BACON INDUSTRY BILL.

§ The Minister of Agriculture (Mr. W. S. Morrison)

I beg to move, "That the Bill be now read a Second time."

The Bill, as its Title indicates, deals with the bacon industry of this country, and the peculiar problems of that industry arise from the fact that it has both a producing and a processing side and that the prosperity of each is affected by the efficiency of the other. In order that the House may approach the consideration of the Bill with all the circumstances in mind, I hope hon. Members will permit me to say a few words of a historical character, with the intention of indicating the present position of the industry and showing how the need for further legislation arises. The history of the industry in this country divides itself into two periods, one period before 1933 and the second period after that year. Though the former of these two periods is, by far, the longer in time, it needs but a brief reference from me.

Bacon curing, of course, was early established as an industry in this country, but the type of article demanded by the market has varied considerably. A century ago Cobbett said that lean bacon was fit only for drunkards who wanted to stimulate a sickly appetite. He also said that if a pig was able to walk 200 or 300 yards at a stretch it was a clear indication that it was not fat enough for bacon. Cobbett's studies of the economics of bacon production led him into a striking and somewhat original anticipation of what our modern experts call "marginal values," because he said that the last bushel, even if he sits as he eats, is the most profitable. Time changes and bacon tastes change with the times. To-day there is a marked preference for lean bacon instead of fat and the public taste now demands the less pungent form of cure, in contradistinction to the old forms of cure that were popular long ago. Not only has taste changed, but the market has expanded enormously, and it is true to say that, until the introduction of marketing schemes, the increase in the demand for pig meat was met almost entirely by in- 776 creased importation from abroad. When the Irish supply fell off after the potato famine in 1847, the United States bacon got a footing in our market. Those were the days of the very pungent cure which enabled the bacon to travel from that distant source and reach our markets in an edible condition. With the change of taste in favour of the mild cure, the United States gradually lost that market to Continental suppliers, principally Denmark. Denmark during the 45-year period from 1881 to 1925 increased her pig population five-fold, and Holland in the same period doubled hers.

During this period, little or nothing was done to take advantage of the home market for British agriculture. Thirty years ago the output of bacon in Great Britain was 805,000 cwts., and in 1930 it was no more than 1,350,000 cwts., and that was only one-seventh of the total demand. Yet the pig industry has always been a very important branch of our agriculture. Before the War, the value of the output from pigs was almost as much as that from mutton and lamb, and it was more than that from potatoes or wheat, or barley, oats, poultry and eggs. After the War it became relatively more important, and its value exceeded that of mutton and lamb, or the whole of our grain crops put together. The truth seems to be that British production in those days concentrated itself on the relatively inelastic pork market, and almost abandoned the expanding bacon market to highly rationalised foreign competitors.

The bacon industry in this country did, indeed, survive, but in a somewhat haphazard fashion. Only the overflow from the pork market found its way into bacon, and then only when the pig cycle, from which every pig-producing country seems to suffer, rendered that course economically advisable to the producer. The result of that haphazard proceeding was that, in the first place, the supply of pigs for bacon became to a large extent dependent upon how much was left over from the pork market. The second result was that little effort was made to produce a bacon pig as such. This hand-to-mouth existence of the industry has reacted unfavourably, both on the pig producing and on the curing side of the industry. Lacking a rationalised curing industry and a safe place in the British market, there was little incentive to the British producer to produce a bacon pig as such. It is a little 777 surprising that this should be so, because the strains which have been so scientifically developed abroad are, to a great extent, founded upon stock imported from this country.

As far as the curers are concerned, lacking the proper pig as they did, and a regular supply, they could not achieve the efficiency in large-scale production, and the economies which were within the power of their foreign competitors. Nor could they achieve adaptation to the changed taste of the public, and the change in taste was, indeed, largely the result of the foreign importation. The factories in this country worked to a little more than half of their capacity with consequent high costs. The cheaper and quicker process of curing bacon made little headway and the whole industry was in a very weak position to stand competition even of a normal character. But what was in store for the industry was not competition of a normal character. In the years 1929 to 1932 there ensued a scramble for this bacon market which threatened with disaster, not only the British producer, but the foreign competitor as well. In 1932 the importation rose to 12,000,000 cwts. or more than twice as much as it had been in the five-year period preceding the War. This pressure of foreign imports constituted a very formidable threat, not only to the pig industry in this country but to the industry abroad. Prices all round fell to ruinous levels and, had the situation been allowed to continue, there would have been a very serious recession in the home industry as well as in the industry abroad. The prices received by Danish producers during this period dropped from 15s. 10d. in 1929 to 7s. 4d. per score in 1933. Denmark in her own defence adopted drastic measures and reduced her pig population, and Holland followed suit.

Meanwhile, following the publication in 1926 and 1928 of the results of surveys made by the Ministry of Agriculture into the marketing of pigs, attention began to be focussed upon this hitherto neglected branch of the agricultural industry. The Pig Industry Council was formed, representing all sections of the industry. This was formed in 1928, and in 1932, following the passage of the Agricultural Marketing Act, the Re-organisation Commission was set up under the chairmanship of Lord Bingley, better known 778 perhaps to hon. Members as Colonel Lane Fox. That Commission was appointed to prepare a scheme regulating the marketing of pigs and pig products. Marketing schemes which were passed on the recommendation of the Commission came into operation in 1933. They were not, in any sense, forced on the industry from without. They were initiated by the voluntary action of the producers under the powers conferred by the Agricultural Marketing Acts. These schemes rested on two essentials. One was the regulated supply of bacon from all sources, which was achieved by quantitative regulation under the Agricultural Marketing Act, 1933, and the second principle on which they rested was an orderly supply of home pigs fit to make good bacon. This was achieved by a system of annual contracts between producers and curers with higher payments and bonuses for pigs of the proper quality.

The Pig Marketing Board and the Bacon Marketing Board thus came into existence. The former represented the producers of pigs and the latter the curers. In this connection, I hope the House will allow me to refer to the loss which the industry has recently sustained by the sudden death of Mr. Marsh, the Chairman of the Bacon Marketing Board. In this country the voluntary organisation of the nation by trade unions, professions, and industries has developed until it has become part of our democratic structure, and the tasks and duties which this form of voluntary organisation casts upon those who lead them are of a very high and exacting character. All who knew Mr. Marsh will agree that he placed his great gifts and his knowledge of the industry freely at the disposal of his fellows, and that he will be sadly missed. That these schemes to which I have referred were on the right lines is shown by the results. The pig population increased by 40 per cent., the output of British bacon was doubled, and the quality of pigs improved greatly. In 1934 the number of grade A pigs contracted for was 789,000, and by 1936 that number had risen to about 1,500,000. Another beneficial result was that deliveries became more regular, and great progress began to be made with the tank curing process.

But experience has shown the existence of certain problems still outstanding which render this Bill necessary. These 779 problems led to the breakdown of the contracts in the Autumn of 1936. These may be briefly stated, though nearly every one of them by itself would furnish matter for a debate. In the first place, we have the problem of the dead weight of surplus curing capacity and of the large number of units of high cost and small turnover on the curing side of the industry. There are 791 establishments at present licensed for bacon curing. Of these, 490 are small curers, who can be left out of account, because their total output does not amount to 5 per cent. of the aggregate. The remaining 300 have a total capacity of 3,750,000 pigs per year, and the result is that on the average they work at about 60 per cent. of capacity, though the proportion, of course, varies greatly from factory to factory. Of these 300 factories, only 20 can handle over 'moo pigs a week, 32 can handle from 500 to 1,000, 75 can handle from no to 500, and the remainder handle less than 100 pigs a week. By comparison, I would ask the House to consider the case of Denmark, which, of course, specialises for the export trade and is in a more favourable position on that account, but in that great bacon-producing country there are only 80 or 90 factories all told, and the average capacity of those factories is about 2,000 pigs per week. That comparison will enable the House to see what a difficulty is caused by the situation that I have mentioned.

The effect of this surplus capacity upon the contract system was deep-rooted. The problem of obtaining an economic throughput in relation to the capacity led curers, in the first place, to stipulate for a minimum quantity of pigs in the contracts, and no attempt was made to regulate the flow of pigs into bacon according to the total pig supply available; and though it was frequently alleged that farmers had failed to respond to the contract system, in fact more pigs were offered on annual bacon contracts than the available supplies of pigs justified. This in the end caused the pork market to be more attractive to producers than the bacon pig market. Another difficulty was the uneven distribution of pigs among curers. Some curers were very well supplied, others indifferently, while some could get no contracts at all. Accordingly, permission was given to curers to buy in the open 780 market. In 1936, for example, the number of pigs taken off the open market by curers was 20 per cent. of the number delivered under contract, and the cumulative result was that non-contracting producers got better prices for their pigs than the contract price, and confidence in the contracts was, therefore, severely shaken.

To add to these difficulties, in 1936 the price of feeding stuffs began to rise very sharply. In July, 1936, the standard ration was 7s. 5d. per cwt.; by the end of the year it had risen to 9s. 1d., and it was still rising. In view of these disheartening and adverse circumstances, it is really remarkable that as many as 1,900,000 pigs were in fact offered on long contracts by producers for 1937, but the Bacon Board had stipulated, as they were fully entitled to do, for 2,200,000, and on the failure of producers to produce this number of pigs they declared the contracts void, and curers since then have had to buy in the open market at enhanced prices. In fairness to the farmers, I would point out that they could not have supplied, in my judgment, even the 1,900,000 without considerable loss, if feeding stuffs continued to rise. They averaged 10s. 1½d, for 1937, and during 1938 they have so far averaged 10s. 4d. These higher costs of feeding stuffs had their inevitable result in a decline of the pig population at home and abroad. The June returns for 1937 showed a drop of 4 per cent. compared with the previous year; the December return revealed that breeding sows were 59,000, or 11½ per cent., fewer than two years before; and the March census indicates that the number of pigs over two months old has dropped still further; but there are encouraging signs that the numbers of breeding sows and young pigs are increasing. This may with great probability be put down to the fact that the industry has been aware that the Government are considering plans for its assistance, and this heartening increase may be due, as I hope and believe it is, to returning confidence. The rise in the cost of feeding stuffs had its effects also in Denmark and Holland, where the pie population in 1937 fell by 15 and 16 per cent. respectively.

I hope I have not wearied the House by this historical recital, but it has been necessary to show the background of the proposals which are now being brought 781 before the House. As I announced to the House in July last, the Government gave careful consideration to the circumstances which had arisen. They recognised the difficulties under which the industry was labouring because of the increase in pig feeding prices and costs, but they nevertheless believed that the industry was inherently economic and that if it could be founded on a smaller number of efficient factories, provided with an adequate and regular supply of pigs of proper type and quality, sufficient economies could be secured to enable the industry to be maintained during periods of high feeding-stuff prices. Some hon. Members may be inclined to think that rationalisation is an efficiency measure which an organised industry should be capable of carrying out itself, and I agree, provided that it is armed with the necessary powers; and, as I have already made clear, the bacon-producing side of the industry has made impressive progress in efficiency as well as output. Marked progress has been made in such matters as quality and to a less extent in standardisation of bacon and efficiency of plant; and on the pig-producing side also improvement has taken place in the type of pigs and in the regularity of production.

Nor has the problem of rationalisation been ignored. Marketing schemes were followed in 1935 by the bacon development scheme, which set up a board consisting of representatives of pig producers and curers, with independent members, and the task of this board was to coordinate the industry, to improve the efficiency of bacon manufacture and to regulate the extension of capacity. But the Development Board had but limited power for the first two years, and it is clear that now the powers of the board are inadequate to tackle the problem. Further, it would be hopeless to expect the bacon industry to achieve rationalisation in face of a falling output. The first essential, if rationalisation is to succeed, is the maintenance of an adequate and steady supply of pigs. The rise in the cost of feeding-stuffs is due to world causes which are outside the powers of the industry to remedy. If high feeding costs persist bacon production will continue to go down both here and in other countries, and the prices of bacon and pork will go up. This combination of a declining supply of raw material and of redundant factory capacity would pro- 782 duce difficult conditions for any industry, I do not care what it is.

For these reasons the Government concluded that if the industry was to be put on a self-sufficient basis, as they believe it can be put, some assistance is necessary during the period in which these temporary difficulties are being overcome. The object in view is one which is well worth achieving. The value of the output of pigs in England and Wales is only a little less than that of cattle, and a serious setback in an industry of this size and importance would be a calamity. After all, pig production is very well suited to our soil and climate. Moreover the pig is a valuable source of fats, and with other livestock it plays its part as a factor in land fertility. Another feature should commend it to the interest of the House in that it is particularly suited for production by small producers, who are enabled often to use foodstuffs or grain for which otherwise they could not find a profitable outlet.

The condition of assistance must be the assurance that efficiency measures will be put in hand. It was with this object that, following my statement of last July, conversations and negotiations with the two marketing boards were begun. I here gladly pay tribute to the accommodating spirit shown by both sides of the industry. As a result of these negotiations the Government were assured that rationalisation would proceed, and the present Bill, which provides both for assistance in reestablishing the contract system and for the powers necessary for rationalisation, is the result.

The Bill is admittedly a complicated structure, and if some of its features are novel the House will consider them more closely in Committee. But I think that the intricacies may appear less confusing if I lay emphasis on two points. The first is that we are not writing on a clean slate. We have the organisations of the pigs and bacon marketing boards already in existence. The Development Board was brought into existence to initiate important reforms, and we propose to increase its jurisdiction and strengthen its hands so that these reforms shall be carried out. We have the machinery of the Agricultural Marketing Acts at our disposal, and in particular the Committee of Investigation for the protection of the public interest and of the interest of all the various bodies affected by the schemes. 783 The Government believe that progress can best be assured by adapting those forms of organisation with which the industry is already familiar, and we hope to cure the defects which experience has shown to exist in them. We are heartened by the progress which these boards have brought about in the pig industry in the past, and if the difficulties can be removed, we believe that more progress will be made in the future.

Secondly, the Bill is based on the same principles as those which this House, in its wisdom, has adopted in respect of other commodities. We are not only giving assistance to the industry, but assistance with a definite object, and with safeguards that the money provided is properly applied according to the needs of the industry. The keynote of the Bill is efficiency. As a parallel to this insistence on an efficient industry I would draw attention to the Sugar Industry (Reorganisation) Act and the economies secured by the amalgamation of the sugar factories into a single corporation; to the improvement of the system of livestock markets and the experiments in central slaughtering under the Livestock Industry Act of 1937; and the intention which has been announced with regard to milk, to incorporate proposals for reducing the cost of milk distribution by legislation this Session. The Bill lays no less emphasis upon efficiency in pig production than in bacon production. There is a Clause in the Bill which enables the industry to finance research and experiment to secure efficiency in both branches of the industry, and we believe that that will be in the permanent interest of the industry itself. These provisions which lay emphasis on quality production through the grading of bacon pigs and carcases correspond with similar provisions in the Livestock Industry Act.

The Bill may appear to be a formidable document in its dimensions, but a great deal of its size is accounted for by the fact that there are incorporated in the Bill, with or without adaptation, many provisions which now appear in the Agricultural Marketing Schemes. This is necessary under the more permanent organisation proposed. So the amount of new matter in the Bill must not be gauged by the bulk. Hon. Members will see that the Bill is divided into parts. Part I deals with the changes in the 784 organisation of the structure of the industry which are necessary to give effect to this policy. As I have explained, there is now in existence a Development Board set up under the Bacon Development Scheme of 1935. The present Development Board is concerned with the organisation of bacon production, that is to say, with the licensing of bacon factories and with measures to ensure efficient curing. It has no general power to coordinate the industry as a whole, since the marketing boards within their own particular spheres were to be more or less watertight compartments.

In my view it is essential that we should have a common and continuous policy from the production of the pigs to the sale of the bacon. It is accordingly proposed to replace the present Development Board by a stronger board having a larger impartial element. The number of independent members is to be increased from three to five, each of the marketing boards contributing four. The Development Board will be given wider powers of control over the whole industry. The marketing boards are to be retained and will in fact be responsible as administrative agents in carrying out the policy of the Development Board. In certain cases they will act independently. The Pigs Marketing Board, for example, retains the right to prescribe on behalf of registered producers terms and prices on which producers are to sell pigs under long contracts, provided it does so not later than 14 weeks from the commencement of the contract. Provision is made for the transfer to the Development Board of any functions of a marketing board which the latter has failed to exercise properly, and for the voluntary surrender of powers by a marketing board to the Development Board. If a marketing scheme is revoked the functions of the board will be transferred to the Development Board.

Part II of the Bill deals with the machinery for bringing a rationalisation scheme into force. The whole plan for the future organisation of the industry rests upon an effective scheme of rationalisation being brought into force and operated, and wide enabling powers are accordingly provided in the Bill for this purpose. It will be noted that under Clause 14 there can be no compulsory acquisition of factories without compensation. A factory rationalisation scheme will require very careful thought and 785 preparation. In our view such a scheme is best submitted by the industry itself, which is familiar with its own trade conditions. The scheme may affect many people. Therefore there must be full opportunity for those affected by it to discuss it and to see how it affects their own interests, in order that in its completed form the scheme will be one that is just. The machinery laid down in the Agricultural Marketing Act, 1931, has been adopted for the submission and approval of these schemes. We think that that is the best way by which the objects, subject to the safeguards, can be obtained. The Bacon Marketing Board, as representing the curers who will be governed by a rationalisation scheme, will have the first right of submitting their proposals. If this right is not exercised, the Development Board may submit a scheme. When a rationalisation scheme is submitted to the Minister he must give notice in the usual way, an opportunity will be given for a full consideration of objections and representations, including a public inquiry.

§ Mr. A. V. Alexander

Before the right hon. Gentleman passes from rationalisation will he tell us exactly what is the intention of Clause II, Sub-section (4), with regard to the surrender and re-issue in certain cases of licences, and the provision for compensation? Is there a price upon the surrender of a licence?

§ Mr. Morrison

The Clause as a whole deals with the operation of licences and with penalties for breach of a licence, and Sub-section (4) provides that the holder of a licence may at any time surrender it to the board, and if that happens the board may issue a new licence with new conditions. They may make these conditions such as will help to bring the rationalisation scheme of a particular district into being. It is a question of the alteration of the conditions in a particular case. That is a necessary power which would enable the rationalisation scheme to be perfected. Before submitting a scheme to Parliament the Minister has to show the draft to the Bacon Marketing Board. I am assuming here that the board is not making the scheme. If the board do not approve the scheme, the scheme lapses, and no further action with regard to that particular draft can be taken.

We attach the utmost importance to an effective plan of rationalisation and we 786 have been assured that such will take place. A Committee of the Bacon Marketing Board, of which my hon. and learned Friend the Member for Ashford (Mr. Spens) has been good enough to take the chair, is now actually at work drawing up a scheme with a view to submitting it immediately on the passing of this Bill. The costs of effecting rationalisation will be payable by licensed curers, except those holding small curers' licences, who will not be affected by the scheme. When a factory rationalisation scheme comes into force the public safeguards provided by Section 9 of the Agricultural Marketing Act, 1931 (Consumers' Committees and Committees of Investigation) will apply to it with certain adaptations. A special safeguard is provided for curers who are affected by a rationalisation scheme.

Part III of the Bill deals with the licensing of factories. The necessity for a licensing system and for the refusal of new licences on specified grounds was recognised by this House when it approved the Development Scheme of 1935. But the present Development Board, set up under that scheme, has not sufficient powers to tackle comprehensively the problem of rationalisation. The necessary powers are therefore provided in the Bill, and other reasons for the refusal of a licence or modifications of one to meet the necessities of rationalisation are included.

I would like to say a word about the small curers. When the Government policy was announced last July some anxiety was expressed by organisations of small curers that they would not be able to attain the increased standards of efficiency and equipment and that their businesses might run the risk of compulsory closure. There is no intention of bringing the small man within the reorganisation provisions. The small curer is one whose output in any four consecutive weeks does not exceed 60 cwts. of bacon. May I call attention to Clause 14 which provides for the revocation of producers' licences under the rationalisation scheme? I am not satisfied on a reconsideration of the wording of that Clause that it indicates that the small producer will in no circumstances have his business closed down, but I will look into it further and will accept an Amendment, or will put one down, to make sure that the small curer runs no risk of having 787 his business closed down under a rationalisation scheme.

Curers who come within the small curers' class are excluded from the whole scheme of regulation. They can buy pigs where they like, their sales of bacon will not be controlled by quotas, and they will not come within any rationalisation scheme. They will not be subject to efficiency measures. They must be licensed with the Development Board, but the only conditions that can be attached to their licences are those requiring a certain standard of hygiene in the manufacture of bacon. Since they will not come within the long contract system, subsidy will not be payable in respect either of the pigs they buy or the bacon they produce. They will be required to contribute to the expenses of the Development Board and the Bacon Marketing Board, but on a considerably lower scale than other curers.

The bacon marketing scheme now in existence recognises and exempts from the scheme another still smaller class of curers consisting of those whose output does not exceed five cwts. per week. They are mostly retailers. It is not intended to depart from this practice and I am considering the terms of an Amendment to make it clear that no producer of bacon need be licensed provided he complies with the quantitative limit and other conditions of paragraph 22 of the present scheme, suitably adapted to fit in with this Bill.

§ Mr. Holdsworth

Suppose a small man finds his business is increasing and that his output is going up above the limit, what will happen to him then?

§ Mr. Morrison

It depends upon the conditions. If a small curer finds his business growing and he wishes to come into the class of larger curers, he will apply for a licence to the Development Board and become a licensed curer.

§ Mr. Holdsworth

If the licence is granted.

§ Mr. Morrison

Certainly.

§ Mr. Alexander

Quite apart from the question of licensing in the higher category, if a man in such cases buys all his pigs in the open market and does not get the subsidy on the long contract system, what is there to stop him from going 788 above the maximum figure of 60 cwts.? I can find nothing in the Bill to prevent that.

§ Mr. Morrison

If it goes above the limit he must have the conditions attached to his licence which a curer of that capacity will have.

§ Mr. Alexander

Is he then free to buy pigs in the open market up to 60 cwts., and must apply for a licence above that amount in respect of which he must buy contract pigs?

§ Mr. Morrison

The small man with an output up to 60 cwts. buys his pigs in the open market, and consequently there is no subsidy attached. If, on the other hand, he decides that his business is growing so as, in his judgment, to make him a curer of the higher category, he then goes into that category and pigs will be supplied to him under the long contract, the financial provisions of which I am coming to shortly. In that respect he will be in the position of an ordinary curer licensed under this Bill.

The supply of pigs to the factories is a most important element in a successful bacon industry. We have found in the past that the system of annual contracts is the best way of regulating the supply. It is proposed, therefore, to resuscitate the system of annual contracts, but in order to avoid the rigidity which contributed to the breakdown of the system in 1936 the Development Board is to be empowered to permit pigs to be purchased by curers, under control and by approved methods, outside that system. The industry is, however, united in its determination not to permit the recurrence of those uncontrolled market purchases which undermined producers' confidence in the contract system.

The Bill provides that any general exemption from the contract system should be subject to the consent of the Minister. This additional check is proposed both to secure stability to the pig industry as a whole and to facilitate the regulation of bacon supplies to which both home supplies and imports contribute. The Bill provides that contracts shall be made through the Pigs Marketing Board. In this way it is intended to arrange for the distribution of pigs among curers in some equitable manner while preserving, as far as possible, existing links between pro- 789 ducers and particular factories. Full consultations between the marketing boards will take place before the contract terms are prescribed and the Development Board will be kept informed of the progress of these negotiations.

The Pigs Marketing Board may prescribe the contract terms not later than 14 weeks before the contract is due to begin; during one further month they may prescribe the terms with the consent of the Bacon Marketing Board; but if the contract is not prescribed by 10 weeks before the due date the contract will be prescribed by the Development Board. This is to prevent, what had occurred in the past, a contract not being prescribed until close on the date it was due to begin. This was the result of protracted negotiations between the marketing boards. This system will provide a time-table which will give every one due notice. The Bill will enable the system of group contracting to be revised. This will be a help to the small man who himself might not be able to maintain the regularity of deliveries required by the curer, but by joining with other small producers deliveries may be maintained by the group as a whole.

It will be the concern of the Development Board to see that a reasonable balance is maintained between the pork and bacon markets. By means of periodical censuses of pigs which the Development Board will have power to take, the board will be able to form a reliable estimate of the number of pigs that should be available for bacon manufacture in any given period without upsetting pork supplies.

Clauses 22 to 25 contain the general financial provisions. Assistance will be limited to a period of three years and will take the form of compensating pig producers for any rise in the price of feeding stuffs above a certain level. It will also take the form of payments to curers to enable them to maintain payments of fixed prices to pig producers when bacon prices fall below specified levels. When conditions work the other way, that is, when food costs fall below or when pig prices rise above the specified levels, the industry concerned will make recoupment to the Exchequer. Curers will be required to pay an average price for the first contract period of 12s. 6d. a score in respect of the standard pig. This price 790 should enable producers of reasonable efficiency to work at a profit under existing conditions. There is, however, little use in requiring curers to pay fixed prices for pigs without regard to the price of bacon, and it is believed that under present conditions a reasonably efficient curer should be able to pay a pig price of 12s. 6d. a score when he is receiving 94s. 9d. per cwt. for his bacon. That price will be taken as the bacon price yardstick for the purpose of payments to and by the curers in the first year. The House will realise that these figures of 12s. 6d. and 94s. 9d. are arithmetical figures and that it is the relation between them which is important, and not their particular amounts.

Economies will be demanded of pig producers and curers for the second year. The pig price will be reduced to 12s. 5d. per score and the bacon price yardstick to 93s. 9d. per cwt. In the third year further economies will be demanded and the pig price will be reduced to 12s. 3d. per score and the bacon price yardstick to 91s. 9d. per cwt. Assistance from the Exchequer to pig producers will be in respect of costs of feeding stuffs. A standard feeding-stuffs ration will be prescribed by the Minister. When the cost of this ration is 8s. 6d. a cwt., no payment will be made. For every shilling rise in the price above 8s. 6d. pig producers will receive 10.3d. per score. When the cost of the ration falls below 8s. 6d. pig producers will make recoupment on the same basis. The curer will be required to pay to the pig producer the additional sums represented by increased cost of feeding stuff, and in respect of the pigs which he satisfies the Minister he has turned into bacon he will receive payment from the Exchequer. When sums are due from the pig producer the curer will deduct them from the pig price and repay the Exchequer. The number of pigs which may in the first three years be sold on annual contract will be limited to the number on which assistance will be payable, namely, 2,100,000 in the first year, 2,400,000 in the second year, and 2,500,000 in the third year.

Part V deals with the fixation of production and selling quotas of curers. Some equitable distribution of the available supplies of pigs is inseparable from any rationalisation scheme devised to remedy the existing redundant factory capacity. The principles on which quotas 791 and pigs are to be distributed among curers will be for the Development Board to consider. Part VI contains general provisions. The general safeguards are contained in Clause 29. These are on lines with which the House is already familiar as they were originally provided in Section 9 of the Agricultural Marketing Act, 1931. In this part of the Bill are contained the machinery provisions dealing with the marking of carcases, the grading of bacon, power of the board to obtain information, and so on. Clause 37 is the one to which I have referred, which provides for the encouragement of research and education. It is proposed that the Development Board should submit annually a programme for carrying out a scheme of research and education in connection with the production and marketing of pigs and bacon. This is highly important work in connection with the rationalisation scheme which aims at placing the industry on a much sounder basis.

To suns up, the reorganisation proposals fall into three main divisions: first, the reintroduction of the contract system, second, the rationalisation of the factories; third, research and education. The original schemes were not imposed by the Government upon the industry; they came into operation on the initiative of the industry, the Government only undertaking certain action to facilitate producers' plans. So now, the proposals in this Bill are not being imposed upon the industry. They are, in the main, proposals worked out by and agreed by the elected representatives of bacon curers and bacon producers, in which both sides have made concessions, each to the other. In the case of the original schemes the assistance offered by the Government took the form of import regulation, which was an integral part of the plan. The difficulties now confronting the industry are of a temporary character, and, therefore, the further Government assistance now proposed is also temporary. As regards bacon manufacture, it is the structure of the industry which is at fault, and which, while the present defects remain, is the bar to rapid increase in efficiency and economical production. Those structural defects are due very largely to the excessive capacity of the industry, having regard not only to the existing pig population, but to any 792 pig population which might reasonably be expected within a period of years, and also to the demand for home-produced bacon.

Let me repeat that Parliament is not being asked to regiment this industry, but to establish conditions within which the industry can develop and can create an assured future for itself, with efficient service to the community. There is no inherent reason, after all, why pig production and bacon manufacture should be uneconomic in this country, or less economic than in other countries. The need is for a concerted effort on the part of pig producers and bacon curers, working together and not at cross purposes, to eliminate waste and inefficiency at every stage of production, processing and marketing. Only then will the bacon industry of this country make any progress in its transition from a comparatively small-scale industry supplying a one-time luxury market to a large-scale factory industry engaged in the mass production of a standardised and popular form of food.

Hon. and right hon. Gentlemen opposite have placed upon the Order Paper an Amendment which expresses certain dubieties about the merits of this proposal. I do not propose to anticipate how they will develop their arguments, but I note with gratitude that the Amendment recognises the necessity for a reorganisation of the bacon industry. It is true that in this Amendment the native hue of resolution is sicklied o'er with the pale cast of thought, and that the Amendment proceeds, as I gather it, to make certain points of criticism. The first is that the proposals exclude an important part of the industry. If, as on first reading the Amendment one would suppose, the objections of hon. Members opposite are to our proposal to leave out small curers, I think our course is abundantly justified. If, on the other hand, as I imagine the Amendment means, they object to the lack of control over the pork market, I would ask them to consider Clause 17. It is clear that the more pigs there are taken out of the pork market for bacon the higher that market tends to go. The control of open market buying of bacon implies some indirect control of the pork market, and this is provided for in 793 Clause 17. In so far as the Amendment asserts that it is necessary to maintain parity between two markets, I am in agreement with it, but not if it asserts that that is not provided for in the Bill.

The second point about which hon. Members seem to be alarmed is that this Bill is designed to ensure high prices for bacon. That, I must confess, is an odd description of a Bill which is making deliberate provision for the contingency of bacon prices falling below 94s. 9d. per cwt. Bacon is now 113s. per cwt., and when hon. Members opposite were in office in the corresponding week in April, 1930, the price of Danish bacon was 117s. I hope the House will not hark back to the slump period with which I have dealt, a period which, without any inducement on our part, led to deliberate measures on the part of exporting countries to restrict production. If we deny the producer his just reward, he takes his very unwilling revenge in creating scarcity, because he can no longer in those circumstances produce and live. This Bill is designed to improve both the industrial and the agricultural sides of the industry. We hope that at the end of the period which it contemplates the production of pigs and the curing of bacon will have greatly improved, so that this country may be the richer by a bacon industry second to none in efficiency and prosperity.

§ Mr. T. Williams

I beg to move, to leave out from the word "That," to the end of the Question, and to add instead thereof: this House recognises the necessity for a reorganisation of the bacon industry, but regrets that the proposals to this end exclude an important part of the industry, and, whilst involving the State in further subsidies, are designed to ensure high prices by restricting supply far below the quantity required for normal consumption, instead of planning an abundant supply under conditions which will enable all sections of the community to benefit. Recently a right hon. Friend of mine moved an Amendment and, because he devoted so little time to explaining it, was chastised by the Prime Minister and by subsequent speakers from the Treasury Bench. I shall not make that mistake, because I propose to make some reference to the Amendment at the outset. As has been the case with many other Government Bills which have been introduced 794 in order to help agriculture during the past six or seven years, the intentions of some parts of the Bill appear to be good, but it is a weak and timid Measure and the right hon. Gentleman, like his predecessor, appears to be willing to bark but afraid to bite when vested interests stand in the way of real, true, lasting organisation. After the last five years' experience I must confess to some disappointment with the right hon. Gentleman. I thought that he, representing agriculture, setting aside all other considerations, might have done something much bigger, much more radical and much more lasting than we think this Measure will achieve. Had it not been for his predecessor's undying faith in private enterprise there would have been no necessity for this Measure at all. If the recommendations of the Reorganisation Commission of 1932 had been faithfully carried out, we should not have required a Bill to-day. There would have been complete rationalisation of the curing industry, the breakdown in 1936 would not have taken place, and we should, I believe, have established a substantial and successful bacon-producing industry. It is true that the Bill does foreshadow some organisation, but it may come to-morrow, the day after, sometime or never. After our experience of the past five years I am afraid that it may be never.

As usual with an agricultural Measure, the Bill provides some financial guarantee, but for bacon consumers it represents the last hole in the belt. Clause 27 is still the old nigger in the wood pile, and for that if for no other reason I can have little or no faith in a Measure which while pretending to reorganise relies so much on the simple power to restrict imports. Not even Clause 43, the fair wages clause for employés, which, of course, we welcome, would encourage us to support this Measure, which not only segregates pork from any effective control but relies upon restrictions, and to the extent that the right hon. Gentleman's hopes and expectations are realised the best we can hope for is the establishment of a permanent, profit-making, statutory monopoly of curers in this country. In other words, we are to place a high premium upon inefficiency in curing, as the right hon. Gentleman has recognised several times during his speech this afternoon. I could find a new title for this Bill if one were required—a Possible Rationalisation. 795 Stabilisation and Subsidisation and a Certain Import Restriction Bill. I think that would fit the position much better than the present title. The taxpayers and consumers have cause to complain that there is no need for this Bill, and I hope to give my reasons for that observation.

I have one or two questions to put to the right hon. Gentleman. Part I of the Bill establishes a new Bacon Development Board, with increased powers. So far as they have powers and exercise them effectively, to that extent, perhaps, we should not disagree, apart from the creation of a statutory profit-making monopoly. Are we to understand that the one Development Board is to act for England and Scotland jointly, and that there is to be no separate board for Scotland The right hon. Gentleman will know far better than I do that the systems of killing, curing and transport in Scotland are very different from those in England. I believe that all pigs killed in Scotland are skinned at the outset. The skin is used as the basis for a very fine leather. To what extent is the Development Board going to affect that peculiar interest and the peculiar methods of the Scottish curing trade? I understand that Scotsmen are much more humane in the matter of slaughtering pigs, because all pigs are slaughtered at the point of production. They are not sent on those long journeys on which pigs have been known to ravage each other, causing serious injuries. I should like the right hon. Gentleman's colleague the Minister of Pensions to tell us when he replies what arrangements, if any, are to be made for the Scottish curers, seeing that their methods of slaughter are so very different.

Under Sub-section (3, a) of Clause 9 small curers, those who cure no more than 39 tons of bacon per annum, are to be excluded altogether from the scheme, except that they will be called upon to make a contribution to the expenses of the Development Board. I want to know whether the right hon. Gentleman feels that there is any danger of that large number of so-called small producers upsetting finally the balance of the scheme. That has happened in the past and it may very well happen in the future. Are all those small producers to remain for ever beyond the pale of any rationalization scheme? If so, there is going to be a 796 rake's progress so far as rationalisation is concerned. I think something more might be said on that subject by the Minister of Pensions.

I also want to know what exactly Clause 24 means. As I read Sub-section (2), in certain circumstances, if the price of bacon is beyond 94s. 9d. and the food ration is less than 8s. 6d., the curer has to make a payment to the Treasury. Suppose the two sets of figures remain as determined here for a fairly long period of time; is it not possible for the Government to make a profit out of this Bill? I may be wrong in my calculations but, as I read the Measure, if the price of bacon exceeds 94s. 9d., and the cost of the specified ration is 8s. 6d. or less for a goodly period of time, the curer has to make a constant payment to the Treasury for each pig. The Government can then make a profit out of this Measure by the simple process of restricting imports to a certain point where the price will always be above 94s. 9d., and where the income of the Government would be perpetual. That would be a very different story from the expenditure of £1,000,000 visualised in this Clause. I hope that the Minister of Pensions will tell us something about that possibility later.

I am sure that the House will be interested to hear a dissertation, or description, or clarifying statement in regard to Sub-section (3) of Clause 24. I noticed that the right hon. Gentleman, in a very interesting speech, clear from beginning to end, avoided any explanation of the Sub-section. Perhaps if I were to read the Sub-section hon. Members might understand it at a first hearing: No amount shall be payable in respect of any pig under paragraph (a) of Sub-section (1), or paragraph (a) of Sub-section (2), of this Section, unless bacon has been produced from the pig on premises in respect of which a producer's licence, other than a small curer's licence, is in force, and where the weight of the bacon produced on such premises from a pig is less than four-fifths of the dead weight thereof, any amount payable under either of those paragraphs shall be reduced by applying thereto a fraction the numerator whereof is the number of pounds comprised in the weight of the bacon produced and the denominator whereof is the number of pounds comprised in four-fifths of the dead weight of the pig. I am sure that that is crystal clear. Unfortunately I am not too clear about it, and perhaps the Minister of Pensions will 797 fill in the breach left by the right hon. Gentleman.

The right hon. Gentleman gave us a history of the pig and bacon industries of this country. I also wish to indulge in a wee bit of history, either from 1913 or from 1933, as the case may be. There was a Reorganisation Commission in 1932. Unfortunately, the Commission's major recommendations were more or less ignored, or there would have been no need for the Bill. It is no great joy to me to say, "I told you so. "I should have preferred that the industry from 1933 to 1938 had been on a really sound basis, and that the consumer had not been called upon to make unnecessary payments during the period. From 1913 to 1933, as the right hon. Gentleman states, two things stand out. We are one of the largest pig-meat consumers in the world and, notwithstanding the suitability of our soil and climate, the output in that period was more or less stationary. I do not think the farmer was wholly to blame. The circumstances were clearly explained by the Reorganisation Commission. The Pig Industry Council and the Commission told us why the individual farmer was not to blame. The former, representing pig producers, pointed to 15 weaknesses within the industry; superfluity of breeds and types, lack of efficiency in factories, irregular supply of pigs, fluctuating feed prices, no real organisation, and others, making pig and feed cycles inevitable. There was an ever-waiting market for an increased supply of bacon, but the bacon was not forthcoming from this country.

As the Commission pointed out on page II of their report, the individual producer was helpless to deal with the multiplicity of weaknesses in the industry, but they said: It is well within the power of organised industry to resolve those problems and to stabilise the bacon industry in this country. It is not merely a question of prices, because even in 1929, when the price was not 117s. per cwt. but 107s., we imported 8,250,000 cwts. of bacon while home produce was about 1,250,000 cwts. There was something fundamentally wrong with the industry, or that situation would not have existed. It is generally known and found to be proved that there is an almost unlimited demand for bacon in this country, if the prices are reasonable. If our home producers had been trying to use the 798 specially suited soil and climate they could have had a ready-waiting market, but they simply could not do themselves justice. They were merely pig producers. They had nothing to do with curing, but were dependent upon factories as to whether or not they could make pig production a success.

Although we had a population of 45,000,000 in 1929, we had a pig population of 2,600,000, while Denmark, with a human population of 3,500,000, had a pig population of 3,700,000. They can not only produce pigs, cure them and send them overland and across the North Sea to this country, but they can sell their bacon in our market while our own producers have not yet found the way. I can explain that only by the two terms, co-operation and factory organisation. I know that those words involve lots of things, but this country, with its background of private enterprise, individual initiative and the profit-making system, prevents the sort of organisation which would have made the industry successful. It was not to be wondered at that in 1932, when we reached a peak of imports, something like 12,000,000 cwts. of bacon and ham for which there was a ready-waiting market —every new cwt. found new consumers and was absorbed as fast as it came in, as well as all the bacon that was produced at home—prices reached a record in low levels. We could not hope for all time to exploit either the British producer of pigs or the Danish producer. It must be remembered, as the Re-organisation Commission pointed out, that maize meal was down 41 per cent. at that time lower than the average between 1926 and 1929, so that if prices were low so were the ration prices. The poorer sections of the community in this country really were allowed for the first time to enjoy a goodly quantity of bacon.

From our own pig producers there was very naturally a demand for a duty or a subsidy, or anything that would give them a better price. I do not complain that the individual farmer demanded a subsidy or a restriction, or something that would lift the price of his produce, because he is the victim of circumstances over which he has no control. Unfortunately, the farmer himself does not know why. He has lived an individualistic life and he thinks, as the Government think, in terms of individualism, and 799 not in terms of co-operation. Therefore, when he encounters a storm like that, be it a storm of imports or of feeding prices, or whatever it may be, the poor, miserable fellow must come to Parliament cap in hand. A commission was set up in response to the demand of the pig producers in this country, and they revealed the problem in all its complexity. Unfortunately, they compromised with themselves in their recommendations, because although they saw the problem clearly they hesitated to say the right thing. They hinted at what might be done. I will refer to this aspect of the matter later on.

They recommended that a Pigs Marketing Board, a Bacon Marketing Board, a Development Board, advisory committees, and so forth, should be set up. They thought that if we could stabilise supplies from all quarters, restrict imports, regulate home output, fix long-term contracts based on feeding prices—that is the object of the right hon. Gentleman now—rationalise factories, fix quotas for our factories with a maximum throughput and a minimum cost of production, we should be on the highway to success. Unfortunately, although there was a golden opportunity placed in the hands of the Government, the right hon. Gentleman's predecessor failed miserably. He was so satisfied in his belief in private enterprise and the profit-taking system, that the scheme was bound to break down after two or three years. I can remember the right hon. Gentleman when he stood at that Box with a vast army of Conservatives sitting behind him. When someone asked whether the pigs would be forthcoming he said: "Pigs? Why, pigs in millions are screaming at me all over the country." The Pied Piper of Hamelin had nothing on him, but if the pigs did come they only had a peep at the factories and then they raced off to the pork markets. They were not available last year for the bacon factories.

The Government have always been nervous of vested interests. It is our complaint here that they relied too much upon the simple process of restriction and that they had not sufficient courage to go forward to real organisation. Let us note what happened with regard to the imports of bacon from 1932 to the present year, excluding imports from Northern Ireland and pork imports turned into 800 bacon here. In 1932, we imported 11,396,000 cwts., the following year 9,000,000 cwts., the next year 7,500,000 cwts., the next year 6,900,000 cwts., the next year 6,500,000 cwts. and last year 6,900,000 cwts. We paid £30,000,000 in 1932 for 11,396,000 cwts., but last year we paid £29,000,000 for 6,900,000 cwts., or nearly the same sum of money for 4,500,000 cwts. less. A question was put this afternoon to the right hon. Gentleman concerning potatoes. Who determines what is the reasonable price for potatoes? Not the Minister, not Parliament, but apparently the producers. The biggest producers are left to determine what is a reasonable price, so that in this case the curer, and, the consumer, has had to pay a hefty price for such part of the Government's policy as has been applied. The right hon. Gentleman said two or three times during his speech that the basic problem was the surplus factory capacity compared with the output of pigs in this country. I am sure, therefore, he will not disagree with me when I quote the following from page 54 of the report of the Reorganisation Commission: The costs of operating the bacon factories, as a whole, are unduly high, owing to the irregularity of supplies, to the excess of capacity over supplies in most factories, and to the excessive number and small average size of factories. The Commission also say, on page 56, of their Report: It is obvious that this excess of factory capacity relative to supplies of pigs is very wasteful. The following figures, which were supplied to us by a large English factory, compare actual feeding costs per hundredweight of bacon with estimated costs on the assumption of larger throughputs, and suggest that very important savings could be made by utilising factory capacity more fully. The figures quoted show that the cost per hundredweight of green bacon with an average kill of 684 pigs per week was 9s. 2d., but that the estimated cost assuming an average kill of 2,500 pigs per week was 5s. 1d., or a difference of 4s. 1d. per hundredweight. I believe that when the contract broke down in 1936 or early in 1937 the pig producer was demanding a certain price, and the consumer was offering another price, the margin being about 6d. per score. 1f 6d. per score could have been offered by the curers in excess of what was asked by the pig producers, the pig producers would have supplied pigs in much larger numbers. But here is 801 a margin of 4s. per hundredweight for sheer factory rationalisation, and yet in five years nothing has been done. Why? On page 57 of their report the Commission tell us. They say: The average weekly throughput per factory is 350–400 carcases in the case of England and Wales, 40–50 in the case of Scotland, and 50–60 in the case of Northern Ireland. By contrast, the average weekly throughput of the Danish factories appears to be about 2,000 carcases. There is the real advantage of Denmark over Britain. Denmark does not necessarily produce better pigs, and it does not necessarily follow that Denmark can produce better pigs, if our own people had been encouraged to concentrate on the production of pigs; but Denmark has seen the wisdom of providing itself with the proper breed, the right type of factory, and the appropriate organisation, and so can compete very favourably with us in our own market and at the same time can pay better wages for labour in Denmark than our people are paid in this country. If the Government in 1933 had had the courage and foresight to see that rationalisation of the curing factories was carried out, instead of leaving it to the curers to rationalise themselves, there would have been no need for this Bill.

It is true that the right hon. Gentleman in his Bill gives slightly more power to the Development Board, but I do not see that Part II of the Bill is likely to go any long way beyond what has happened between 1933 and 1938. Let us see what the right hon. Gentleman does in Clause 6. This is a typical piece of hesitancy on the part of a Conservative Government. It says, first of all, that if the Bacon Marketing Board do not send in a rationalisation scheme within a month, the Development Board can step in and prepare a scheme, but if the Bacon Marketing Board send in a scheme within a month, the Development Board cannot do anything for 12 months. Therefore, if the Bacon Marketing Board send in a scheme in the fourth week of the first month, they need not do anything for the next 11 months and three weeks, nor need the Bacon Development Board either. These are the terms of the Bill. Then, when the Bacon Marketing Board send in their scheme after 11 months and three weeks, they send it to the Bacon Development Board, who have six weeks in which to examine the scheme. 802 They then submit the scheme to the Minister, and the Minister lets the world know that the scheme is in existence. He waits for objections; he may cause an inquiry to be held; and then he must allow 28 days before anything really happens. By that time, of course, 18 or 20 months have expired, and no rationalisation scheme has come into existence. Even in Clauses 14 and 17 the right hon. Gentleman doubts whether any rationalisation scheme will be in existence in the first two years, for he says in Clauses 14 and 17 that, if the rationalisation scheme is not in existence within two years, certain things are to happen. He has no confidence in his own Bill. In any case it seems clear that Clause 6 not only gives the bacon curer time to provide himself with a rationalisation scheme, but gives him time to forget a scheme. In other words, it is fiddling with a really urgent problem. And this is six years after the Commission's report. For our part we should prefer to see the curing industry really rationalised, not by the curers themselves, but rationalised as the Commission hinted when, on page 21 of their report, they suggested the setting up of some form of corporation which would enter into and gradually absorb the home curing trade. That is to say, instead of allowing the curers to rationalist themselves out of existence—which of course they would never do unless they left themselves with a tight little permanent statutory monopoly—this rationalisation should be left in the hands of a public corporation. After all, the Minister of Agriculture is not the minister of bacon curing. He represents agriculture and agriculture alone, involving 45,000,000 or 46,000,000 consumers and 1,000,000 producers, and it ought to be his duty to see to it that anything and everything that can be done to make agriculture really prosperous should be done, even though vested interests have to be cast north, south, east and west. I do not see anything that need bar the Government from taking this step. If the curing of bacon was a service to agriculture and the nation, there is no doubt that we should get rationalisation. Then the curer would be able to pay a bigger price to the pig producer, and, with such assistance as the Government might give with regard to squaring out those peculiar 803 intervals where pig feed prices go up and down, I have no doubt that we could establish a bacon industry on the Danish lines which would not only save much more than the subsidy, but, what is more important to me, would provide a larger quantity of bacon for willing consumers in this country without increasing the price.

That, really, is the point which we on these benches have in mind, and that is the sense of our Amendment. We do not like to see the industry divided, one part controlled and the other part not controlled. We have seen what has happened many times in the past. We agree with the right hon. Gentleman's intentions as to rationalisation, licensing, prolonging contracts, and fitting them into a proper scheme, with the appropriate arbitration possibilities on compensation questions, licence questions and so on. But we do not think that this is the sort of Bill which will do that. The Bill actually puts a premium on in efficiency in curing. The right hon. Gentleman admits that it does. He tells us how many factories there are and what their throughput is, and he knows very well that the curer is just as helpless an individual as the pig producer is in the matter of bargaining for a price when the throughput available for his factory is 50 per cent. of its capacity. Let me take a simple example from figures given by the Commission. They show that the average weekly supplies of bacon pigs in the years 1923 to 1929 in an English factory varied from 450 to 826. The overheads remain constant. How can a curer make an economic success of his factory under such conditions? The Commission also tell us that the average weekly supplies of pigs from January to December, 1929, varied from 260 to 731. How can any bacon curer cope with conditions of that kind?

Therefore, as I have said, a premium is put on the inefficiency in curing, and now it is proposed that the curers shall be allowed to rationalise themselves from 26o factories to the number they think they ought to retain, and, that having been done, to provide Government funds to enable farmers to send regular supplies of bacon pigs to maintain the maximum throughput and the maximum 804 profit for all time—for those curers who remain in the industry will have that statutory monopoly, since no other factories will be allowed to be erected except with the consent of the Development Board, who will only give their consent if an increased number of pigs is likely to be available. We fear that this Bill will disregard the interests of the nation, as has happened in the past, and I hope that agricultural Members of the House who really have the interests of agriculture at heart, and who really feel for pig producers and farmers generally will go into the Lobby in support of the Amendment I am moving, believing that the national interests as regards pig production and efficient curing will not be advanced as a result of this Measure, but will only be advanced when real rationalisation takes place under a public corporation, where curing becomes a service to the farmer and a service to the State. It is for these reasons that I move the Amendment.

§ Colonel Sir Edward Ruggles-Brise

The hon. Member for Don Valley (Mr. T. Williams) promised the House at the beginning of his remarks that he would not fall into the error committed by some of his colleagues in a recent Debate, when they omitted to speak to the terms of an Amendment which they had moved. It is true that the hon. Member did make a passing reference in his concluding remarks to the Amendment on the Paper, but he did not, in fact, make any reply to the two questions which my right hon. Friend the Minister of Agriculture asked him. I am still in the dark as to what exactly the Amendment means. It says that this House regrets that the proposals to this end exclude an important part of the industry. Does that refer to the smaller curers, or to the whole of the pork industry? I do not think the hon. Member made that clear, although he was asked a specific question by my right hon. Friend; nor did he go on to develop the argument set forth in the Amendment that this Bill will have the effect of increasing the price of bacon. It may be that one or other of his colleagues will supply the deficiency.

I think this Bill will receive a general welcome from the producers of pigs with regard to its main provisions, although 805 in detail some of the provisions are open to criticism. It is intended that there shall be provided a basis on which the pig producers can work; that is, the provision of a formula which relates the cost of production to the price the producer gets for his finished product. Therein lies a degree of security for the producer in what is essentially a risky operation, as most of those in this House who have produced pigs well know. There arises the question as to whether the formula as it stands in the Bill is the correct formula. There may be a good deal of difference of opinion on that. It is obviously essential that that formula should be a correct one. I may refer later to the formula itself.

The second principle in the Bill is that such assistance as is promised is assured for a period: namely, three years. The hon. Member who has just sat down referred to that period. I think he indicated that in his view the period was too short. If that is so, I share his view. It is a mistake to make the period a short one, because all farming operations are long-term operations, and pig production is no exception to that general rule. Though the period of gestation of a pig is shorter than that of some other animals produced on the farm, the circumstances which surround pig production are in themselves long-term processes. For instance, a pig producer is obviously not going to spend a great deal of money on new housing or new equipment for pigs if he feels that there is no certainty after a short period like three years. If there were a longer period, he might say, "During that time there will be some opportunity for me to get back some return on the capital I have invested." If we take the question of producing the right type of pig, that again is a long-term operation. It is true that you can get a litter of pigs in a comparatively few weeks, but you cannot evolve the right type of pig except by a longer process, carried out over a period of years. Therefore, as far as production of pigs is concerned, we must consider that it is a long-term business, and that it requires a long-term policy. A period of at least five years would be more suitable.

The next point is the quota of pigs. Figures have been mentioned by the Minister, and are in the Bill. Therefore, 806 I will not quote them again. But it is certainly the case, that, in view of the very great consumption of pigs in this country, the maximum number of pigs in the third year on the long contract amounts to no more than 2,500,000. I think that number is a too closely restrictive one. There may be a reaction in regard to the pork market by the operation of this quota. If the producers of pigs think that the terms of the Bill are very attractive, they may produce in excess of the quota laid down, with the result that there will be a surplus of pigs, and that this surplus will be thrown on the pork market, causing a glut, and a consequential fall in the price of pork. The desideratum to be aimed at is the establishment in the pig and pork market of a steady price in regard to the two classes of pigs. It may be that, by the restrictions in the Bill, we shall disturb the price of pork in the pork market. I understand, although I am not sure, that the hon. Gentleman who spoke from the Front Opposition Bench would have preferred—he did not explain—that this Bill should have embraced the whole of the pigs of the country. I think the hon. Gentleman acquiesces in that. My own view is that the Government are right in not interfering with the pork market at this stage by legislation. If I may talk in terms of pigs, the pork market question bristles with difficulties.

The fourth point to which I want to refer is that, under the aegis of the Bacon Development Board, there is to be research. That obviously is right, and it will be welcomed by all. As I understand it, the cost of research is to fall upon both the producers and the curers, although there is nothing in the Bill to say how it is to be apportioned between them. I dare say my hon. Friend, in replying, will be able to give us some enlightenment on that. I think that here the Government might possibly have allocated a sum, not necessarily a very great one, towards the cost of this research, because we know that research is costly and one may have to labour for years before results are achieved. I do not suppose it is possible to make any proposal on those lines in an Amendment, because it would increase the charge, but I regret that the Government did not allocate a definite sum. I do not know whether it is the intention of the Minister to appoint, as one of his appointed members, to the Development 807 Board anyone who has had first-hand experience of the improvement of pig breeding. For instance, does the Minister intend to appoint as one of those nominated members a representative of the National Pig Breeders' Association? It might be reasonable for him to do so.

§ Mr. Alexander

Does the hon. and gallant Member consider that such a representative would be impartial?

§ Sir E. Ruggles-Brise

I think it is true that that organisation has more knowledge, as regards the breeding of pigs, than any other organisation. On that ground alone, I throw out the suggestion that its inclusion would be welcome. I am bound to say that with much that has been said in the hon. Member's criticism of the factories I find myself in agreement. There is no doubt that rationalisation of the factories is long overdue and that it will be generally welcomed. I share his fears that it may be postponed. I would like to see the rationalisation process put into operation much more quickly than is envisaged in this Bill. The producers of pigs have proved since 1932 that if they are given a chance they are capable of enormously expanding production, but the difficulty has always been that the factories themselves have to a large degree, though of course not universally, been unable to deal efficaciously with such pigs as they have had from the producers. This question of rationalisation lies at the root of a great many of the troubles of the industry. I rather hope that my right hon. Friend the Minister will be prepared to accept in Committee Amendments which will have the effect of speeding up the rationalisation of the factories.

I should like to ask a question relating to the descending scale of payments to be made to pig producers for the three long-contract periods. Is this descending scale of payments to pig producers to be made in connection with the cost of factory rationalisation? There is no provision at all in the Bill as to who is to pay for the cost of the factory rationalisation. My right hon. Friend said that the factories themselves were to meet the cost of their rationalisation, but the Bill does not say so, as far as I have been able to see. While it is laid down in the Bill that there is to be a descending scale of contract price to the pig producer and 808 of contribution from the Exchequer to the factory, it appears that the whole of the cost to the factory will be passed on to the pig producer. I should like to know whether that is to be so or not. If that is to be the case, obviously the factories will suffer nothing by the fact that the Exchequer contribution to them is reduced, if they have been able to pass it all on to the producer. It is a very difficult sum to work out, and my arithmetic, I confess, has not been capable of answering the question.

I submit, in contradistinction to what the hon. Member said in his speech, that the regulation of imports, as provided for in Clause 27, is absolutely essential. The necessity for it must be abundantly clear. Over almost the whole field of home-produced agricultural produce in this country the home market is invaded by overseas supplies.

§ Mr. T. Williams

I hope that the hon. and gallant Gentleman does not misunderstand me. What I both said and implied throughout my speech was, that we did not attack the regulations in a really good case, but we objected to the Government exclusively relying upon the wholesale restriction of imports.

§ Sir E. Ruggles-Brise

I do not think that the hon. Gentleman can quite say that. He would argue, as I understand him, that, the Bill being tardy in bringing into operation the factory rationalisation, the Government are relying on erecting a barrier by means of the regulation of the industry, behind which the factories at their leisure may be organised. Have I interpreted the hon. Gentleman correctly? I do not think that that can be substantiated. I was really referring to the regulation of imports in general to all our home-produced agricultural products, and I was stating that it is the fact that our home market is invaded by overseas supplies in almost every commodity, with the possible exception of potatoes, and even there we have a few imports. We do not, and cannot produce 100 per cent. of our requirements for consumption in this country of more than a few agricultural commodities, and, therefore, speaking in general terms, our home market is being invaded.

I am not arguing whether the supplies are coming from Empire sources or from foreign sources. That is out of the question for the moment. Where you have a 809 great food-consuming market, like our home market, invaded by overseas imports from whatever source, it is clear that there must be times when that market will be completely swamped and upset, and that the home producer can have no security in his own home market. Therefore, the regulation of imports is a matter of business for us as a nation, as we are compelled to buy a large part of our food from overseas, and we should conduct that buying upon a businesslike basis and try to regulate the flow of foodstuffs to this country by a reasonable measure of regulation of imports. That is the reason why I welcome the regulation of imports as provided in Clause 27 of the Bill.

The Exchequer contribution provided for in Clause 24 appears to be a contingent liability hinging on two factors (1) the price of feeding-stuffs and (2) the price of bacon. My right hon. Friend estimates the cost to the Exchequer to be about £1,000,000 a year, though that is, apparently, rather a rough guess. I can well understand that it will be almost impossible to get a very precise estimate until the whole scheme has been in operation for some time. I personally regret—and I think that there are many others in this House who will do the same—that the Government have not adopted the principle of the levy subsidy. It is a more scientific method, and I wish that the Government had taken the opportunity of applying it in this case. It has the great advantage that it would reduce the liability of the Exchequer, and to that extent would assist the taxpayer. I sincerely trust that, in any future legislation, the Government will revert to the policy of the levy subsidy wherever that policy may be found to be applicable. The principle of the levy subsidy is enshrined in the Wheat Act, which from practical experience we know has worked, and I would like to see that same principle applied mutatis mutandisto other plans which the Government may have in mind for the industry.

§ Mr. Alexander

Does the hon. and gallant Gentleman want that levy subsidy to be applied without any restrictions being placed upon it?

§ Sir E. Ruggles-Brise

No, I think that it might quite well be necessary to have a regulation of imports, for the reason I 810 gave to the House, that you should try to ensure a steady flow of such foodstuffs as you are compelled to buy. But when one comes to supporting the industry, as this Bill now proposes to do, I suggest another way of doing it. There should be a levy made on the competitive imported article, and the proceeds of that levy should be applied to help the home producer and to ease the Exchequer.

§ Mr. Alexander

Do I understand that the suggestion of the hon. and gallant Gentleman is that you should maintain artificially high prices by the restriction of foreign imports, and then subsidise the home producer by the levy on restricted imports and pass the cost on to the consumer? Is that the suggestion?

§ Sir E. Ruggles-Brise

It is very difficult to draw a sharp line of distinction between the taxpayer and the consumer, and it would be out of place, obviously, to try and argue that now. The levy subsidy was accepted in principle in the White Paper issued by the Government in 1935, and I regret that the Government have abandoned that particular policy in favour of the one in the Bill. When we are passing a great Bill like this, of some 50 Clauses, we ought to go back to the origin of the Bill and all the things which have led up to it. The original Pigs Marketing Scheme was brought into being by the vote of the pig producers themselves under the aegis of the Agricultural Marketing Act, in order to try and give them some security in their business. This legislation is intended to support that theory, and to turn it more into practice. The purpose is, as my right hon. Friend said in his speech, that this country should produce a larger proportion of the pigs required for bacon, and that we should to that extent have to import a less quantity of bacon.

The question, therefore, is, Are the terms of this Bill such as will achieve this object and bring about a definite expansion of production of home-produced pigs? Does this Bill give the producer such an amount of reasonable security as to encourage him to launch forth and equip his housing and other ancillary requirements and increase his herds of pigs? The one determining factor as to whether he will do so or not is the relation which the price he is to receive for his finished article—the pig—bears to the cost of production. That is the govern- 811 ing factor of the whole situation. If, therefore, the formula in the Bill should happen to be wrong, it is clear that the pig producer will not be encouraged to carry out the purposes of the Bill, namely, to increase the production of pigs and to allow this country to become more self-supporting in the matter of the supply of bacon.

This brings me to an analysis of the formula, which is, that there should be a basis of 8s. 6d. per cwt. as the cost of feeding stuffs. That is only for the first year of the three long contract periods. If you take the average which is to be received for the three years the amount will be reduced to 12s. 4⅔d. on the descending scale. That is the gross price which the pig producer is to receive. There are deductions which will have to be made from that price of 12s. 4⅔d. In accordance with the terms of the Bill, the Pigs Marketing Board will be able to make a deduction of 1s. 6d. per pig, and the Development Board is to receive a contribution from the pig producer. There is nothing in the Bill to limit the demands of the Development Board as to what it may charge to the pig producer on every pig. The approximate amount which the Development Board will have to demand in order to pay its own running expenses is not indicated in any way, but that board also is responsible for finding £50,000 for research.

Therefore, there will have to be a contribution made by the pig producer towards the cost of research. I admit that that cost is to be shared between the pig producer and the curer, though we do not know in what proportion. I do not think that I shall be overstating the case if I say that the ordinary running charge which will be made by the Development Board on the pig producer will not be less than 3d. per pig in all probability. Assuming that another 3d. per pig is levied in respect of the cost of research, that will make 6d. per pig, and that, added to the 1s. 6d. per pig which the Pigs Marketing Board under the Bill is allowed to charge, makes a total of 2s. to be deducted in respect of each pig.

There must be added to that deduction another 6d. at least in order to meet the cost of insurance of the pig against death, damage or loss of weight in transit. That is to be provided for under Clause 812 22. That will be not less than 6d. per pig. Therefore, we get a levy of approximately 2s. 6d. per pig deducted from the price that the pig producer will ultimately receive.

The whole question as to whether the formula is right depends largely upon the deductions which are to be made from the pig producer. On the basis of the producer selling an eight-score pig, the price per score will be reduced by just under 4d. Therefore, the net price that the producer will receive will not be 12s. 6d. per score as appears in the Bill, but approximately 12s. per score. I am trying to arrive at what the pig producer will receive. His net receipts are what is important, and not the gross figure. For the sake of argument we will say that the producer will receive a net price of 12s. per score, although I admit that some of the items in my calculation have been merely estimates.

The question is whether that price is right, whether 12s. a score on the basis of a cost of 8s. 6d. for feeding stuffs will bring about the large extension in the production of pigs that is desired and is intended by the Bill. Large-scale producers may possibly be able to operate on that figure. If they have good luck, large litters and low casualties, it may be that the formula will work satisfactorily, but the smaller producer finds his casualties a far bigger burden than does the large producer. The loss of one pig may not be a serious matter, viewed from the percentage point of view, in the case of a large producer, but the loss of one pig may be a very serious percentage in the herd of a small producer. I hope, therefore, that when my hon. Friend the Minister of Pensions replies he will be able to give us some assurance as to whether he and my right hon. Friend the Minister of Agriculture are satisfied that this net price is one that will be adequate for the producer.

In general, I wish the Bill well, and I think it will receive the general support of the House, even though I have thought it my duty to criticise some of its provisions. At a time like this when the policy of the country must be the increase of the fertility of the soil, it is clear that an increase in animal production must be on the right lines. Therefore, we have to attempt an increase in the production of pigs for bacon purposes, and the question will arise, how are we to keep it up in 813 case of war? We are acutely conscious of the difficult problem of how we are to be assured of an adequate supply of feeding stuffs wherewith to feed our increased herd of pigs when we have them. I think my right hon. Friend the Minister has that point fully in mind, and I have no doubt that he will consider that the right way to ensure a greater amount of available feeding stuffs for the increased number of pigs will be to see that some of our land, perhaps border-land or second-class land, which has fallen down to rough grazing, is taken into account. If we can get that land brought back into production, so that at least it might provide feeding stuffs for our cattle and pigs, then the pigs will play their part in return, by giving back fertility to the soil, by means of the manure we shall get from them. I feel sure that my right hon. Friend has that problem in mind and I hope that the Bill will meet with the success that it deserves.

§ Mr. Holdsworth

Before I left home this morning I had for breakfast a little bacon. I am certain that if the little pig from which that bacon came had known that 62 pages of a Bill were to be devoted to the subject of how to produce more pigs, the bacon would have curled up more than it did. Of all Ministers the Minister of Agriculture must feel most disheartened. He comes almost every week with a fresh present for the agricultural Members and he finds himself surrounded continually by a band of Oliver Twists, always asking for more. The hon. and gallant Member for Maldon (Sir E. Ruggles-Brise) complains that the Bill does not give him enough. He says that he knows they are going to get £1,000,000 in a year, but bacon production is a long job. He desires that the man should not only get a better price for his bacon, but one that will enable him to buy off his capital assets before the subsidy goes off.

The hon. and gallant Member contradicted himself. He said that the number of pigs to be subsidised was not big enough in the third year. In his first argument he suggested that the pigs might not be produced because the subsidy did not extend over a long enough period, but his second argument was a complete contradiction. He said the number was not big enough and that probably more pigs would be produced in the third year, and consequently they would not all 814 be able to enjoy the subsidy. It is astounding, after all the help that agriculture has had from this House, that we should still find agricultural Members complaining of the inadequacy of the gifts extended to them. If one takes into account the allowance for rates, they have had more than £30,000,000 a year in subsidy. I could go into a great many more figures in answer to the hon. and gallant Member for Maldon, but I want to say a few words about the speech of the hon. Member for Don Valley (Mr. T. Williams). With a good deal of the speech of the hon. Member for Don Valley I was in thorough agreement. His complaint about the Bill is not that there is too much regulation but that there is not enough. There are 62 pages of it, but I think he wanted zoo pages of restrictions, and then he would be perfectly happy.

§ Mr. T. Williams

One page would be enough.

§ Mr. Holdsworth

I would ask the right hon. Member for Hillsborough (Mr. Alexander), who I assume will wind up the Debate to-night, to tell us whether he is prepared for the regulation of imports. The hon. Member for Don Valley said that his party were prepared to regulate imports on certain conditions. The right hon. Member for Hillsborough is a very striking ornament in the great Cooperative movement. I do not believe that there is any member of that Co-operative movement who has ever stated that they are prepared to support the regulation of imports. I wish the right hon. Gentleman would confirm or deny what the hon. Member for Don Valley said on that particular point, because we ought to have unity on this matter in the party above the Gangway.

There is one further point in the speech of the hon. Member for the Don Valley, in which he said that the trouble with this industry was that it was permeated by individual initiative and private enterprise. He cited the success of Denmark. Two or three years ago I took the trouble to spend a fortnight going round Denmark examining their bacon industry. It is purely voluntary, absolutely run by private enterprise. Every man is allowed to use his individual initiative. The astonishing thing to me about the bacon industry in this country is that we have better land here than they have in Denmark. It is not the case of Denmark 815 sending goods into this country because they pay lower wages, because that is not true, nor is it the case that a man there can purchase his land more cheaply and that it enables him to produce more cheaply. It is because they have been wise enough to co-operate with one another in a voluntary way.

§ Mr. T. Williams

Did not the hon. Member discover when he went to Denmark that their individualism expresses itself in the best form of co-operative system there is in the world?

§ Mr. Holdsworth

I agree that private individualism is the thing when you allow it to work collectively but from the voluntary point of view. Then I have nothing whatever to say against it, but that is not what the hon. Member suggested. He said, "None of this business. Let us compel them to join." Do not let the hon. Member cite Denmark as being a splendid example of nationalism, when it is absolutely founded upon the voluntary system. I could not help thinking when I listened to the Minister of Agriculture, of the long Debates we had upstairs in 1933 when we were discussing the Agricultural Marketing Act. We spent weeks on that Bill. We were told that it was to enable marketing hoards to be set up, coupled with quota restrictions on imports. I remember an Amendment that I moved to ensure that before there was regulation of imports marketing boards should be instituted. I put down an Amendment that the marketing board should have been in existence a certain time before there was regulation of imports. That Amendment was defeated. I used at that time the argument that marketing boards were not really wanted but what was wanted was restriction of imports, and I think the speech of the hon. and gallant Member for Maldon—I do not want to misrepresent him—implied that what they were really concerned about was restriction of imports. The argument that was used at that time was that dearer prices would result because of inadequate protection for the consumer. I do not want to use a phrase which we all detest, but every word that I said has been justified. One reason why we are discussing this Bill is because the scheme has broken down. The Minister of Agriculture was pianissimo on that particular note.

816 The Bill has arisen because the previous Marketing Act completely failed to meet the needs, as far as the curers were concerned. In 1933 the right hon. Gentleman who is now the Minister of Transport made a remarkable speech, the most remarkable I have ever heard from him. I remember his marvellous Free Trade speech, in which he said that one of the great difficulties in the House was to convince hon. Members of the entirely new set of circumstances which confronted the world, namely—it was a new phrase to me—the economics of glut. After saying that in times of glut restriction was essential the hon. Member referred to me because on one Amendment I agreed with him, and he said: Alliance with such a quarter is indeed suspect. The alliance prior to 1931 had been rather long. One reason I mention this is because the glut has been stopped effectively by the regulation of imports and scarcity has been assured as the result. I am going to repeat some figures given by the hon. Member for Don Valley. The imports in 1932 were 11,395,000 cwts. at a cost of £30,189,000. In 1937 the imports were 6,925,000 cwts., at a cost of £29,289,000. In other words the cost was 53s. per cwt. in 1932 and 84s. 7d. per cwt. in 1937. In 1932 the import of hams was 801,000 cwts. at a cost of 68s. per cwt., a total amount of £2,723,000. In 1937 the imports had gone down to 675,000 cwts., but the money paid had increased from £2,723,000 to £3,158,000. In fact, with 15 per cent. less in weight we paid over £400,000 more for it. If for this increased price we had received in return a greater production in this country there might be something to be said for it; but that point cannot be made. There has been very little increase in the home production of bacon from 1932 to 1937. I believe the figures are an increase of 600,000 cwts., and when you compare that with the total amount of imports which have gone down, home production is hardly worth talking about.

Some time ago a petition was presented to this House relating to the cost of living. I am not suggesting that the 1932 price was a remunerative price for the producer, but I am suggesting that there is a remunerative price somewhere between the two, and that it is this artificial restriction which has driven up 817 the price to what it is to-day. Reference was made by the Minister to the fact that the people of Denmark had reduced the quantity of bacon. Yes, they began to do so in 1932 when I was there, Out not because they wanted to reduce the quantity of bacon but because they aw that one market was to become a limited market.

§ Sir E. Ruggles-Brise

The one market which they themselves had glutted.

§ Mr. Holdsworth

I have yet to learn that it is a crime for people to try and sell a commodity cheaply, or that it is to be called glutting a market to enable poor people to buy cheap bacon. We do not buy Danish bacon because we love the Danes. We buy Danish bacon because it is of a standard quality at a reasonable price, and the consequence of all these restrictive measures is that bacon has largely disappeared from the working man's breakfast table. The working man cannot afford to buy it as a conse