§ 4.29 p.m.
§ Lord BESWICKMy Lords, I now wish, with the agreement of the House, to repeat a Statement which is being made in another place by my right honourable friend the Minister of Agriculture. He said:
"I am glad to report to the House on the meeting of the Council of Ministers (Agriculture) on 21st-22nd July and on the decisions which the Government have taken following the meeting.
"The Council has agreed to a change of 5 per cent. from 4th August in the Green Pound, the representative rate at which prices under the Common Agricultural Policy are converted into sterling. This means, first, that the monetary compensatory amounts will be cut by about one third.
"More important, the comon support prices for British farmers will rise automatically by about 5 per cent. in sterling terms. The changes should increase returns to British agriculture by over £100 million in a full year.
"This is a valuable step towards the longer term objectives set out in the Government's White Paper Food from our own Resources.
"The consequences for producer prices of particular commodities are as follows. For milk, the effective level of the guarantee will be increased by about 2.2p per gallon from 1st September. The new annual average guaranteed price for 1975–76 will be 35.92p per gallon. This increase will be worth some £33 million during the period to next March. This mid-year 461 adjustment means that the guaranteed price for milk is now about 37 per cent. above the level set at last year's Annual Review.
"For beef, I was concerned to give beef farmers a better prospect over the winter but to avoid undue support buying in the peak period of autumn marketings. It is part of the arrangement that, although the change in the representative rate will take effect for beef on 4th August, the effective buying-in prices will not be increased this year. I shall be announcing a scale of producer target prices rising from £21.90 per live cwt. in October to £25.75 in February.
"The buying-in price will rise by at least £1 per live cwt. when we take the next transitional step in the spring and the seasonal scale of target prices will continue to increase until May. The seasonal differential should provide a strong inducement for fatteners to hold stock over the winter. It should strengthen prices at the autumn sales of calves and store cattle.
"For wheat and barley, the September intervention prices for the 1975 crop will be increased to about £54.90 and £47.60 per ton respectively. Nevertheless, the United Kingdom guarantees for wheat, barley and oats will continue for 1975–76.
"For sugar beet, the guaranteed minimum for the 1975 crop will rise to £13.11 per ton. When transport and pulp payments are taken into account, growers should receive something of the order of £16.75. For poultry and for pigmeat products, the adjustment will have the effect of reducing the subsidies payable on imports and of strengthening the competitive position of our own producers.
"Many food prices in the shops will not be affected at all by this change and the total effect on consumers will be small. When the adjustment is fully reflected in food prices, they may increase on average by about 1 per cent. The increase in the guaranteed price for milk, together with other costs, will require a further increase of 1p in the maximum retail price of milk later in the year, in order to keep within the provision available for the food subsidy programme.
462 "None the less, because of the paramount importance of the Government's attack on inflation, this has not been an easy decision for the Government to take now. We have taken it because an increase in producers' returns and support prices is needed in the interests of our future food supply. We remain ready to consider further adjustments should these be necessary to assure our agricultural industry of a fair return.
"I turn now to the other matters which were discussed. The Council adopted a recommendation on feed wheat, to the effect that next year producers of feed wheat should not expect a return higher than the equivalent feed grain value. This recommendation has no binding force. But it accords with our traditional policy. It holds out the prospects of a less expensive cereal regime and a better balance between livestock and feed wheat prices. This should be to our benefit.
"The Council agreed certain measures designed to help deal with the surplus of skimmed milk powder. These included improvements in the arrangements for sales at reduced prices for developing countries and provision for aid to private storage of powder. The Council will be considering further measures in the milk sector, including longer term policies, at its meeting in September."
My Lords, that ends the Statement.
§ 4.36 p.m.
Earl FERRERSMy Lords, we are grateful to the noble Lord, Lord Beswick, for repeating that Statement. There is only one main point in it and that is the change in the rate of the Green Pound. The fact that the Green Pound has been devalued is, of course, a direct result of inflation and this has put British agriculture, and therefore our country as a whole, at a disadvantage. I urge the Government to realign the representative rate of the Green Pound. I applaud the Government for having taken these steps, but I cannot understand why they have made it only 5 per cent. It is a pathetically small alteration. When we are dealing with a disparity of some 20 per cent. in the Green Pound, to alter it by only 5 per cent. is like an old hen scratching on top of a haystack—it is 463 simply inadequate. I hope that the Government will not think that by this step they have done great things for British agriculture, because I do not think they have. I hope they will not think that they have done great things for the European Community, because the monetary compensatory amounts will still have to be paid in substantial quantities, and they were never designed for discrepancies of this nature.
I also hope that the Government will not feel they have done great things for the consumer, because these measures will do nothing to avoid the halt in, for instance, milk production. We are heading for a shortage of milk and a retrenching agricultural industry. If the Government want to achieve the targets which they put forward in their White Paper Food from our own Resources, they must do more on this count. One paragraph is encouraging, where the Government say that they remain ready to consider further adjustments, should these be necessary, to assure our agricultural industry of a fair return. The inference is that if our currency were in parity with other partners, which it should be and which the Community intends, this would be giving an excessive return to British agriculture, and that the Government are prepared to continue the non-total alignment of our currency for the time being. I hope the noble Lord will reject that inference which is clearly to be drawn from this Statement. I also hope he will indicate that they are prepared to move at the earliest possible opportunity to the full realignment of the Green Pound. I find this Statement depressing, and I should like to ask this question. By how much will the Green Pound still remain devalued after this realignment has been brought in?
§ Lord LLOYD of KILGERRANMy Lords, may I join the noble Earl, Lord Ferrers, in thanking the noble Lord, Lord Beswick, for repeating that Statement? May I also presume to ask him to extend from these Benches our congratulations to his right honourable friend in another place, Mr. Fred Peart, for the persistent efforts he makes before the Council of Ministers in order to affect matters of great interest to this country. But in saying that, we on these Benches consider that this devaluation of the Green Pound 464 is not enough. May I suggest that the devaluation of the Green Pound should be considered with two main factors in mind: first, the Government's policy regarding getting food from our own resources, and the incentives and encouragement necessary regarding that policy; and, secondly, having regard to the general devaluation of the Pound. We therefore urge the Government to devalue this Green Pound further. Is the noble Lord, Lord Beswick, in a position to say whether further negotiations are being undertaken regarding devaluing the Green Pound, and whether the devaluation can be extended in the near future?
§ Lord HARMAR-NICHOLLSMy Lords—
§ Lord BESWICKMy Lords, may I reply to the noble Earl, Lord Ferrers, and the noble Lord, Lord Lloyd? I thank them for what they have said and I recognise that 5 per cent. is a disappointment to many people, but we have to recognise that a balance has to be struck here. There are two ways of getting out of the present disparity, which was 16 per cent. and is now 11 per cent. after the 5 per cent. change: one is by reducing the rate of inflation, and the other is by devaluing further the Green Pound. I am not absolutely certain, nor are the Government, that the right way to deal with this is by just devaluing the Green Pound. One does not help the restraint on inflation by putting up the price of food. That is the dilemma we are facing. As for the milk situation, I know that the noble Lord is very apprehensive about what will happen in the coming winter. I have told him in a Written Answer that we expect there to be enough liquid milk over the period, and I think these measures will help. The noble Earl should not say that nothing has been done, when in fact these measures I have described represent a 37 per cent. increase since February of last year.
§ Lord HARMAR-NICHOLLSMy Lords, is the noble Lord aware that anyone who has followed the negotiations, so far as information is known about them, will have to recognise that, against the formidable opposition of Ireland and France, to get this amount of devaluation at this stage is perhaps the most that can be got? But, having said that, I should like to point out that it is essential that 465 the Government, and indeed everyone concerned, should know that in the view of those who have to work in agriculture this is not really sufficient to overcome the disaster which is hanging over the industry, particularly as regards milk. As my noble friend has said, the one hope contained in the Statement made by the noble Lord is that the Government are going to persist in seeing that this point of view is understood and recognised in the right quarters. No time ought to be lost. This ought to be an interim report only, so that the importance of this matter to our industry may be made known. Anything less than twice the 5 per cent. is not going to prevent the disaster which is hanging over this industry. I would hope that by making comments of this kind in your Lordships' House one is helping the noble Lord and his colleagues to bring this matter home to the people with whom they are having these negotiations, who are helping their own interests. We therefore have to see that our own interests are looked after just as strongly.
§ Lord BESWICKMy Lords, the noble Lord has made his point strongly, and he can be assured that consideration will be given to what he has said; but I think he would fairly accept that a balance has to be struck here. This is not the last meeting which will be held on this subject, but I think it is unwise to consider that the exchange rate of the pound sterling from now on is necessarily going to be in an adverse direction. I hope it will not be. What happens in the markets will have to be taken in account.
§ Baroness PHILLIPSMy Lords, speaking as a member of the Sub-Committee dealing with Agriculture and Consumer Affairs, may I ask the Minister whether he would tell the House what decision was reached at the Council on the EEC proposal to reduce the support price for high-yield wheat for the next year? If, as I understand it, a recommendation was adopted to that effect, can he say whether the United Kingdom growers will still receive an adequate return, and whether such a change would not be positively harmful to United Kingdom growers, who of course rely, as the Minister will know, to a very high degree on expensive imported feed grain?
§ Lord BESWICKMy Lords, I am not sure whether my noble friend has raised a point which is somewhat different from what I have already said about the intervention prices for the 1975 crop being increased. I said earlier that the Council of Ministers decided there would not be any advantage to the grower of inferior wheat and that the price obtained in intervention by feed wheat would not exceed that to be obtained by eqivalent feed grain value. I do not know whether that answers the point put by my noble friend about the necessity for a better standard of grain. If it does not, perhaps I could write to her later about it.
§ The Earl of ONSLOWMy Lords, is the noble Lord aware that we in the farming industry completely understand the difficulty in which the Government find themselves on the price to the consumer and the price to the agricultural industry? Is he further aware that really those two interests are the same, because help to agriculture is of benefit to the consumer? Further, is the noble Lord aware that the £100 million which is to be put into agriculture by this devaluation of the Green Pound looks much less attractive when one realises that costs to the farming community have gone up by some £700 million in the last year? Fourthly, is the noble Lord aware that the intervention prices for wheat and barley are totally non-economic prices so far as the farmer is concerned? Considering the fact that there could be—though we do not know it yet—a world glut of wheat, this could have a very serious effect upon the grain growers of this country, and we must avoid at all costs the same thing happening to the grain farmers as happened to the beef farmers eighteen months ago.
§ Lord BESWICKMy Lords, I have had some correspondence with the noble Earl about the economic returns on cereals. I know the views he holds and have studied them. Generally, this will mean a return of £100 million to the industry. I know this is not accepted as sufficient, but when one listens to all those who have said in the last few weeks—and even in the last few days if one includes Members of Parliament—that what they are getting is not sufficient, I am not sure that there is any difference between the farmers and the rest of the community. One hopes that 467 this increase will be of some assistance, and will help towards achieving the objective that we both have in common.
§ Baroness GAITSKELLMy Lords, could not the Government go some way towards meeting the difficulties in which the milk producers find themselves?—because milk is still the best and cheapest food we have at the moment.
§ Lord BESWICKMy Lords, I absolutely agree that not only is it the cheapest food, but it also enjoys the most economic distribution of any article in the country. We pay, or are going to pay, 7p for a pint of milk, which is exactly the same as the delivery charge for one letter. I agree with my noble friend, and would hope that the increase will help.
Earl FERRERSMy Lords, the noble Lord's answer to my noble friend behind me referred to a point which I had also put but which he did not actually answer—that is, the inference that the realignment of the Green Pound is sufficient to leave the Green Pound still at a disadvantage as against the pound sterling. Will the noble Lord give the House an assurance that it is the Government's intention not to accept a position where the Green Pound is different from the pound sterling?
§ Lord BESWICKMy Lords, I thought I had answered that when answering the question put by the noble Lord, Lord Lloyd of Kilgerran. I agree with the noble Earl that there is still a 16 per cent. disparity and I said there were two ways of closing the gap, both of which we must consider. It will be 11 per cent., following the 5 per cent. increase.
§ Lord BALERNOMy Lords, may I ask the noble Lord whether he is aware that the factories which are manufacturing butter and cheese are almost all reported to be in process of closing down or to have already closed down'? This will mean there will be considerable unemployment and it seems that the prospects of reopening those factories n the spring is rather dim. Would the noble Lord agree that 2½ per gallon is unlikely to engender the confidence of the dairy farmer in the Government's White Paper?
§ Lord BESWICKMy Lords, I am aware of the situation regarding the butter 468 factories. We are aware of the difficulties and hope that the situation will be better for them in the spring.