COMMODITY PRICES: SELECT COMMITTEE REPORT

HL Deb 26 July 1977 vol 386 cc878-96

3.13 p.m.

Lord ROBERTHALL rose to call attention to the Report of the Select Committee on Commodity Prices (HL 165); and to move for Papers. The noble Lord said: My Lords, I beg to call attention to the Report of the Select Committee on Commodity Prices, of which I was chairman, and to move for Papers. We have a rather longer list of speakers than I expected. Some of them are members of the Committee, and no doubt they will deal with problems that I omit, and no fewer than three of them are noble Lords who assisted the Committee by submitting papers and appearing before it.

In a report of this kind, it is customary to acknowledge the help received from all the people who were good enough to submit papers and to come to give evidence. Although it is customary, I do not think that we should treat it as a perfunctory matter. It is a tribute to the respect in which your Lordships' House is still held that so many busy and important people are willing to take so much trouble to prepare memoranda and to come to talk to us. If your Lordships have looked at the acknowledgments you will have noticed that we refer particularly to Mr. Grondona, who, as some of your Lordships know, has been a leading advocate of commodity stabilisation for a great many years and can be regarded as one of the founding fathers of this subject. Although we did not recommend the actual acceptance of his proposals there is no doubt that they have the substance of the matter in them.

In connection with the acknowledgments and also on behalf of the Committee, I wish to pay a tribute to the staff of your Lordships' House, particularly to our secretary, Mr. Carstairs, for his unflagging zeal and service to the Committee. As an ex-civil servant he knew his way completely round Whitehall and was able to get us answers to our queries in no time at all. But, as your Lordships will know, all committees are deeply indebted to the whole supporting staff. I myself am constantly surprised, especially at the skill with which the shorthand writers and the printers manage to make good sense of what is sometimes inaudible and sometimes unintelligible to other people.

The problem with which the report deals is that of fluctuations in commodity prices. As I suppose all of us—or our wives—will know very well because of the last year's experience with tea, coffee and cocoa, these prices can rise in a quite extraordinary way, and the same is true in the other direction: they can also go down. These fluctuations cause a good deal of difficulty to all connected with the production and use of these commodities. For a long time, it has been urged that commodity prices should be made more stable, but not much progress has been made. That is the subject of the report. It has been in your Lordships' hands for some time and I hope that I may deal rather briefly with it.

The first thing to be said about it is that, at the present time, the problem falls into two divisions, or can be considered from two points of view. One is the general problem as it has been considered for 30 years or more. A great deal has been said about it, a great many experiments have been made. Her Majesty's Government have had a fairly settled policy on this since the end of the war. It is well grounded and indeed at the beginning I thought that perhaps it was somewhat doubtful whether we ought to have a committee to go over ground that a great deal was known about and on which it was not likely that anything very new could be said.

But the second strand in the report is the current situation and the relation between commodity policy and the demand by developing countries for a new world order. About the time that this demand from developing countries for a new world order was getting up steam in a UN forum, the then Prime Minister, now Sir Harold Wilson, made a speech at Kingston, Jamaica to the Commonwealth Prime Ministers in which he called for a new initiative in this field. Since then, the whole subject of commodity policy has become a burning issue and has been widely discussed in international circles. But the main forum of discussion has been UNCTAS (the United Nations Conference on Trade and Development), where a proposal was put forward some two years ago for what has been called the integrated programme for commodities. That programme included a proposal for a Common Fund which was to be used mainly for enlarging and financing a number of international commodity agreements in this field.

International commodity agreements are the generally accepted method of trying to attack this problem of price stabilisation. As I said, this whole question of the Common Fund has been hotly debated, both in UNCTAD and in a number of other international organisations; it gave rise to sharp differences of opinion between the great majority of countries, mostly the developing countries, on the one hand, and a small number of developed countries, of which the United Kingdom was one, on the other hand.

The Committee formed the opinion that there was some inconsistency between the attitude taken by the United Kingdom and the call of the Prime Minister, which was still supported by Her Majesty's Government, for a new initiative; the Committee was certainly left in no doubt that the developing countries thought there was considerable inconsistency. The Committee, therefore, proposed to recommend a change in the attitude of the Government. But just as we were finalising our report the Government—I will not quite say shot our fox, but withdrew their animal and entered a new one, as we thought, which was much more acceptable to the Committee. In the end we practically endorsed the Government, both on the long-term programme and on this current and very burning issue. I shall very much look forward to the account of the present position which I hope the noble Lord, Lord Oram, is going to give us.

The background to these two aspects of the report is given in the first two chapters, the first giving the United Kingdom position at the time that we met, and the second the political background to the UNCTAD proposals. The greater part of the rest of the report is concerned with the more general question. We deal with the political issue as appropriate, and the last chapter gives our conclusions and recommendations, which are then summarised. I hope the Summary of Conclusions will be found useful by those who have not time for the full document. All this is in the first volume, and the written and oral evidence is in the second and third.

In the third chapter we examine the extent to which commodity prices have actually fluctuated and the reasons for this. I think that before the war one of the main reasons for fluctuations was what used to be called the trade cycle or the business cycle, the fluctuations between booms and slumps, which made a very big change in the demand of the main consuming countries for the main commodities, especially raw materials. This had a very disturbing effect indeed, particularly on the less developed countries which produced these commodities. But it also had a backward action, so to speak, on the advanced countries, because many of their customers in the countries producing primary commodities had their incomes reduced practically to nothing, so that the trade of the manufacturing countries suffered a great deal.

This was one of the reasons which stimulated many people, including Mr. Grondona and Lord Keynes, to come forward with proposals for commodity price stabilisation. But, partly as a result of Lord Keynes' work in other fields, the trade cycle has been much less in evidence in the post-war period until quite recently. That, I think, is one reason why there was not a great deal of interest in this subject of commodity price stabilisation. But there was a general boom between 1973 and 1975, and that was followed, as your Lordships know, by a recession from which the world is emerging very slowly. It is not surprising, therefore, that there have been more violent commodity price fluctuations since then, and a restoration of interest.

On the whole, however, the Committee considered that the cause of fluctuations now lies more on the supply side than on the demand side. Most of the commodities that are covered by this field are either those where producers cannot switch very easily to producing something else, or those produced over quite a long period. There is interference with supply in one form or another, there is too much or too little, and compared with manufactured goods and with services, the tap cannot be turned off at all easily. Owing to the characteristic of demand, that gives the big price fluctuations. In manufactured goods it is, within limits, much easier to change production: you go on short time or produce unemployment if the price is tending to go down, and you can work full time and expand if there is a good demand.

In the next chapter we examine the effects of fluctuating prices. Our conclusion is that these are damaging to the processors, the manufacturers, and the consumers, because of the big changes that they experience, but there is no doubt that the principal damage, that which is most felt, is that to countries which have to specialise in producing one or two of these commodities. Price fluctuations present them with extremely serious problems. They find it very hard to adjust themselves to a sudden increase in their incomes, and very hard to adjust back when that situation is over, and even more hard to adjust to a big fall in prices. Fortunately, the number of countries seriously affected in this way is not very large. Zambia is perhaps the most obvious at the moment; it is almost entirely dependent on copper and the price of copper is very low; the economy is suffering very seriously indeed.

In the next chapter we deal with the problem of long-term supplies. I hope that the noble Lord, Lord Lee of Newton, will refer to that, as he kept us mindful of it. It is relevant of course, to the future price. We examined this and came to the conclusion that there is a serious future problem, particularly for minerals and metals; the most promising sources of new supply are in countries which are exposed to political instability, where there is the fear, and sometimes the reality, of unilateral revision of contracts. We think it would be a great pity if the old partnership broke down between countries such as Britain (a leading one), which provide finance and know-how for mining development, and the countries which possess the resources. I think that arrangements should be made for a type of international guarantee of contracts of this kind on the lines suggested by Dr. Kissinger when he was American Secretary of State.

We then come to the analysis of the problem and the remedies which have been suggested. The remedies were sometimes put forward by individuals and sometimes by Governments. Moreover, a number of experiments have been carried out by the producers and consumers of the commodities. The solution for durable commodities—commodities that can be stored—is an obvious one. We are all familiar with this solution as regards annual crops where one does not throw the whole crop on to the market at harvest time: it is held off and fed out again in the course of the year and thus the prices remain fairly stable. However, the solution is not as easy as that for most primary commodities, partly because of the longer production period required for many of them; partly because it is more difficult to make arrangements on a world-wide scale; and partly because it is extremely difficult when production takes some time and is subject to all sorts of interruptions, to predict the size of the problem with which one must deal. There are considerable technical difficulties as well as some political difficulties in dealing with the situation in this way.

However, the solution generally favoured and the one recommended by the Committee is to have international commodity agreements which represent both consuming and producing countries and for them to establish what are called, in this context, "buffer stocks"; that is, stocks which are purchased by the organisation when the price is low because there is an excess of supply, and then fed back again when the price shows a tendency to rise because there is a shortage. In the opinion of almost everyone who has studied the subject, those are undoubtedly the lines upon which to proceed.

The question is often asked, why is it not done? It has been done as regards a number of commodities of which the best known is tin, which has had a buffer stock for a long time. There have been and there still are commodity agreements covering cocoa and coffee, and wheat and sugar have also been subject to such agreements. However, none of these agreements has been very successful, partly because of the difficulty which affects all international agreements—namely, that it is extremely hard to get companies to agree on anything because they all see their interests in different ways. In the view of the Committee, such buffer stock schemes as have been tried, have been tried on much too small a scale. They have not been given a chance to show what they could do because of the inadequate amounts involved. That leads to the view that if new buffer stocks are formed, or if the existing ones can be overhauled, they should be handled on a much bigger scale and have more money, because that would provide more time to find out what was going on and to make better decisions about the price, which has also been a problem in the past.

The Committee then looked at a number of questions which have arisen in the area of commodity agreements. It has sometimes been urged by producing countries or feared by consuming countries that agreements of this sort wilt be used to put the price up, as was done by OPEC with oil. We feel that it would be much more difficult to make effective arrangements of this kind if there were international commodity agreements in which both the producers and the consumers had a voice and, in any case, we believe that the special conditions which enabled OPEC to function are not likely to apply to other commodities. Therefore, we do not take that threat very seriously.

It has also been suggested that the world should support agreements of this kind because that would be one way of giving aid to developing countries which are often the producers of these commodities. That is a very simplistic view. These commodities are produced by developed countries as well as by developing countries. If one takes the whole spectrum of developing countries, one will find that more of them are consumers of these commodities than are producers. Therefore, it is extremely doubtful whether it would be in the interests of the developing countries as a whole to use these methods as a form of aid and, if they did, the advantages would fall very unevenly between rich and poor countries and between consuming and producing countries.

An extremely vexed question in the international discussions has been the demand by the developing countries which produce these commodities for the prices to be indexed. We are much more familiar with that than we used to be. I suppose that we all know what indexation means and we would all like it to be applied to our own particular situation. However, the idea of a general indexing of these prices presents great difficulties. It seemed to us that this was not something of which to be afraid. When setting their prices, they would have to take into account the general movement of prices, but it would be almost impossible for all prices to be indexed in the same way.

The penultimate chapter of the report goes into the question of commodity markets. This is of considerable interest to Britain because London is one of the great international commodity markets. We were led to consider this matter because developing countries often think that these markets keep the price down against them. On the other hand, many people think that the commodity markets are great areas for speculation and a cause of the fluctuations. We took a great deal of evidence on this matter and considered it very carefully. On the whole, we came to the conclusion that, far from being dangerous, these commodity markets perform a necessary and useful function and help to stabilise prices, although there is some danger that they may assist speculation. That matter is being looked at.

Next, we come to the recommendations. As I have said on the general side, Britain has been a leader in this area, and has for a long time been urging the setting-up of international commodity agreements and the use of buffer stocks, as well as that both consumers and producers should be represented. On the whole, this has been a non-contentious issue in politics and we therefore approve the policy as it has been pursued. We make some recommendations which stem largely from the difficulties of operating these agreements—difficulties such as the lack of information and, especially, the inadequate size of the buffer stocks.

Finally, I turn to the second strand—namely, the pressure for a Common Fund. As I have already indicated, the British Government were regarded by many countries, including many Commonwealth countries, as very negative in their attitude towards this fund. It was felt that this was the only project which had been put forward since Mr. Wilson called for a new initiative. The Committee therefore examined the reasons given for the United Kingdom's fears. It did not feel that they were very convincing reasons.

As I have also said, there have been a number of international discussions in the EEC, the OECD and other areas where developed countries have been trying to form a common front on this matter. As a result of the last meeting of an UNCTAD negotiating committee in Paris, a paper was presented on behalf of those countries. That paper seemed to us to go about as far in this direction as we should like.

That sums up my introduction to the debate. All our inquiries have led us to think that it is quite difficult to get commodity agreements going and that it is fairly difficult to run them when they do exist. Just as it would be a mistake for the developing countries to think that a Common Fund will put an end to all their troubles, so it would be a mistake for those who attach importance to price stabilisation to think that we are likely to make rapid progress in this area. But the Common Fund calls for a very large amount of capital and, so far as we can tell, for a sensible attitude to these agreements. Therefore, we believe that those who are concerned about the problem should welcome UNCTAD's initiative for a Common Fund. My Lords, I beg to move for Papers.

3.43 p.m.

Lord CARR of HADLEY

My Lords, I am sure that all your Lordships would wish me to thank the noble Lord, Lord Roberthall, and his Committee for the great work that they have done. It has been a great volume of work when we realise the lengthy period during which the Committee have been carrying out their inquiries. And when we read not only their substantial report, which I have managed to do, but observe the two further volumes of evidence and memoranda, which I confess—probably like most of your Lordships—I have seen more from the outside than from the inside, it has clearly been a very arduous job, but a very important one. As an ex-Member of another place for some considerable time, I believe that that illustrates the sort of job which this House does extremely well and which another place scarcely manages to deal with at all. Therefore, I am sure that we should all like to thank and congratulate the noble Lord and his colleagues who have conducted this inquiry and produced this report.

I had a little sympathy with the noble Lord when he spoke about the Government coming along and shooting their fox. I had such an experience myself when, a good many years ago now, I was chairman of one of the sub-committees of the old Estimates Committee. On the whole, we regarded the action as a compliment rather than as anything else, because we very much doubted whether they would have shot the fox if they had not feared that, if they did not do so, the Committee were about to. Therefore, I do not think that the noble Lord and his Committee should feel in any way discouraged, because in fact they were responsible for the death of the fox even though the Government got out the gun.

I am sure that the whole House would also wish to thank the noble Lord for his extremely lucid summary of the Committee's report. He has taken us through a model Second Reading speech, explaining it in an exemplary manner. I am left with the difficult task of trying to give the Opposition's views on the recommendations and conclusions advanced by the Committee.

It is undoubtedly a very important subject. It is important to us and to other consumer countries that we should have an adequate and regular supply of these commodities and, as consumers, as cheap a supply as possible. It is also obviously an important subject to those less developed countries which are largely or significantly dependent on the production of various of these primary commodities. It is important not only for those economic reasons but for deeper reasons, for it is a subject which is extremely important in the conduct of international relations in many areas. As we have noticed recently, scarcely any international conference can take place, whether it be under the European umbrella, under the United Nations umbrella or under the Commonwealth umbrella, where this subject does not loom as one of the important items on the agenda. So it is a very important subject indeed.

Therefore I ask myself: On what principles should we base our approach to it? Here I suppose, inevitably we display our natural economic and political instincts and beliefs. In this, and in other matters, we have really to choose between the engine of market forces or the engine of State direction, control and finance for the economic driving force. I am sure it is no surprise to noble Lords to know that I have always preferred the engine of market forces, believing that to be the more effective. Indeed, I am in little doubt that if one is looking solely for long-term economic benefit—how one maximises economic benefit in the longterm—then market forces are quite clearly the best way of achieving that end.

But, of course, even in economic terms one cannot always afford to take the long-term view. Sometimes the long-term working out of economic forces produces short-term economic difficulties, which it is difficult at least, and sometimes even impossible, to live with. Moreover, human affairs are about more than economics. So while believing in the value of market forces as the best way of maximising economic benefit in the long-run, I have also believed, as we do on this side of the House, that it is right and necessary for Government to intervene in the free play of market forces on grounds of public policy for social and political objectives. Of course, when I use the word "political", I use it in its fullest and widest meaning and not in any partisan sense.

But we should not intervene more than we have to, because we should always realise that when we intervene we shall in the long-run probably pay an economic penalty for that intervention, although it may be a price worth paying. Taking this balanced view, I have no difficulty in declaring that in principle I am in favour of seeking to achieve more stability than we have had in the past in commodity prices. I welcome the Committee's conclusion that there would be widespread advantages in more stable commodity prices and that we and other countries should support action to achieve that greater stability.

I also welcome and agree with the Committee's conclusion that British interests and those of primary producing countries are to a considerable extent complementary. Of course, they can be in conflict if we take the shortest-term view about getting the cheapest price at a particular moment. Of course they can be in conflict if the producing countries take an opposite view and want to seek to maximise the price to an undue degree at any given moment. But if both sides are reasonable, then I believe that Britain's interests and those of the primary producing countries are, as the Committee say, or certainly could, and should to a considerable extent, be complementary, and I imagine that that also applies for other consuming countries as well.

Britain has a particular need greater than most other industrial countries for sure access to supplies of raw materials for industry and of food products, and a sure supply at the most competitive prices. We have this particular need for the obvious reason that, on the whole, we are more dependent on imports than are most other major industrial countries. Therefore, our need for competitive prices has no doubt been the main reason why British Governments of all political colours have tended, having perhaps said encouraging things at international conferences, to be hard bargainers when it comes to turning those intentions into practice. We should be rather cautious before we ask our Governments, of whatever Party, not to be fairly hardheaded in looking at British interests in these matters.

What we are coming to realise more than we used to—at least I hope and think we are—is that stability of price is in itself an economic advantage, and not just a social and political advantage to the producing countries. For most of my own industrial life the principal raw material with which I had to deal was aluminium. I always felt how lucky I was that it was aluminium and not copper. I had no doubt that manufacturers and fabricators in aluminium had, on the whole, a long-term advantage over fabricators in copper, simply because of the greater stability of aluminium prices compared with copper.

When I say "advantage", I am not just looking at short-term commercial advantage; I am looking too at the greater certainty with which one could plan ahead one's investment and marketing programmes when one was dealing in a raw material price movements of which were much more stable than those of some competing commodities. I believe therefore that there is an economic advantage in stability itself, and that we are not lacking in hard-headedness if we are prepared to pay a certain price for stability. But of course, one cannot pay any price for stability. As the Committee say, and I agree with them, the basic problem is to assess the benefits to be gained against the costs and difficulties involved.

In these difficult matters there are no absolute yardsticks by which one can measure the benefits on the one hand and the costs on the other. So one is thrown back, as so often in the most important matters which one has to decide, on using one's best judgment, and not by getting out some nice measuring instrument and recording a figure on the scale which gives an answer one way or the other. Taking that judgment, I can only express my opinion that I believe that our Committee give us good guidance. I very much hope that the Government will express that view too, and will be prepared to accept it.

Holding the view that I do about market forces playing as much a part as possible, I welcome what the Committee have to say about doing all we can to help those market forces to work as smoothly and efficiently as possible. Here I am sure that the emphasis that the Committee put on the need for the best possible information is of key importance. It is also of importance when one comes to consider commodity agreements, but it is of key importance in getting market forces to work as smoothly as possible. I have never understood why some, but of course by no means all, of the most ardent supporters of market forces seem to be deeply suspicious about the collecting of information. I agree that one has to go down into the market place, but one is inclined to make a better decision in the market place, and to judge better one's long-term interest and not merely today's interest if one is better supplied with information.

Of course one has to look at and take with a pinch of salt the information one gets. We are sophisticated enough in these things nowadays to know that the most expert attempts at crystal gazing are, in the end, no more than that. Sometimes in the past we have made the mistake of thinking that they have some greater validity. But the more study and the more information arising from real study that can be provided, I am sure the better we shall find the market forces will themselves work.

I also welcome what the Committee have to say about our British commodity markets. I am glad that they come down in favour of the view that, on the whole, there can be little doubt that these commodity markets have served, and do serve, to have a stabilising rather than a destabilising influence. At the same time I think they are right to point out that this, although generally true, is not always true, and that inflation in particular has brought some new factors to bear; notably, that it has brought into these commodity markets people who have not normally been there before and are looking to the use of them more to hedge against inflation and for other purposes of that kind, than because they are experienced dealers in and users of the commodities concerned.

If that is the case, as I think it is, then I also agree with the Committee that the commodity markets ought to look very carefully at their practices; not just be content to say that these particular practices have been all right in the past, but to recognise that circumstances have changed and that therefore they may have to change some of their practices to guard against some of the new dangers that have arisen. I very much hope that our commodity markets will pay serious attention to the suggestions which the committee have made, bearing in mind their overall verdict that these markets play a helpful role not only in forwarding our commercial advantage in any short-run consideration but as a stabilising rather than as a destabilising effect. I also agree with the Committee in saying that although we should do all we can to make the market work efficiently and smoothly, more is needed. Hence there is a need, if we can get them, for a number of international commodity agreements.

May I just run down with approval some of the major points which they made, I think learning and helping us to learn from the unfortunate experience of commodity agreements in the past. It is no good burking the fact that the past experience has been unfortunate, and on the whole very unsuccessful. And am I right in recalling from this report that only the Tin Agreement has survived? Others have either never been set up, or when set up have collapsed for one reason or another, quite quickly.

It seems to me that really there are six conditions for success which the Committee lay down, which at least strike me as being vital conditions. First, the need for fuller information than we have had in the past, which is something I have already referred to. Secondly, I believe that it is absolutely certain that if we are going to have an agreement based on buffer stocks, then the buffer stocks need to be considerably larger in relation to the consumption and production of the particular commodity than has been the case in the past. Frankly, if one cannot raise the finance for considerably larger buffer stocks, then one may not only be wasting one's time, one may even be doing more harm than good by going in for further agreements. I agree with them that it is important to have production and/or export quota in reserve, but underlining very much "in reserve"; it is the buffer stocks concept which is the important one and the production and export quota should be a means in reserve.

I think, too, that they are right in saying that in future it is essential that consumers and producers should be equally represented on the council of management, or whatever one should call it, of a commodity agreement and that—and this may not be popular with us or with any other consumer country, but I think it is right—consumers as well as producers should contribute to the cost of these commodity agreements.

Probably, next to the size of the buffer stocks, the most important matter, and clearly one of the most difficult, is the nature of the target price which the commodity agreement settles. Here we have a great problem because the consumer naturally wants the lowest possible target price while the producer wants to press for the highest possible target price, sometimes without paying sufficient regard to the danger that if producers set the target price too high they are merely inviting new producers to come into the market from other countries and of course also inviting intensification of research on substitutes which may in the long run do great damage to the commodities the supplies of which they are trying to further.

As the Committee rightly make clear, it is essential that the target price set must be based on, and move in time and in line with, the pattern of supply and demand set by market forces and that unless one tries, difficult though it is, to have a target price which is based essentially on the long-term trend determined by market forces, it is most unlikely that one will get a commodity agreement which has any staying power, any real life in it, for more than a very short time. Thus, I believe that, in saying to us that we should seek a number of commodity agreements and that we should be guided by what seem to me to be the most important points which I have picked out from the report, the Committee is indeed giving the Government good advice.

We come now to the difficult matter of the Common Fund, and here we have to face a political and a financial and economic problem. Whether or not with logic, it is undoubtedly true that the Third World has raised the Common Fund to a political touchstone of good faith on the part of the richer countries, and any attempt to dodge that issue would be almost sure to lead to failure to make progress. Although with some considerable doubts, I am inclined to believe that, on the whole, we and the other more developed countries should grant the concept of a Common Fund, although I do not think we could grant it quite in the form in which it is put forward by UNCTAD. I believe we should grant it because it could lead to saving in financial cost. If one believes, for example, that it is unlikely that all commodities will peak at the same time, will all fall into the trough at the same time, then I think a Common Fund could make the financing problems of a number of commodity agreements somewhat easier and more economical. So I think a properly run Common Fund can lead to economy of financial resources and is therefore supportable on that basis.

However, there is a big proviso which the Committee properly bring out; that is, that the Common Fund would be a disaster unless a proper and high degree of autonomy was left to each individual commodity agreement. I am sure they are right in saying that while, on the whole, the difficulties of getting some general automatic adjustments, such as those recommended by the noble Lord, Lord Kaldor, or Mr. Grondona, are very attractive, the more one looks at them the less practicable they seem to be, and one must go on a commodity-by-commodity basis. If that is so, it is extremely important that the Common Fund should not destroy the vital autonomy of each individual commodity agreement and the decisions of its management.

Then one has to say about commodity agreements that, of course, as the Committee point out and as is obvious, they are not suitable for all the products and not even for all the 10 core products mentioned and defined by UNCTAD; one obvious reason being that it is not much good talking about buffer stocks of commodities one cannot store for very long. But there are other reasons which the Committee go into.

The Committee have made a very sound case in principle, which I hope the Government will support, for an approach on the lines it suggests. But they also point out—and we should be foolish to ignore that part of it——the great practical difficulties. We have seen the practical difficulties from past experience and, even if we learn from experience, as the Committee's report helps us to do, great difficulties still remain. We must get agreement not only between producers and consumers, as parties having a tendency to conflicting interests, but, even more difficult, we must get agreement among the different producers and different consumers. Strangely enough, that often seems more difficult than getting agreement between producers as a class and consumers as a class. Then there is the difficulty in fixing the right target price, an absolutely vital matter, of which I have spoken, and one which will always be a great difficulty.

There is the problem of course of how one finances all this, particularly at a time when not only Britain but almost every country believes its public spending is already too high, so that if one goes in for more public spending in one area one is faced with the awkwardness of having to find some reduction in another area. This is something which it is always easy to say but very difficult to do, at least when one finds oneself sitting round a Cabinet table; noble Lords of whatever Party who have been in that position will know how difficult it is.

Despite the difficulties, I hope noble Lords will urge the Government to make a favourable response to the conclusions and recommendations in our Committee's report, because it would be in our national interest to do so. Of course, we recognise that the solution must be an international one; we recognise that Britain's weight either of wealth or influence in these matters round the international table is nothing like as great as it used to be. But we still have influence and I urge the Government to see that that influence is used in almost every respect in the sense recommended by our Committee.