Farm Output and Balance of Payments (Hansard, 17 February 1982)

§ Lord Monk Bretton
My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

Earl Ferrers
My Lords, the increased volume of output from British farms in 1980 was worth about £300 million to the food and feed component of the balance of payments in that year, the latest for which figures are available.

§ Lord Monk Bretton
My Lords, I thank my noble friend for that reply. May I ask him whether, first, that confirms the importance of maintained and increased agricultural output to our balance of payments? But are there not grave doubts in the industry whether the EEC Commission price proposals, which represent an increase of something under 9 per cent., will be sufficient to maintain the productive base of our industry in the United Kingdom, or to increase the very low current level of profitability? Will the Minister therefore endeavour, if possible, to obtain something rather better than the proposals, and something certainly no worse?

Earl Ferrers
My Lords, my noble friend is quite right in that he has underlined the importance of British agriculture to the economy. It may interest him to know that from the beginning to the end of the 1970s there was a drop from 40 per cent. to 30 per cent. in net imports of the types of food which can be grown here, and in 1980 there was a further fall to 25 per cent.; and during the lifetime of this Government, between May 1979 and December 1981, in round figures the retail price index went up by 43 per cent., the price of food went up by 29 per cent. and farm gate prices went up by 19 per cent. That is a measure of the very major contribution which agriculture is making to the economy, and we hope to see that that continues.

§ Lord Molloy
My Lords, is the Minister aware that the efforts being made by Her Majesty's Government in trying to get a rational approach to Britain's contribution to the EEC are applauded everywhere? Because of the tremendous importance of this issue and of the fact that it would appear that Britain is being ganged up against and our Government are standing almost alone in trying to get fair play, would he agree that the time has come for us to have a full-scale debate in both Chambers of the British Parliament to show our partners in Europe that we will not any longer take the vile discrimination which is operating against this nation?

Earl Ferrers
My Lords, I am grateful to the noble Lord for his approval of what the Government are doing, and I would only remark that his last few words were hardly in a Community spirit. Whether 562 your Lordships decide to debate the matter is of course for the procedures of the House. However, I assure the noble Lord that we have a very sincere interest in the success of Europe, both from a budget and an agricultural point of view, and when there are difficulties confronting all member states over both of those matters, it is the duty of all of us to try to achieve success and agreement.

The Marquess of Aberdeen and Temair
My Lords, would the Minister agree that it would be fair to throw into the balance of all the figures that are being produced the extent of the real increase in farmers' income since the present Government came to office?

Earl Ferrers
I do not know whether it would be fair, my Lords, but if the noble Marquess wishes to do so, I should be delighted to hear it.

§ Baroness Elliot of Harwood
My Lords, in view of the splendid contribution which British agriculture makes to the balance of payments, may I ask my noble friend to assure us that the Government will not support the devaluation of the green pound, which has halved the sterling value of the increases?

Earl Ferrers
My Lords, a revaluation of the green pound in the light of the Commission's price proposals is totally unacceptable to the Government because it would give British farmers only half the increase which has been permitted under the proposals for other member states.

§ Lord Bishopston
My Lords, is the Minister aware that the commendable result which is attributed to the balance of payments is got from an industry with only 2.7 per cent. of the working population and which has very high productivity records? Will he reflect that the help, generosity and partnership which the Government rightly show to agriculture, if extended to other sectors, public and private, might produce similarly commendable results?

Earl Ferrers
My Lords, the noble Lord, Lord Bishopston, is entirely correct to draw attention to that fact; this achievement has been carried out by a very small percentage of the population, and I go along with him and say that if every other industry had been as successful as agriculture, we should not be in quite the difficulties we are at the moment.

§ Lord Blyton
My Lords, is the noble Earl aware that the mining industry has increased its production in the past few years greatly in excess of that of the farming industry? Would he agree that there should be rewards for people who increase their productivity per man year and per person employed in such an industry?

Earl Ferrers
My Lords, I admire the ingenuity of the noble Lord, Lord Blyton, in bringing the mining industry into a Question on agriculture. Certainly any industry which increases its productivity in the way agriculture has deserves a similar commendation.

Earl De La Warr
My Lords, does my noble friend agree that the near doubling of bank borrowing by 563 farmers in the last four years is an indication of a very serious state of affairs in the industry?

Earl Ferrers
It is a very serious state of affairs, my Lords, and one about which the Government are acutely concerned. It does not, however, refer solely to agriculture; it happens in other industries as well. There is a sign of an upturn, and we hope to see that being continued. I assure my noble friend that we consider it a matter of great concern.

§ Lord Gisborough
My Lords, would my noble friend agree that there has been a great fall-off in investment in agricultural buildings and machinery, that much of the machinery is now getting old and that that will affect output within a year or two?

Earl Ferrers
My Lords, the question of investment, whether in machinery or buildings, is a total one, and, as I explained in answer to the last question, it is a matter that is causing great concern. I would merely underline my reply to my noble friend by saying, in regard to the drop in the level of investment, that the contribution which agriculture has made by accepting lower price increases than almost any other industry—and that was the figure to which I earlier referred—is one of the reasons why possibly the investment has not been forthcoming, since the funds have not been there to undertake it.

Lord Morris
My Lords, arising from the previous supplementary question of my noble friend, if the funds that are being borrowed are not being used for investment in capital equipment and capital construction, may I ask for what in the main they are being borrowed?

Earl Ferrers
My Lords, one cannot possibly generalise on individual borrowings, but quite clearly borrowings are for all kinds of different purposes, some of which may be in order to keep businesses going.

§ Lord Monk Bretton
My Lords, may I ask my noble friend whether he can comment upon the recent growth of national aids within the common agricultural policy membership and say whether these will not provide our own agriculture with unfair competition if they go unchecked?

Earl Ferrers
My Lords, certain national aids are permitted under the European Community regulations, and these we of course approve. Where countries give vast national aids and so produce the structural surpluses which other countries have to pay for, we consider this to be totally outside the Community spirit and a course which we deplore. This has happened in some countries, and it is a matter which my right honourable friend takes up very forcefully with the Commission.

§ Lord Leatherland
My Lords, may I ask the Minister whether it is not also true that that has happened in this country, and that farmers are exempt from the payment of large sums of local rates?

Earl Ferrers
My Lords, national aids are permitted to be given by various countries to their agriculture with the approval and the agreement of the Commission. Where that is done there is no trouble. There are countries that are doing it on a scale which undermines the concept of the common agricultural policy, and that is what we disapprove of. The points which the noble Lord, Lord Leatherland, makes are in fact agreed.