Beef and Rye (Deficiency Payments) (Hansard, 7 March 1973)

§ Mr. Anthony Stodart

The guaranteed price for eligible fat cattle is £13.20 per cwt., but deficiency payments have only been made in the first seven weeks of the 1972–73 fatstock year, the last being for the week beginning 8th May 1972. Recently, average market prices have been very much above the weekly standard price and I do not expect deficiency payments to be resumed during the rest of this fatstock year.

The adoption in the United Kingdom of the Community mechanisms means that market prices will, as necessary, be supported by the system of duties and levies on imports and through the intervention arrangements, including the new permanent intervention system which the Community has decided to introduce. If there is no change in the Community guide price for 1973–74 there will be a guide price in the United Kingdom for 1973–74 of £14.87 per live cwt. related to all adult cattle including for example cull cows as well as clean cattle of fatstock guarantee scheme quality. It is equivalent to a price for clean cattle of at least 80p per live cwt. higher. Under the new permanent intervention arrangements the buying-in prices at intervention centres will be fixed for defined qualities of beef at 93 per cent. of the guide price subject to adjustments for differences in qualities of cattle and carcase meat.

These mechanisms thus provide a firm assurance to beef producers as an alternative to our present guarantee against the possibility of a fall to inadequate levels 154W in the returns they get from the market. However unlikely such a fall appears at the moment, an assurance against market collapse is essential given the long production cycle of beef if producers are to commit themselves and invest in the expansion which is desirable in the interests of consumers. The Intervention Board for Agricultural Produce has made the necessary arrangements to enable beef to be sold into intervention at once should circumstances require it.

In the light of these considerations my colleagues and I have decided that there is no longer any justification for retaining the fat cattle guarantee, and so it will be terminated after the end of the present fatstock year. This will be done by the Common Agricultural Policy (Termination of Guarantee Arrangements) Order being laid today. Consequential technical changes are also necessary to the Fatstock (Guarantee Payments) Order, and also to the calf subsidy scheme to enable payments to continue on Stage B certification of carcases. New orders for these purposes will also be laid today. The guarantee payments order will also give effect to decisions to terminate the flexible guarantee for pigs and to provide greater flexibility in the operation of the pigs feed formula.

Beef will be the first major commodity for which Community arrangements will completely replace the guarantee arrangements. In the situation as it exists this will have no effect on market prices or producers' returns, but I believe that the new system will fully meet the need for a long-term assurance of an adequate return for beef producers.

So far as rye is concerned, no deficiency payment has been made since the 1965–66 crop year, and the rye guarantee will also be terminated by the termination of guarantee arrangements order.