers of Wales, to be living on something of a shoestring. I can speak about the northern hill farmers whom I consider to be the salt of the earth. I certainly do not intend any discourtesy to those from Wales, Scotland or Northern Ireland. The older man who has been in the business for a long time is not hit so badly. He has had his troubles before, and no doubt has some reserves to fall back on in hard times, and perhaps he will be able to get through. This is really worrying the younger man. He often has a young family with a more expensive living to keep up, and has probably had to borrow money from the bank to get him into agriculture. He is having really hard times; he has nothing to fall back on. Surely this is the person whom we want to encourage in the agricultural industry—the keen young man who wants to get on in farming—and this is the person who is being hit most. I do not know what is to happen to him over the coming winter. The noble Earl, Lord Dundonald, mentioned hay at £40 a ton. In our part of the world last week before the rain came, it was about £35 a ton collected from the field. Even at that price he will find it hard to get through the coming winter.

We have heard much this evening about the guaranteed price of £18 per ton. I was very grateful to the noble Viscount, Lord Brookeborough—

VISCOUNT BROOKEBOROUGH

£8 a cwt!

THE EARL OF SWINTON

£18 a cwt.! I am more grateful still to the noble Viscount, Lord Brookeborough, for correcting me. People last year were selling beef at £20 a cwt. and were still losing money on that. The sum of £18 does not seem very much. The noble Viscount said that something over £22 a cwt. is now the cost. At £18 they will be even more out of pocket. It is not only the short-term position hitting the farmers which worries me; it is also the long-term. Several noble Lords have said that there will not be much beef in two or three years' time. Even worse is the effect that it is having on the land generally. If farmers do not have the money they are held back and the land does not get the treatment it needs. It takes a lot of caring for and needs a lot put back into it. If it gets into a bad state, it can be many years before it gets back to the condition it should be in. My Lords, what will Her Majesty's Government do about the situation?

8.17 p.m.

THE EARL OF ONSLOW

My Lords, I must certainly thank the noble Earl. Lord Dundonald, for allowing us to discuss yet again the problems of farming and the beef industry, in particular. I say, "yet again" because we have discussed it frequently in the past month or two, both here and in another place. But it seems to me to be so desperately serious, as practically every noble Lord who has spoken has said, that it is worth discussing yet again.

As the noble Earl, Lord Ferrers, said we have to realise that there is a worldwide glut of beef. In the beef States of the United States, as the noble Earl, Lord Ferrers, said the position is very similar to ours. Japan's imports have fallen as a result of her deteriorating balance of payments situation and, consequently, there is a drying up of one source of the market for beef. In Argentina their competence has increased compared with the chronic state that they have been in in recent years. We all know that there is a beef glut in Europe. The reason why I am venturing to repeat this fact is that it has not yet been brought out that agricultural prices react extremely sharply to very small movements in demand. We have had a fairly large increase in the production of beef, encouraged by everybody. The demand seems to have slackened off for one reason or another and, consequently, the price reaction has been much worse.

We ought to say, certainly from these Benches, that the agricultural community was not 100 per cent. happy before the last General Election. This was brought out very well by my noble friend Lord Monckton of Brenchley in an Unstarred Question on the dairy industry last December. There were rumblings of discontent, and this is not just a one Party issue. One must also say that Mr. Peart has far from improved the situation. I say this knowing he has the interests of the agricultural community at heart. But one has the impression that he is not capable of getting the message through to his Cabinet colleagues. The cost of food has been covered both to-day and earlier and, again, all I should like to do is emphasise it.

I should like to ask the Minister to underline again what the noble Earl, Lord Ferrers, said, whether this £18 per live cwt. will be a flat premium. When is it to start? If it is not to be a flat premium, will this be the January/February—in other words, high—part of the curve price, thus producing a summer price of about £16.50 per cwt., or will it be a summer price producing possibly £20 per cwt.? These are vital questions. What happens if the European Economic Commission turns down Mr. Peart's proposals and requests? Does he act unilaterally and so badly hinder the Government's renegotiation proceedings in Brussels'? These are questions I sincerely hope the noble Lord, Lord Strabolgi, can answer for us.

We must think very hard about not only the privileged farmers—and privileged farmers must include myself, the noble Earl, Lord Ferrers, and the noble Earl, Lord Dundonald; we have access to your Lordships' House and we can see Ministers. As the noble Lord, Lord Lloyd of Kilgerran, said, the farmers we must worry about more are the small farmers. These people do not have grain harvests to cushion them against a falling beef market. These people in the hill areas and the underdeveloped areas take up a much bigger percentage of the population than do the barley and wheat farmers of the southern and eastern counties. They play a far more important part in the social life of those counties, and keep the countryside of some of our most beautiful parts of the world in good order. These people must be worried about.

Moreover, as the noble Earl, Lord Swinton, said, we must worry about the agricultural labourer. The agricultural labourer cannot be paid the wage he deserves, and in my view he deserves a very high wage. We must attract into the industry people of the best kind, and appropriate wages cannot be paid unless we are making decent profits. By "decent profits" I do not mean "Centre Point" profits; I mean profits which provide a reasonable standard of living for ourselves and our children, and good money, good housing and good conditions for our employees. I would illustrates what I mean by "a good agricultural employee". He is the kind of man who has an evening party to attend on a Sunday. He is in his bath when his employer rings up and says that 50 head of cattle have escaped. This does happen, my Lords, frequently, unfortunately. The employee gets out of his bath. He is late for his social engagement and he keeps his wife waiting, but he goes willingly to help and put those cattle back. He is furthermore a good mechanic and also the kind of man who has constructive, useful and intelligent ideas. A man of that kind is somebody we have to pay well, out of reasonable profits. Will a lack of confidence in the industry stop us from making reasonable profits and make us unable to attract men of that kind? This to me is very worrying.

The noble Earl, Lord Ferrers, has raised practically every single point I wanted to raise myself, and I have almost had to start again from scratch. Admittedly he had the help of an American Senator, which I did not. But I hope that the noble Lord, Lord Strabolgi, can answer the questions raised by your Lordships in this debate, and that he can get through to his Cabinet superiors and his Ministerial colleagues that, in the long run, the interest of the consumer and the interest of the farmer are completely identical.

8.25 p.m.

LORD WISE

My Lords, I also must thank the noble Earl, Lord Dundonald, for raising this Question this evening, for it is a question of the utmost importance to the whole of the agricultural community and not only to the beef breeding section. That is so, although undoubtedly the beef breeding section is one in which our greatest difficulties are foreseeable because it has the highest capital outlay. As we have heard this evening, heavy losses are being sustained. May I relate just one instance of a neighbour of mine, a small farmer, who had some cattle which he had to sell because he needed the money? To break even he needed to sell them at about £120 each, but in fact he sold them at £75. It is losses of that kind which have been occurring constantly. Probably he paid too much money for these cattle, and the unhappy position which the industry is in now is aggravated by the high cost of calves and store cattle last autumn. As the noble Earl, Lord Swinton, said, the need for expansion is constantly, or has been constantly, impressed upon us, and the beef herds over the past year or so have been rapidly expanding. It was reasonable to expect that the market would remain firm.

Farmers arc gamblers; they are gamblers always, and the odds generally seem stacked against them. However, we cannot grope continually and blindly from one crisis to the next. I think that the Government's intention of dealing with this matter and raising the calf subsidy a further £10—and I am sure that the noble Lord, Lord Strabolgi, will clarify this matter this evening—must undoubtedly he welcomed, for this will help dairy farmers as well as beef producers, for they derive a considerable income from the sale of calves apart from the sale of milk. It will also, I am sure, help to diminish the heavy number of calf slaughterings which are taking place now—and if this is allowed to continue it must inevitably seriously jeopardise future beef supplies.

The Minister's assurance that the return for beef cattle will not fall below £18, as we hope, is also most welcome—this is the price per live cwt. for quality and clean cattle. Again, I hope the noble Lord will be able to clarify the position as to when it is to he implemented. However, a base (if one might call it that) of £18 is surely not enough with the ever-escalating costs with which we have to contend. The figure of £18 per live cwt. cannot possibly show a profitable return on investment. Nevertheless, as I say, it gives us a base upon which to work. Over the past month or so I have been in various markets watching fat cattle sold. It seemed to me that the auctioneers were taking their commission and probably making a small profit; they were covering overheads and were quite happy, although, of course, if prices had been higher they would have been doing better. Wholesalers were buying these cattle. They were taking them away and they were being slaughtered. They were being kept for perhaps a week and sold to the butchers. Again, overheads were being covered and a profit was being made. Butchers were buying them, taking them back to their shops and selling to the consumer, again making a profit.

In all those transactions the only person who was not making a profit was the farmer who had kept the animal for anything up to 18 months or two years and who had had all the worry, anxiety and cost of keeping it. He was the only person who was losing money. It seems to me that there must be something wrong with a system which allows this to happen. Of course, it is not always so. As your Lordships know, farmers have not always lost money on beef cattle, but we cannot continue with high returns and low returns. It is impossible to live to-day on yesterday's profits because they have gone; they have been used up in the working of the farm. If it is impossible to do that, it is even more impossible to live tomorrow on to-day's losses. I am sure that production can be sustained only by the assurance of continuity of a reasonable return.

When the noble Lord, Lord Walston, spoke in the agricultural debate in your Lordships' House a couple of months ago, he urged the Government to consider the setting up of an overall meat marketing board. I endorse wholeheartedly his suggestion. It could put some semblance of order into the question of marketing and some stability into the regulation of supplies. The industry can provide the beef which we need, but only if the return is commensurate with the costs involved. It cannot operate on a cost-minus basis. I hope that the Government will be able to set up a committee to study in depth the possibility of a meat marketing board. The noble Lord, Lord Walston, would probably make an admirable chairman. Something must be done to restore long-term confidence. As the noble Lord said, it is not an insuperable administrative problem and I believe that it could bring some order into meat marketing.

8.32 p.m.

LORD STANLEY OF ALDERLEY

My Lords, I am not sure whether I want to thank the noble Earl, Lord Dundonald, for raising this subject. Maybe I would have been happier—I am sure that noble Lords on the Benches opposite would have been happier—if I had remained at home and worked out the losses which I am making on my beef cattle. There I must declare an interest, in that I have been beef farming for 20 years. Indeed, it is for this reason that I am here to-night, because I want to try to explain to your Lordships how my fellow farmers and I feel and react to the present crisis. I hope that your Lordships will realise that the questions which I shall ask are ones that I ask as a beef farmer. I want to know the answers to these questions; preferably I wanted to know them by yesterday because time has run out. I hope to put the questions to the noble Lord without bias or spite and if I get worked up I apologise to your Lordships; it will be because I believe that agriculture is the most important industry. I hope that the noble Lord, Lord Strabolgi, will not mind my having written to warn him of some of the questions which I might raise to-night. Fortunately, a lot of those questions have been raised already by noble Lords. Therefore I shall cut them out, because I am sure that the noble Lord will answer them.

One point which I want to raise is that last Friday, June 28, after the Statement made by the Minister of Agriculture, the butchers' trade was still trying to talk the price down. They were suggesting that the Minister did not mean £18 a cwt. to apply as soon as possible. When the noble Lord replies, can he please give a strong recommendation to beef producers not to sell below this price, or not to sell very much below this price, despite the slight ambiguity of the Statement made by the Minister of Agriculture on Wednesday? I was offered only 27p a lb. on Friday for prime quality 9 and 10 cwt. bullocks. That is 17p, give or take a bit accordingly to how they kill out. I know that the Minister of Agriculture has told your Lordships already—he has told me, too—not to talk the trade down. But I wonder whether he would be prepared to take the advice of a former Minister of Agriculture who once said that if you want to get anything over to farmers you must tell them that you are going to tell them, tell them, and tell them that you have told them. It was the noble Viscount, Lord Amory, who made that remark. It is quite an important point and sometimes it takes a long time to get through to us.

One other point which I should like to put to the noble Lord is that there is a feeling that the Government are not entirely in touch with farmers. I believe that Banbury is the largest market in Europe. It is only an hour or so away and it is even closer to the noble Lord, Lord Wells-Pestell. I know that the directors and farmers of that market would more than welcome Ministers and noble Lords on the Front Bench opposite going there to see for themselves what is the position. Indeed, I think that they may instil some confidence in the trade and in farmers. I personally should be more than happy to supply a gang of large, beef-eating farmers to act as escorts if they feel frightened about coming to Banbury alone.

LORD STRABOLGI

My Lords, I hope that the noble Lord will forgive my interruption, but as I am the Captain of the Yeomen of the Guard that would be very suitable!

LORD STANLEY OF ALDERLEY

My Lords, that will be all right, then! To come to a more serious aspect, we are all waiting for the Government to make a decision on the O'Brien Report. I do not know whether the noble Lord can say when that decision is likely to be made. I am still at a loss to know whether calf slaughtering has fallen since the £10 increase in subsidy which was announced the other day. I accept entirely the remarks of the Minister of Agriculture regarding the business decisions taken by beef farmers last autumn—that is, that we bought too high. I agree that I bought too high and that a lot of us bought too high. We are to blame. So is my own Party to blame and so is the Party opposite. I think that we are a nice, happy gang together! I hope that the noble Lord, Lord Hoy, will not haul me over the coals for having said that we are all in it together.

There is one other point which I feel I may be tackled about by the noble Lord, Lord Strabolgi. It is a little bedside reading which I am always asking the noble Lord, Lord Beswick, to do. Last Saturday I read in The Economist the statement that we are going to make a lot of money out of beef. All I can say is that I think their figures are about as accurate as the statement made in The Economist about three months ago, that the average 100 acre, poorly equipped farmer was making £10,000 a year profit. Therefore, I hope that the noble Lord will not commend that bit of reading to me.

Although it is a difficult question, if it is possible I should like to know what is the average gross mark-up between the farm gate price of beef and the housewife. I accept that yesterday the butchers lowered their prices. In particular, I noticed that Dewhurst had brought their prices down quite considerably—which, of course, we welcome. Will the noble Lord confirm whether I am right—it may be that I am wrong—that a 10 cwt. beast in the United Kingdom makes about £170 to £180, whereas a similar beast in France or Germany makes over £300 and can be imported into this country? Indeed I have been told that this week prime quality, fresh Charolais beef was imported into England at between 23p and 27p a lb.

My Lords, I apologise for mixing up the hundred weights and the pounds, but I am sure that the noble Lord will be able to translate that as easily as I cannot. This is due basically to compensatory payments and export restitutions. We should like this to be made quite clear because people often think that we are inefficient. But I do not think that we are so inefficient. Another question which I should like to ask the noble Lord is how it is that the Minister of Agriculture can state that we have a surplus of beef? In a written reply to the noble Lord, Lord O'Hagan, on June 13, I read that last year we imported about £190 million worth of beef. My Lords, I am sure that this beef could be produced by this country. Have we forgotten about the balance of payments—or has the balance of payments got so had, like my overdraft, that one does not open the letters when they come? Another point which I should like to raise is that the Meat and Livestock Commission have a scheme for meat promotion which has the blessing of the National Farmers' Union, and I should like to know whether the Government will give it their blessing because we should like to see it pushed ahead. Will the Government consider—I am sure they will not—in these days of inflation some form of threshold agreement for livestock end prices? I must now bring in my perennial. Will the Government consider reintroducing the fencing grant, which is of vital importance to beef producers? It now costs something like £70 an acre to fence a field, even if the fields are 20 or 30 acres, and I feel that a grant might also solve the problem of the noble Earl, Lord Onslow, in regard to his employee's party, because the cattle would not get out.

I shall now conclude, my Lords, and I hope that the noble Lord will be able to give satisfactory answers to the questions that I and other noble Lords have asked. I feel that it would be uncharitable of me not to say that I welcome the Statement made by the Minister of Agriculture, Fisheries and Food on June 26, regarding the minimum price and the lime subsidy. I hope the noble Lord will not accuse me of looking a gift horse in the mouth, when I say that early announcement of the retention of the lime subsidy would have prevented over-liming which can cause severe nutritional disorders such as hypermagnesaemia.

Also, the position of the stock rearer is grim. For my hay I was offered £50 a ton the other day. To keep a beast through the winter will cost somewhere around £75. If the end price of a 9 cwt. bullock is £180, all that the farmer will be able to offer in the autumn will be £105. You cannot rear a 9 cwt. bullock for £105, let alone a 5 cwt. suckle calf. They come off the Welsh hills for considerably less. I think their position is very severe, and I am a suckle calf rearer although I fatten my stock in Wales. Despite what the noble Lord, Lord Lloyd of Kilgerran, said about the calf subsidy and the fattening—and I also farm in Wales—I am afraid I do not agree with him in this regard. It would be better to put an end price which would cause less disruption over the whole beef cycle of selling from rearer to fattener. The position of a beef farmer, despite the recent efforts of the Minister of Agriculture, Fisheries and Food, is still very serious. We need better end prices and we need stability of prices, not just today and next year but for quite a long time to come. I wish the Minister the best of success in Brussels in the negotiations this month to achieve that stability.

But although beef production is one of the main cornerstones of British farming there is, to my mind, one more serious aspect of this problem. Farmers, are moderate, law-abiding people led by moderate, law-abiding men. I think we are possibly led by the best people in the National Farmers' Union. If the Government do not listen to our leaders in the Union, those leaders will in turn have difficulty with their rank and file members, and I am sorry to say that they are having such difficulty. Therefore we shall move to further cases of extremism by individual groups of farmers. One can see that in the Press to-day. I am glad to say that the Government are beginning to listen to our leaders, but if we do not see this happening farmers will move further either to Right or Left, and I mind not which. I am sorry to say that we have lost faith in Government—and I do not lay the blame for this entirely on the Benches opposite I think I must blame my Party, too—and it will take a lot to get our confidence back. You have done too little, too late, and you will now have to work very hard to get back our confidence.

8.45 p.m.

LORD HOY

My Lords, I am sorry that I did not put my name down for this debate but I have only just come back to London, having been in Scotland for some time. I liked the last speech. I want to say to the noble Lord, Lord Stanley of Alderley, that I enjoyed his speech, right up to his concluding sentences. Indeed, I never think one makes very much of a case by threatening action of an extreme character. I find it a little difficult to understand that apparently it is all right if the farming community does it, but it is quite wrong if any other industry does it. All I will say to the noble Lord is just to be a little careful about this because I do not think it brings any respect to any industry, whether it be the farming industry or any other, to adopt these extra-mural tactics.

LORD STANLEY OF ALDERLEY

My Lords, I thank the noble Lorl for giving way. I am sorry if the noble Lord took my final remarks in that manner. I hoped to put them as quietly as I could. There is a danger. I entirely agree with what the noble Lord, Lord Hoy, has said, but I think he has misinterpreted my remarks.

LORD HOY

My Lords, I will not reproach the noble Lord on that point, except to say that there is a danger because when one thinks of it this Government have been in office for about three months and in that time we have had demonstrations in Whitehall and cattle have been paraded in the streets. I wonder who is arranging these demonstrations. I think I do not need to say that I have always had a very warm side for the agricultural industry. Indeed, for six years I served it to the best of my ability, and I agree with the argument that if we are to have an agricultural industry it must, like any other industry, have assurances, but it must be economic. Sometimes one thinks in terms of criticism of Government. I do not say that of this Government because obviously in three months they cannot have done all the desperate things of which noble Lords opposite have been accusing them to-night. Indeed I would say to them that we must find a reason for it. I heard the noble Earl, Lord Swinton, say that one of the great on costs of this industry and one thing that was causing difficulty was the threshold agreement. I say to the noble Earl with due respect that that cannot be pinned on the door of this Government: it was their predecessor which in fact produced the agreement.

THE EARL OF SWINTON

My Lords, I never for a moment pinned it on the Government opposite. It was a damned stupid thing to do, and I think all Governments can be damned stupid a lot of the time—and, my God! they are too.

LORD HOY

My Lords, the noble Earl may try to get out of it in that way, but all I am saying is that he did not make it clear which Government were responsible. I am reminding the House that that agreement was introduced by our predecessors and we have to accept it. I do not want to argue this all night, but when I hear a plea for fencing (with which I agree) I can remember that debate a few months ago when the noble Earl, Lord Ferrers, announced certain cuts in the fencing grants. I raised the matter and I did not find a single supporter among the Members who were then occupying the Benches on this side of the House—not a single one. So while I agree with what the noble Lord, Lord Stanley of Alderly, was saying to-night, I can only wish that he had said it when the Statement was being made by the Government of that day.

In agriculture we have to consider the situation that confronts us. There is no doubt at all that we are in great difficulty, not only in this country but all over the world. Indeed, consider Europe, where they are not only producing meat but are then putting it into cold storage so that the consumer cannot purchase it. This is one of the problems we are up against. I raised the matter many months ago in another respect because we were then faced with the awful problem of butter production inside the agricultural industry. Then we were producing so much butter that they had more in stock in the cold storages of Europe than we had coal in Britain. Consequently, we had to get rid of it at very cheap prices and sell it to Russia and other countries. This is the position we have got into, and this is the position we have got to get out of.

I want to say to the noble Lord, Lord Lloyd of Kilgerran, that I think one can talk this industry down. I have had a fairly long connection with the Welsh farming industry. The noble Lord said that the one thing he did not want to do was to introduce figures to bamboozle people, but he did produce figures. Apparently he was out for a walk one day when he met a banker and the next day he met a solicitor, and one was going bankrupt and the other was selling farms. The noble Lord said that eight were then up for sale, but that the next week the number had gone up to 80. What he did not tell us was how many were sold. Farms can be bought only if someone wants to sell.

LORD LLOYD OF KILGERRAN

My Lords, if the noble Lord, Lord Hoy, would like to have privately the names and addresses of the two persons I spoke to, I will give them to him. But I said that the solicitor to whom I spoke last year in Ceredigion, in the High Street of a little town called Lampeter, had eight farms for sale at that time on his books. At the present time his firm has 80 farms for sale. So far I understood the solicitor to whom I spoke, there was no question of any of those farms having been sold at the present time.

LORD HOY

My Lords, all I wanted was the figures. All I wanted to know was how many farms had been sold.

LORD LLOYD OF KILGERRAN

My Lords, the position is this. The noble Lord has again misunderstood me. A year ago there were eight farms for sale, and now nearly 80 farms are for sale, so the question of whether they have been sold did not arise when I was speaking in the High Street of Lampeter to this solicitor.

LORD HOY

My Lords, I did not misunderstand the noble Lord one bit. All I am saying is that when he produced figures of the farms for sale, he is entitled to say how many were sold, because this is an economic argument. He does not do the agricultural industry any good by producing figures of this kind. One of our troubles today in connection with prices is a very simple one. I was glad that two Members of your Lordships' House admitted it, the noble Lords, Lord Stanley of Alderley, and Lord Wise, who said that during a sale some time ago they were paying prices that were much too high. Both noble Lords admitted that they were paying prices that were much too high. They were paying them because they thought that at the end of the day the end price would he considerably more than it was so there was a misjudgment in their business management. Many people do it, in either the agricultural or in any other industry. It can be done. But in the debate this evening there was a breath of honesty from those two noble Lords. All these things bring difficulties.

My Lords, I thought that the noble Earl, Lord Dundonald, was reticent, in introducing the debate, in really acknowledging what the Minister said last week, because here was a Minister attempting to take steps to correct a position, not that he had created, but a position into which the agricultural industry had got because of decisions made before he arrived. This is what we are thinking about. I do not want to bandy it about in a political way—

SEVERAL NOBLE LORDS Oh!

LORD HOY

No, my Lords, nothing of the kind. The noble Lord, Lord Lloyd of Kilgerran, never uttered a single word in praise of what the Minister of Agriculture did last week.

LORD LLOYD OF KILGERRAN

My Lords, I am sorry to interrupt, but I did praise the right honourable gentleman the Minister of Agriculture for the steps he had taken on June 18 in standing up against the other E.E.C. Ministers in relation to Common Agricultural Policy. I praised him for that act.

LORD HOY

My Lords, yes, but I am talking about the debate tonight, and about prices. It is difficult for me to agree with the noble Lord on this, because if there is one Party which wanted to be in the E.E.C., despite the C.A.P., it was the Party he represents. So what the present Minister has to do is to meet this new situation. All I hope is that, as a result of this debate, the agricultural industry and my noble friend will understand it all the better. The industry is in difficulties, of course; no one pretends it is not. We must find solutions to these problems. We do not get it done by criticising one side or another. One can go on doing this endlessly. We must consider the problem that confronts the agricultural industry tonight. I have tried to point out who created these problems. It is unfair to blame my right honourable friend for them when he had no responsibility for them, but he has inherited these problems.

THE EARL OF ONSLOW

My Lords, the noble Lord, Lord Hoy, has made the best speech for getting interruptions. Would he admit that his right honourable friend Mr. Peart did withdraw the bottom from the market? I think many of us on this side of the House made the point that we were not 100 per cent. happy with our own side when in Government. When Mr. Peart did this he hit confidence very hard indeed.

LORD HOY

My Lords, this argument can always be made politically. All I am saying is, and the noble Earl and I are good friends, that the Minister has, at least, given the industry a basis, a guarantee, that it has not had for a considerable time. No one will deny that.

EARL FERRERS

My Lords, the noble Lord, Lord Hoy, said that he did not want to be Party political, but he is not having a bad go at it! What is the guarantee which he says his right honourable friend has given the beef industry and which it has not had before?

LORD HOY

My Lords, I do not know why the noble Earl should ask me. I do not sit on the Front Bench. He does. The noble Earl, Lord Dundonald, had better hold his argument for a while, because about six noble Lords asked my noble friend what the guarantee is. He is the Minister, and it will not matter what my opinion is. If they are really interested, they will want to know what the opinion of the Government is. All I am saying is that they had better wait a little. I will not keep them for many more seconds, except to say that all of us want Britain to have a successful agricultural industry. We saw the difficulties even at the time of entry into the E.E.C. In three months, this Government have had to face up to a considerable number of difficulties. They have produced a Statement which was made last week and which, indeed, has been welcomed by the noble Lord, Lord Stanley of Alderley, and I think by the noble Lord, Lord Wise, as well. These noble Lords have gone out of their way to welcome it. They do not claim it as a solution, but they do say it is a considerable step in the right direction. As a consequence, they have asked my noble friend the answer to certain questions appertaining to the Statement made last week. All I am saying to my noble friend is that like noble Lords in all parts of the House, I hope he can provide the answers. Let us all understand what the Government are doing, what steps they have taken, and what they think the consequences will be for the agricultural industry.

8.58 p.m.

LORD STRABOLGI

My Lords, we must be grateful to the noble Earl, Lord Dundonald, for raising this matter. It is an important matter and, as every noble Lord who has spoken has said, there are no grounds for complacency. As my noble friend Lord Hoy said, I hope that during my speech I may do something to reassure your Lordships There is one thing I should like to say at the outset, which is to deny (as, indeed, I was invited to deny) the allegation of the noble Lord, Lord Lloyd of Kilgerran, that the Labour Party is engaged in some kind of Machiavellian plot to squeeze the small Welsh farmer out of existence. I do not really believe that the noble Lord meant that at all, but I thought I would get it out of the way at the beginning.

LORD LLOYD OF KILGERRAN

My Lords, I thank the noble Lord for that.

LORD STRABOLGI

My Lords, the noble Lord, Lord Hoy, said that this Government had been in Office for a few months only, but my right honourable friend the Minister has already taken some considerable action, which I shall describe in more detail in a moment. It is right to say, as noble Lords have said during the debate, that the problems facing beef producers have been highlighted by the falling market prices over the past two or three weeks, and they do give cause for concern; there is no doubt about that, both because of the importance of the industry itself and because of the reactions which a weak beef market can cause in livestock markets generally.

There are a number of reasons for the present difficulties, but there can be no doubt that the rapid expansion of production coupled with increased production costs are the main causes. As my noble friend said, each of these factors had its roots in a period many months before the present Government took Office. We can all understand 'why the industry was tempted by the very high prices early last year to build up their herds, even though this meant paying very expensively for young animals; but in retrospect it can be seen how unfortunate it was that production should have been built up in this way in a period of rapid and substantial rises in production costs, particularly of winter feeds. Producers expected market prices to rise this year, but this of course did not happen and losses have. I regret to say, undoubtedly taken place. Now we have a situation in which consumers cannot or are not prepared to pay the sort of prices needed to offset producers' costs in the context of a beef market which has weakened because of exanding supplies, a somewhat Gilbertian situation.

This, then, was our inheritance in March. Nothing had been done to guard against the foreseeable effects. I am not trying to make a Party point here, because I know the noble Earl, Lord Ferrers, was not making Party points in his speech—it is really too important a matter for that—but the previous Government took away from beef producers the safety net of the Fatstock Guarantee Scheme on the grounds that they could rely on an E.E.C. regime based on the maintenance of prices through intervention purchasing. As your Lordships will know, the new Government took two important policy decisions in their first weeks of Office. The first was to maintain and exercise an option not to apply permanent intervention. The second was to inject about £35 million into the industry, at the point where it was required at that time to prevent a level of calf slaughterings which could have endangered our future food supplies. This was done by increasing the calf subsidy by £10 a head.

The noble Earl, Lord Ferrers, criticised us for our inaction since we came into Office. The decision not to apply permanent intervention in the United Kingdom was taken very soon after this Government were elected. There were complaints from the industry that this took from them any price guarantee. To the extent that this was so, it was because the previous Administration had removed the protection of the Fatstock Guarantee Scheme which had worked so successfully for many years. But it was wrong to say that the market had no protection. It was still supported by the E.E.C. régime on import duties and levies against unduly low priced supplies from third countries, and it remained linked to the Irish and Continental beef markets so that our prices would follow any increase in price in other Member States. In fact, the market prices in the United Kingdom were subsequently well above the price at which intervention would have operated, and fell to the notional intervention level only during the past two or three weeks. There can, therefore, be no complaint that my right honourable friend did not take immediate steps when that situation arose. I have been asked about the size of the calf subsidy. This is an extra calf subsidy of £10 a head which was announced by my right honourable friend on April 11 to conic into effect on July 1. Therefore, the total subsidy is now £18.50 a head on steers and £16.50 a head on heifers born after October 31, 1973.

Returning again to the Community, despite the misgivings which we have heard over the last few months, recent experience elsewhere in the Community has provided full justification for the view we took that the intervention system is inefficient as well as undesirable. I agree very much with what my noble friend Lord Hoy said about this matter, how beef is something to eat and not to put into cold storage. I wonder very much what some future Gibbon would think about a world which stores its beef deteriorating in stores which are now not even large enough to hold it, while the price is too high for even the Western European housewife and the product does not reach the millions of people who are starving in other parts of the world.

More recently the decision was taken to bring forward to July 1 the increase in the United Kingdom guide price to £19.25 a live cwt. This will help to sustain the market in the present difficult situation by affording producers greater protection against imports and providing a closer link with the beef markets elsewhere in the Community. Your Lordships will be aware that my right honourable friend the Minister of Agriculture has announced in another place the changes that he hopes to see made to the Community's beef regime. In the Council of Ministers meeting on June 17 and 18 last he laid stress on the need for arrangements by which permanent intervention would be replaced by a system of variable subsidies and production grants. This would undoubtedly help both our producers and consumers. He recognised that such a new system could not be introduced before next April.

Some more immediate action is clearly needed, and last Wednesday the Minister announced his intention to press immediately for direct interim action to be taken in recognition of the need to assure producers that their returns will not drop below about £18 per live cwt. for clean quality cattle. I was asked about this figure, whether £18 could mean that or something slightly less. I regret that I cannot give more than this interim figure, as the final sum will depend on negotiations. We are in the Common Market now. The previous Government put us in. But it depends on negotiations. You cannot blame the present Government for this. It is our firm intention that we should reach agreement on this figure in the future. In view of this, the Minister has instructed his officials to be ready to undertake the necessary certification procedures for whatever arrangements are decided upon.

EARL FERRERS

My Lords, nay I ask the noble Lord one question with regard to that? Does one understand from him that the operation of this base figure will be subject to the agreement of the European Community, and that if that agreement is not forthcoming then the Minister will not be able to do it?

LORD STRABOLGI

Yes, my Lords; it is subject to agreement. I think that it has been proved in the past, since this Government came into office, that we are rather tough and realistic negotiators, and the figure of £18 is the one we are going for. As a result of this, I am glad to see that market prices have this week improved considerably following the Minister's Statement, and the indications are that we may get back to about £18, which I think is fairly reassuring in view of some of the speeches we have had. The figure had been falling; I accept that. For example, on June 17 it was £17.11, then it went down on June 24 to £17.08, but I believe now—and I was told that this afternoon by the Department—there is every hope that it will be back at £18.

The noble Viscount, Lord Brooke-borough, mentioned Northern Ireland. The Government recognise that they face particular difficulty in the current depressed state of the market, in that their returns are usually substantially lower than in the United Kingdom generally. The recent increase of the United Kingdom guide price will have had the indirect effect of reducing somewhat their level of returns by substituting on July 1—that is yesterday—a calf subsidy increase of £10 a head for the beef marketing scheme payment of £1.76 a live hundredweight paid on slaughter. This payment had been made since April 1 to bring Northern Ireland into line with the higher guide price in the Irish Republic. It is, however, fair to point out that the beef marketing scheme represented an additional return to Northern Ireland producers that was not available to farmers in Great Britain, and that they also receive certain other special producer grants.

We are confident that the steps announced by my right honourable friend on June 26 last, should help to strengthen the beef market throughout the United Kingdom, and indeed the movement of this week's prices, as I have indicated, shows that this is already happening. I trust, therefore, that this will result in a considerable easing of Northern Ireland's problems.

I was asked various questions by noble Lords, some of which I shall try to answer to the best of my ability, and on others I shall write to noble Lords, if I may. The noble Lord, Lord Wise, asked me about the Beef Marketing Board. The Verdon-Smith Report of 1964 came out against the idea of the statutory marketing board, and their alternative proposals led to the establishment of the Meat and Livestock Commission. The practical difficulties seen by the Verdon-Smith Commission at that time against setting up a Marketing Board apply, in our view, equally to-day. I was also asked by the noble Earl, Lord Onslow—and I am grateful to him for giving me notice of this—whether we were satisfied that the sum of £18 per live hundredweight, as a base price, is really adequate. An assurance to producers of a return of about that level would represent a more secure basis of guarantee than protection based on intervention, as I said earlier. Moreover, the present national intervention price for clean cattle would be, in the range of about £1826 to £18.62 a live hundredweight. With the benefit of direct producer aids, such as the calf subsidy, itself now worth on average about £17.50 a head, the total returns to beef producers would be well above the intervention level. In these circumstances, I do not think that it can be argued that £18 is an unreasonable figure.

The noble Lord, Lord Stanley of Alderley, asked me a great many questions. Here again I am grateful to him for writing to me about them in advance. It was most courteous of him. He asked how and when the beef slaughter premium will apply. I think the noble Earl, Lord Onslow, also asked me this question. On June 26 in another place my right honourable friend stated that he will press the Community to take action at once so that producers may be given the assurance I referred to earlier. At this stage, I cannot say what detailed arrangements may be agreed. However, it is our intention that they should apply as soon as possible, athough it will probably take about a month to make the necessary arrangements. The noble Lord, Lord Stanley of Alderley, also asked me about the O'Brien Report. The Government will announce their decision on that Report as soon as possible after their consultations with interested parties have been completed.

I was also asked about calf slaughterings. The average weekly level of calf slaughterings, since my right honourable friend made his announcement on March 25 of the proposal to increase the subsidy by £10, declined to a figure of about 5,400. The average for the month before that date was 6,600. Of course, my Lords, I admit that slaughter of cows and calves has increased from the unusually low level of the last two years, but the national herd is much larger. More calves are being produced and there are many older cows in the herd which were retained last year for breeding instead of being culled. Therefore we do not think that the present level of slaughter is unduly high. I am glad to confirm that it is declining still further.

We accept that many producers will be hard pressed to achieve even an economic return on sales at recent low prices, but good profits were made last year. I submit that profitability in the beef industry cannot be judged over a short time. It is, I am sure noble Lords will agree, a longterm business. Nor is it possible to generalise about the economics of an industry which has such a wide range of production systems and conditions.

The noble Lord, Lord Stanley of Alderley, asked me about the mark-up between the farm gate and the housewife. My Lords, I do not think one can talk about mark-ups in the meat industry in the same way one talks about bars of soap. There are a great many factors, as noble Lords know, affecting the retail price of a cut of meat in relation to the cost of the whole animal. But the Government have no reason to consider that butchers' returns are excessive.

I was also asked about the comparison of fat cattle prices in the United Kingdom compared with France and Germany. For most of this year the average market prices for clean cattle in the United Kingdom have been in the range of £18.30 to £19 per live hundredweight and after two very low weeks prices are this week expected to return towards that level. The noble Lord quoted a distinctly low representative price. In general, average cattle prices in France and Germany appear to be about 40 to 50 per cent. above the United Kingdom in terms of their own currencies. There are many other factors which make it difficult to make a valid direct comparison in price terms.

There was also a question about the imports of cheap beef from the Continent, which was referred to by several noble Lords. I can neither confirm nor deny the matter of these particular consignments of beef, particularly the Charolais type referred to by the noble Lord, Lord Stanley of Alderley. However, I would be surprised if significant quantities of first quality beef were being imported at the prices quoted. Most of the recently increased supplies from Community countries have been of lower quality meat destined for manufacture which has to some extent been replacing much smaller recent imports of frozen beef from other countries. The increase in the United Kingdom guide price, which took effect yesterday, will in any case have the effect of reducing the compensatory amounts on both types of imports and so give our producers greater protection.

The noble Lord also asked me about the Meat and Livestock Commission Promotion Scheme. I think the scheme that he has in mind is that which was the subject of a memorandum sent to the Minister by the President of the National Farmers' Union recently which had been prepared in consultation with a number of other organisations. I hope the noble Lord will allow me to say that it would be wrong for me to indicate in advance anything that the Minister may decide, but I know that this is being carefully considered.

The noble Lord also asked me about fencing grants. The decision to end the provision for fencing in the Farm Capital Grants Scheme was taken in 1972 after a comprehensive review of the scheme and a fresh evaluation of priorities. Fencing was one of several items which were thought to have less claim on the sums available than other kinds of work and facilities.

My Lords, I hope I have answered most of the questions asked by noble Lords, and that what I have said will assure the industry that the Government have their problems very much in mind; that what we have done already is a first step and that what we hope to do further, after continued negotiations with the Community, will improve the situation even further so that confidence will return to this great industry.