HL Deb 20 June 1974 vol 352 cc1069-73

4.53 p.m.

LORD STRABOLGI rose to move, That the Draft Calf Subsidies (United Kingdom) (Variation) Scheme 1974, laid before the House on June 10, be approved. The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. When my noble friend Lord Wells-Pestell sought the approval of this House on March 28 to the main Calf Subsidies (United Kingdom) Scheme, he mentioned that since the draft of that Scheme was laid before your Lordships on March 13 the Government had reached agreement in the E.E.C. Council of Ministers on measures to be taken to support the United Kingdom beef industry.

Perhaps I should remind the House briefly of the context in which the increase was determined. The agreement of our E.E.C. colleagues had been obtained to our exercising the option of not taking beef into intervention in view of the need to stimulate consumption rather than taking beef off the market at prices which housewives cannot afford. The Government also informed the Commission in Brussels that, subject to the approval of Parliament, there would be an increase of £10 in the calf subsidy rates in Great Britain. Therefore my noble friend told your Lordships that the variation scheme providing for new increased rates in Great Britain would be laid before your Lordships later. It is this variation Scheme for which I ask your Lordships approval to-day.

The increase agreed to of £10 per head in the calf subsidy, for which the draft Scheme makes provision, applies only to calves born in Great Britain. Northern Ireland farmers are at present being paid under separate legislation, a beef marketing subsidy broadly equivalent to the calf subsidy. This special arrangement was made to prevent distortion in trade with the Irish Republic due to the differences in guide prices on each side of the Border. The situation will be changed as from July 1 when the guide price in the United Kingdom and the Irish Republic are to be made the same, following agreement reached in the Council in Ministers earlier this week, as announced to your Lord- ships yesterday by my noble friend Lord Goronwy-Roberts. The Northern Ireland headage payments will need to be replaced by an increase in the calf subsidy so that all United Kingdom producers are put on the same footing. A further Calf Subsidy (Variation) Order will therefore be brought before your Lordships as soon as possible.

The draft Scheme falls into two parts, providing respectively for increased rates on live calves—stage A, and on carcases—stage B. Under stage A the increased rates will be £18.50 for male calves and £16.50 for heifer calves. They will be paid on calves born in Great Britain on or after October 30, 1973, until further notice. The increased rates under stage B will be the same as for stage A and will be paid on carcases of animals born in Great Britain and certified on or after December 16, 1974, until further notice. The cost of the increases in calf subsidy rates is estimated at £30 million in a full year.

My Lords, I apologise for speaking at some length but hope your Lordships will agree that the Order is somewhat complicated and that it merits some explanation. My Lords, I beg leave to move.

Moved, That the Draft Calf Subsidies (United Kingdom) (Variation) Scheme 1974, laid before the House on June 10, be approved.—(Lord Strabolgi.)


My Lords, the House will be grateful to the noble Lord for giving us details of the Calf Subsidies (United Kingdom) (Variation) Scheme 1974. I should like to thank the noble Lord, Lord Strabolgi, for dealing with it at some length because it is somewhat complicated. I speak with restraint for obvious reasons this afternoon because at present negotiations are in progress between the Common Market authorities. The Meat and Livestock Commission are being informed of all these developments and therefore it is in the wider context that I wish to speak about these subsidies.

In the debate on prices to which we have just been listening dairy products were mentioned but not the beef market. Currently, this especially is in a state of great uncertainty. In fact the noble Lord's right honourable friend Mr. Peart, the Minister of Agriculture, stressed in his negotiations and in his statement in Luxembourg that he considered it to be the most difficult problem within the Common Market at the moment. But in this country the situation of the industry is one of acute financial embarrassment, giving rise to an extreme shortage of liquidity and very high prices of feed. The feeding of animals during the last six months has been a matter of great concern and, as the noble Lord has already told us this afternoon, the steps being taken are to be regarded as interim measures. We look forward to further measures to support them.

One can say only this, my Lords, that the high slaughter rates to-day are caused by a whole group of circumstances, and those high rates to-day will inevitably mean fewer Sunday joints at a later stage. Future shortages may conceivably mean higher prices; higher prices will inevitably lead to increased subsidies and, in their turn, to higher taxes. It is this extremely difficult pattern of circumstances of which we wish to rid the industry, and indeed the housewife and the consumer in this country. The measures proposed this afternoon are but one small step. From this side of the House we can say only that, if they are interim measures, they are inevitably part of a package which must be supported by a great deal more activity in order to support the industry as a whole.

5.1 p.m.


My Lords. may I welcome the explanation of this important and interim Scheme given by the noble Lord the Minister, and also the increase in the amount of subsidies which this Scheme shows over and above the figures introduced by the last Conservative Government after the last Price Review? This subsidy is one which Her Majesty's Government were expected to phase out after a few years, if we were to comply with some of the monstrous and unrealistic terms of the E.E.C.'s Common Agricultural Policy. I join in congratulating the Minister of Agriculture in the other place, Mr. Peart, on the stand that he is beginning to take against these aspects of the E.E.C.'s Agricultural Policy. In particular, may I refer to his speech on June 18 at the Council of Agricultural Ministers in Luxembourg, when he referred to the urgent problems of beef production? He said—and I quote from his speech—

There is a real urgency about this. We must all recognise that we face the most acute short-term problems in beef production. It could well be that further Community action will be required on an interim basis during the coming weeks. If so, we must be ready to act quickly and effectively ". My information, my Lords, is that in many rural areas, and particularly on the small farms in parts of Wales, where confidence in relation to beef production is waning, calves are being slaughtered at an ever-increasing rate. This could lead to a shortage of beef in the next year and a subsequent increase in price and, in the long-term, a fall in production can lead only to further higher prices to consumers. There is still considerable scope for expansion in calf production, and I hope that the noble Lord the Minister will give urgent consideration to the requests and appeals which are now being made to him to increase the subsidies in the next measure, which we understand will shortly be forthcoming.

5.4 p.m.


My Lords, I should like to thank the two noble Lords for their support, and particularly the noble Lord, Lord Sandys, for his qualified support. The noble Lord said that he would speak with restraint, and I am of course grateful to him for doing so. He mentioned particularly the question of the beef market; and referred to it as being in an uncertain state. I must admit that we are going through a difficult period at present, but I suggest that any alarmist talk can serve only to damage confidence and prospects, and should in my view be avoided. The Government are confident about the industry's continuing future prospects. As I said, action has already been taken to overcome the short-term difficulties. We will safeguard future production, and the first need has been to assist breeders and rearers. This is the reason why we are proposing that the calf subsidy should be more than doubled, as was said by the noble Lord, Lord Lloyd of Kilgerran, bringing the total direct support for beef production to about £100 million a year. This is equivalent to about £2.50 per live hundredweight. This help should work, in our view, throughout the industry.

The noble Lord, Lord Lloyd, mentioned slaughtering. The slaughtering 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 for breeding last year instead of being culled. On the other hand, I think the present level of slaughter is not unduly high: it is about the same as three years ago when the herd was much smaller. I was very glad to hear the remarks of the noble Lord, Lord Lloyd of Kilgerran, about the intervention support, and the agreement that he gave to the Government's policy of removing this by stages. Of course, putting beef into intervention cold stores cannot be in the industry's long-term interests. It is much more important to produce a bigger market by stimulating consumption at prices which housewives can afford. The difficulties in other E.E.C. countries have been largely created by consumer resistance to artificially high prices supported by intervention.

The noble Lord, Lord Lloyd, asked us about renegotiation. Beef is one of our main concerns in renegotiation of the C.A.P., and we have put forward changes in the marketing régime whereby intervention buying would play a much less important part. I am sure that we can agree a solution which results in a fair return to cattle farmers, without raising beef prices to a level which deters consumption. I was asked about calf slaughtering. The value of the calf subsidy is in its effect on calf producers, and this is the best point at which to introduce it and to encourage the production of calves, which are our future beef supplies. I hope that I have answered all the questions which have been raised.

On Question, Motion agreed to.