HC Deb 07 May 1964 vol 694 cc1541-64

7.31 p.m.

The Under-Secretary of State for Scotland (Mr. J. A. Stodart)

I beg to move, That the Calf Subsidies (England and Wales and Northern Ireland) (Amendment) Scheme, 1964, a draft of which was laid before this House on 23rd April, be approved. Would it be convenient if we also took the other two Statutory Instruments on the Order Paper? The two Schemes deal with calves and the Order deals with more mature animals.

Mr. Speaker

It is in order to discuss them together if the House so pleases.

Mr. Stodart

Thank you, Mr. Speaker.

May I start with the two Schemes relating to the calf subsidy, one in Scotland and one in England. I do not think I need dwell on them long, because they are simple. All that the two amendment Schemes do is to give effect to the increase of 10s. in the subsidy for steer calves born on and after 1st January, 1964. As the House will know, this was an item in this year's Annual Review, and I do not think that I need detain hon. Members long with explanations.

There are, however, three points to which I should draw attention. First, the date 1st January has been deliberately chosen to cover all spring-born calves and to benefit the rearer of steer calves of the beef breeds, the great majority of which are born before April. There have been objections on previous occasions when the calf subsidy has been changed in its rate on 1st April. The objection was that it was not sensible to do this in the middle of the spring calving season and that it might put a considerable strain on the honesty of those applying for the subsidy. I hope that we have done better this time.

The second point of note is that the Schemes which we are amending cover calves born only up to and including 29th October this year. In case of misunderstanding, I should repeat, as is stated in the Annual Review White Paper, that the calf subsidy is to be continued for a further three years from that date. That means that a Motion to approve a new Scheme in draft will be laid before the House in due course.

Thirdly, there is the cost of these increases. For Scotland, this is estimated to be £100,000 in this financial year and £125,000 in a full year. For England and Wales and Northern Ireland, the equivalent figures are £400,000 in this financial year and £625,000 in a full year.

Mr. Roderic Bowen (Cardigan)

Would the hon. Gentleman split those figures between England, Wales and Northern Ireland?

Mr. Stodart

I will give that information if I can before I sit down, but I do not think that it is available.

That this production grant has been successful is shown by the fact that since 1953 the number of calves certified in Scotland—and the House will forgive me if I give the Scottish figures first—rose from the vicinity of 250,000 to over 425,000 in 1963, an increase of 70 per cent. In the rest of the United Kingdom, they have gone up from 1¼million in 1953 to 1,843,000 in 1963. Therefore, I think that I may invite the House approve the Schemes which are necessary to authorise the higher subsidy for the calves born within the period covered by the existing Schemes.

I turn to the Fatstock (Guarantee Payments) Order, which was laid before the House on 26th March. I do not pretend that this is as simple in its application as the two Schemes which I have just described. The purpose of the Order is to provide authority for guarantee payments on fatstock to be made for the period which began with the opening of the present fatstock guarantee year on 30th March. It supersedes the existing Order which, after some amendment in 1961, has been the authority for these guarantee payments since March, 1960. The main difference between the existing Order and what we now propose lies in the changes in the guarantee arrangements for sheep and cattle which were announced in the White Paper entitled the Annual Review and Determination of Guarantees for 1964.

The House will no doubt observe that the new Order has separate sections for cattle and sheep and another one for pigs. The system which was in operation up to the end of March this year worked well enough, but it fell short in one important respect. It did not provide much incentive—and, if I may say so frankly, as a producer, it did not provide enough incentive—to farmers to pay attention to whether the market was being weakened by being over-supplied or was strong because of shortage.

What is now proposed is that the seasonal scale of standard prices for fat cattle and sheep will remain. This was worked out, as in previous years, after the recent Price Review. These prices, which vary according to the seasons, are at their peak about the beginning of April when they reach 184s. 6d. per live cwt. for cattle and 3s. 7¼d. per lb. dressed carcase weight for sheep. The price for cattle reaches its lowest level of 152s. about the beginning of October and lasts throughout that month. The lowest price for sheep, which falls to 3s. 0½d., lasts a good deal longer—from 10th August until 8th November.

I should explain the workings of the standard price in relation to the deficiency payment. The difference between the standard price in any week and the actual price realised in the market will form a nominal rate of deficiency payment. If this difference is more than 27s. per cwt. in the case of cattle, the amount of the deficiency payment will be reduced on a graduated scale. The maximum reduction can run to 12s. 6d. per cwt. If the difference between the standard price and the actual price is less than 23s., an addition to the deficiency will be made, again on a graduated scale, up to a point where producers may receive on average a total return of 8s. above the standard price.

I am certain that the House does not believe that this is a simple scheme. I should like, therefore, to illustrate with what, I think, is a simple example how the new arrangements will work. At one period during the year—in the forty-fifth week, which falls at about the beginning of February—the standard price for cattle is 160s. per live cwt. If, during that forty-fifth week, the average market price turns out to be 135s., there would be a nominal deficiency of 25s., the difference between the two figures. The figure of 25s. falls within what I can best describe as the no man's land between 27s. and 23s. and, therefore, the deficiency payment would be 25s.

Suppose, however, that the market was weak and the average was only 125s. There would then be a nominal deficiency of 35s. This would carry a reduction of 2s. 8d. from the 35s., so that the payment would be only 32s. 4d. If, on the other hand, there had been what farmers know as a "flying trade" in the market, averaging out at 145s., there would be a deficiency of only 15s. This would win a bonus of 2s. 8d., making 17s. 8d. on to the 145s.

In the case of sheep, the scale of reductions will begin when the deficiency is more than 6d. per lb. dressed carcase weight and it might rise to as much as 4d. If the deficiency is less than 4¼d., there will be a supplement or bonus up to a limit of 1½d. above the standard price and that will be included in the guaranteed payment.

A point arises concerning the marketing of sheep. The Government are wisely anxious to encourage the production of lightweight lambs and, therefore, the first 2d. of any abatement will not apply to lambs of 38 lb. dressed carcase weight and under. A result of this, which is of great interest to Scotland with her vast areas of hill land is that hill farmers whose lambs are light—blackface lambs are light in any event—and who are obliged by circumstances over which they have no control to put their lambs on the market at a time when marketing reaches its peak, namely, in the autumn months, and when, accordingly, reductions in the deficiency payments may be high, will have protection given to them because any reductions of abatements in the deficiency payments will not bite to the same extent.

I come now to the second stage. When the fatstock year ends at the end of March, the average of all market prices will be calculated. The difference between this and the guaranteed price for the year, which is 170s. in the case of cattle, will form the all-over deficiency payment. The weight of all fat cattle which have been certified will be multiplied by this deficiency. If the total of that sum comes to more than what has been paid out in guarantees, a further flat-rate payment will be paid out on every animal which has been certified.

The only other change of substance in the Order is in the feed formula arrangements for pigs, under which the guaranteed price is related to the cost of a standard feed ration and is subject to adjustment in accordance with changes in the cost of the ration. The present arrangements were made some years ago and since then tremendous strides have been made in achieving a better food conversion rate.

The method now proposed is that for every change of 4d. per cwt. in the price of the ration, the guaranteed prices will vary by 3d. per score deadweight. A change in the basis of this adjustment was also announced in the White Paper and the rewording of the relevant article in the Order permits this change to be put into effect. That the scheme has its complexities, as I said at the outset, I should be the last to deny, but so also—and, in my view, even more so with things that were called rolling averages and stabilising limits for cattle and sheep—had the one which we have recently discontinued.

I do not pretend that this is to be regarded as a magical solution to the difficulties of ensuring an orderly supply of meat to our markets. The new arrangements will, however, make it well worth while for farmers and other producers to study the strength or the weakness of fatstock markets in precisely the same way as it pays a farmer to pick the right week in which to sell his wheat. It will certainly discourage the tendency, which has sometimes appeared, to think that no matter whether the trade be good or bad, the guarantee will bail a farmer out.

The Order is concerned with methods and procedure. The changes involved are acceptable to producers generally and I commend the two Schemes and the Order to the House.

7.47 p.m.

Mr. Timothy Kitson (Richmond, Yorks)

I wish to refer to two points in the Calf Subsidies Scheme. I should like my right hon. Friend the Minister to draw the attention of his certifying officers to paragraph 5 of Statutory Instrument No. 1364. I know from my own experience and that of many of my constituents that it is extremely difficult to get calves certified at the age of eight months as suggested in the Scheme. We have encountered the difficulty of having to wait probably until calves have reached about a year before the certifying officer will punch them. This creates difficulties.

Only recently, I have written to my hon. Friend the Joint Parliamentary Secretary to tell him of the case of one of my constituents who, realising the extreme difficulty that he now has of getting the calves certified at the age of eight months, left it until they were about a year old. He applied for certification in January. The certifying officer was due to arrive a month later. Just before he arrived, there was suspected fowl pest, which eventually was confirmed. The certifying officer, quite rightly, did not then appear on the scene for another six weeks.

By that time the calves had broad teeth. The case went to appeal, but it was turned down. I am sure that this sort of thing would not arise if the certifying officers were accepting calves at the suggested time of eight months.

I should also like to refer to the exclusion of Friesians. Everyone will agree that the majority of barley-fed beef are Friesian calves. It is only the fact that the Friesian Society still chooses to call it a dairy breed that keeps Friesian cattle out of the scheme. I consider this to be extremely unfair. The best shorthorns and red polls can still produce a cow which will give eight gallons of milk, which is far more than many Friesians w ill produce, and yet they are eligible. Friesian heifers are producing beef calves in the same way that dual purpose cattle do.

This situation needs to be carefully studied. I know that a number of branches of the National Farmers' Union are now justifiably putting forward resolutions to this effect, and I would have thought that the next time the scheme came before the House we should carefully consider the inclusion of Friesian cattle, because if Friesian calves are required for barley feeding we ought to consider whether Friesians should not become eligible for this subsidy.

I should like to say how grateful I am to my hon. Friend the Member for Edinburgh, West (Mr. Stodart) for at last explaining the fatstock guarantee payments arrangements. I have tried to explain them on a number of occasions, and I am now a little better equipped, having heard him give a very reasonable explanation. The only problem is that there are few farmers who like to put anything on the market unless they know exactly what they will collect at the end of the day. With his explanation, my hon. Friend has reasonably pointed out that the difference between what they expect to get and what they get is only very small. I am sure that when the farming community gets used to working the new guarantee, it will be satisfied with it. I am certain that the Government are right to ensure that farmers work to the markets. For far too long this need has been ignored, and this Scheme is a step in the right direction.

7.53 p.m.

Mr. Emrys Hughes (South Ayrshire)

I agree with the hon. Member for Richmond, Yorks (Mr. Kitson) that we have had a very lucid explanation from the Under-Secretary. It has been very interesting to see a Scottish Minister instead of an English Minister at this debate on agriculture. We hope that this trend will continue.

There are some matters on which the Under-Secretary might have given us a little more enlightenment. For example, when the Price Review was analysed in the pages of the Scotsman by that newspaper's very able agricultural correspondent it was pointed out that it amounted to an increase of £4½ million over the previous year. This scheme is part of that sum. The figure of £4½ million seemed familiar. Last week, I tried to elicit some facts about the rents paid by Scottish farmers to Scottish landlords. Curiously enough, they amounted to £4½ million. To some extent, at any rate, what is happening is that the taxpayer is assisting the farmer to pay rent.

Both sides of the House generally accept that we want to do our best to ensure a living wage for the farmer and to improve agricultural output, but there is always the lingering feeling in my mind that anything granted to the farmer to improve agriculture too often finds its way into the pockets of the landlords. I should like the Under-Secretary to tell us what percentage of this money goes into the pockets of the landlords.

There is a great deal of criticism of agricultural policy in Scotland. Although I was not present, I know that the Under-Secretary came in for much criticism at a meeting of the Scottish National Farmers' Union, in my constituency. In the Scottish Farmer the following week he was not exactly regarded as the last word in help to the farmer. Some of the criticism against him has been unjust because it should have been directed against those in the upper circles of the Government who are more responsible for agricultural policy.

The fact remains that there is considerable interest in the fact that both the Secretary of State for Scotland and the Prime Minister are large landlords in Scotland. Naturally, the question is whether any of this subsidy will percolate to rich landlords and landowners who do not require subsidies. The interest arises especially when we hear that the Prime Minister, for example, owns 60,000 acres of land on the borders of Scotland. It is natural to ask to what extent these agricultural payments percolate to large landowners who do not need a subsidy. I do not wish in any way to attack the landlords of Scotland unjustly. It may be that they are on the poverty level.

Mr. Keith Stainton (Sudbury and Woodbridge)

On a point of order. Is it in order for references of this type to be made?

Mr. Deputy-Speaker (Sir Robert Grimston)

I think that they are just on the fringe of order, but I am listening very carefully to what the hon. Member for South Ayrshire (Mr. Emrys Hughes) is saying.

Mr. Hughes

It may be on the borders, but I am talking about the borders geographically as well as in argument.

Perhaps the Under-Secretary would like to make some attempt to say how much in the £ of the calf subsidy ultimately finds its way to the pockets of the large landowners. There is considerable indignation in Ayrshire and other parts of Scotland because rents are going up. I should like some assurance that the money being paid to farmers will not be paid to landlords and so not help farmers.

Mr. Kitson

indicated dissent.

Mr. Hughes

I am merely putting the grievance which farmers have put to me. I do not know whether the hon. Gentleman is familiar with the Scottish National Farmers' Union.

Mr. Kitson

I am a member of the N.F.U. in England.

Mr. Hughes

I am not dealing with England. I am not dogmatic about England. I would not dogmatise about the hon. Gentleman's constituency. I am trying to elicit information and to satisfy the farmers in my constituency, some of whom say that their rents have gone up by 125 per cent. and that some of the subsidy is going to the landlords.

I have tried to get the figures by questioning the Secretary of State for Scotland and the Under-Secretary, and I have asked for figures of incomes of landlords in the border counties and Ayrshire and Argyllshire in the same way that the English Minister of Agriculture estimates the incomes of farmers. But I cannot get those figures.

Mr. Deputy-Speaker

The hon. Gentleman cannot go into detail about figures. He has been quite entitled to complain that part of these guaranteed payments are going to landlords and not to farmers, but if he gets beyond that point and into detail, as to the amounts, figures, and so on, he is getting out of order.

Mr. Hughes

Thank you, Mr. Deputy-Speaker. I was only trying to elicit information.

I am surely entitled to ask for information before we pass this Order. What percentage, for example, of, say, £250,000 or £400,000 does not go to the farmer at all, but goes to the landlord? I have tried my best to get these figures by question and answer, but as soon as we ask questions of this kind down comes the iron curtain of silence. I should like to know why the Minister is so reticent when discussing the income that the landlord gets from these subsidies.

8.1 p.m.

Mr. Cyril Bence (Dunbartonshire, East)

I want to support my hon. Friend the Member for Central Ayrshire (Mr. Emrys Hughes). He is on a very important point. We are reaching a stage where we are giving considerable support from this House to all branches of industry, including the farmers. I am all in favour of supporting agriculture. The soil is the most important heritage man has, and it is important that we should support the rearing of livestock, and support the farmer in keeping the soil in good heart and fertile, so that we can produce the maximum amount of food, whether it is livestock, vegetables or cereals for consumption.

I support this subsidy so that the person who shall reap the benefit of it shall be the farmer and those who need the product, the housewives and the people in general. But when the State intervenes in this way and gives subsidies for the specific purpose of rearing calves into beef, we must have parallel regulations to ensure that not one penny of these subsidies accrues to the advantage of anyone except the rearer of the calf who produces it into a steer to butcher or put on the market. If any of it passes to dealers, farmers, and landowners who do not perform any particular function in the rearing of the calf, I think that we are misguided in granting these subsidies.

It is shocking that we should pay these subsidies for Scottish beef, some of the finest beef in Europe. The farmer gets a guaranteed price, but he gets no benefit at all out of this subsidy with the guaranteed price. It is the dealer who markets these cattle. I have heard it said that the farmer benefits from the selling of this beef on the continent of Europe; but he does not. The farmer is paid a Support price, a fixed price. It is only when the market is so denuded that the price passes above the guaranteed price that the farmer benefits. When the market price is below the guaranteed price, the person who gets the benefit of this subsidised beef is the French housewife and the British dealer who can perhaps get a better price on the French market. The British farmer is not benefiting at all.

We have an Order here which to all intents and purposes—and both sides of the House support this purpose—is to help the Scottish farmer so that he can produce good beef for the housewife. We find that the dealer, not the farmer, exploits the rearing of these fine cattle, subsidised by the Scottish taxpayer, and that instead of offering it through butchers' shops to the housewife it goes to Paris, Nice and Cannes, which is where they are getting the benefit.

I should like to make sure that none of these subsidies pass to the dealers and wholesalers who are exporting these carcases of mature cattle to the Continent of Europe.

8.5 p.m.

Mr. William Ross (Kilmarnock)

These Statutory Instruments are very important. I am surprised, in view of the number of letters I have received from the farming community over the last six months—certainly prior to events just a month ago—how little interest there is in the House, particularly by those Members who are supposed to represent agricultural constituencies. The only Scottish Members here are Labour Members, apart from the Minister, whose duty it is to be here. It is also his pleasure and his profit, and he declared in a graceful way, his own interest.

The absence of hon. Members is rather shocking, which, of course, does not surprise me. When we had an agricultural Bill they were not here. Indeed, it may well be that they have already lost heart. In any event, we are not here to discuss the merits or demerits of Scottish Unionist Members, as they like to call themselves, but rather the merits or demerits of these Instruments. Does the hon. Gentleman wish to interrupt, because I will give way if he does?

Mr. Stainton

I was wondering where the hon. Member for Workington (Mr. Peart) happened to be.

Mr. Ross

If the hon. Gentleman is going to consider where all his hon. Friends are, he will spend the rest of the week considering where they are. He will recollect that this Scheme was introduced by the joint Under-Secretary of State for Scotland, and I do not think that it is inappropriate, that being the case, that I should have a word or two to say on it. I hope that he does not begrudge me this opportunity because it is not often that I weary the House.

Mr. Bence

You never weary the House.

Mr. Ross

What the Government have done is eminently sensible, particularly the change of date, and, of course, there is the additional 10s. for steer cattle. It is noticeable that this Scheme ends on 29th October, so it will be left to the next Government. The hon. Gentleman said that it was to be continued for another three years. He is rather anticipating things. It is the intention of the present Government to continue it for three years, but whether with or without changes I do not know. Was this part of the deal that was made with the farmers? Are the Government committing themselves in relation to future events as well as to this year? I should like a little more information about the further three years, and whether the subsidy is going to be at these various rates. The importance of this to Scotland can be seen in the figures given. I think that the cost in this financial year is to be £500,000. In spite of that, one-fifth will go mainly to Scottish hill farmers—£100,000. It is usually reckoned that Scotland's interest in such matters as these amounts to 11–80ths. This is greater than 11–80ths. Scottish farmers, especially small ones, felt that they were sold down the river by the Government in connection with the M.A.P. grants. We shall probably discuss that subject on Monday night, when we discuss winter keep.

My hon. Friend was right to draw attention to the considerable interest of hon. Members opposite in this matter. I read with interest about the 60 farms which a certain Member of the Government has, only six of which he farms himself. His main interest is hill sheep. No wonder he was at Turnberry, and no wonder my hon. Friend was not invited. I do not think that anybody would disagree with the changes that are being made this year. I was not surprised when the Minister told us about the increases in the years which he chose, but he could have told us that in those years when the Government switched from milk to beef there was a considerable reduction in the number of Scottish farmers in the milk business. I remember hearing my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) quoting with effect how many farmers had gone out of the milk business in that year. Most milk producers in Ayrshire were badly hit.

We were given figures in respect of the calf subsidies, but no figures in respect of the Fatstock Order. I congratulate the Joint Under-Secretary for explaining the Order so lucidly. He said that he did not know what it meant until he had had it explained to him. I thought I knew what it meant until I heard it explained. I looked for the figure of 130s. that he spoke about. It is not in the Order. The Minister indicates that he has it in a document, but it is not in anything that is on the Table. He is possessed of information that we do not have.

I have no desire to weary the House by asking, a lot of questions, but I want to ask one. I should like a better explanation of paragraph 7(2). I should like to know how the scheme is worked in relation to animals imported of[...] brought into the United Kingdom from outside. Who gets the deficiency payment? It can hardly be the producer, because he is not in this country. It would be interesting to know the reason for this sub-paragraph, how the scheme works, and who receives the payment.

It is very easy to pick out one or two points from an Order and ask for explanations, and not to speak long enough to enable the Minister to obtain the necessary information. He need not worry about that. I shall not catch him out in that way.

I was interested to hear that the main purpose of the Order is to make changes that will improve the week-to-week position in the market, and even out seasonal differences to a certain extent. The Minister also said that a bonus is being provided for the farmer, to allow him to study the market. It is a pretty poor thing, with the British housewife dependent on her weekly joint, for this rather chaotic type of procedure to be gone through. There are two weaknesses in the system. First, the housewife has to pay too high a price and, secondly, the Government will have to pay deficiency payments.

If we look at the first part of the Fatstock Order we find that certain people have to be consulted and that everything has to be done with the consent of the Treasury. Although no sum has been supplied to us either in the Explanatory Note to the Order or in the statement by the Minister—unlike the position in relation to the calf subsidy—it is implicit that this will cost the country several million pounds. I should like to know how much it will be. I know that the Minister will say, "It all depends." But it will cost an awful lot just now, because there is little or nothing coming in. It is not costing him much, but it is costing the British housewife a lot. My wife often holds up our Co-op joint and says, "Do you know how much it cost?" I cannot these days begin to guess what it costs. It is fantastically costly to feed a family with decent-quality meat.

A butcher whose supervisory function covers a considerable portion of Ayrshire has told me of the difficulties in which he and other butchers find themselves in trying to obtain any meat at all. We have put down Questions about cattle being exported after calf subsidy has been paid on them. It is no good the Minister's saying that it is only 1 per cent., 1½ per cent. or 2 per cent. The subsidy has been paid in order that people may be able to have the meat on the home market. It was all supposed to be for the benefit of the consumer, as well as the producer, but evidently the consumer in this case is somebody on the Continent.

The Minister says that there will be no deficiency payment in respect of this, but I think that there might be. I am pointing out the weakness of the position.While this kind of thing goes on the Minister cannot satisfy one of the fundamental requirements, and one of the underlying reasons for doing this at all, namely, our ability to satisfy the home market.

How often during the discussions on agriculture and the discussions which we had with the farmers did we hear of their concern about getting their proper share of the home market. Whenever another market seems to be more profitable, they bypass the home market, despite the fact that the payments made in respect of them are for the benefit of the home consumer. Are the Government thinking about this? So far as I can see there is little or nothing that they can do about it on the present basis of marketing in this country.

Mr. Kitson

Surely, from the point of view of the farmer, it is extremely difficult. If he puts an animal in the market he cannot know whether it will be bought by a Frenchman, a Dutchman or an Englishman. We cannot blame the farmers for putting business in the market for overseas buyers. Much of the cattle going overseas consists of fat cows, which is a good thing and helps to bolster up the market.

Mr. Ross

It may well be a good thing, but who has to eat what is left? The best Scots beef is never seen in Scotland. It may well be that better prices are obtained for it in the South, but we in Scotland still pay our taxes and a considerable contribution to the guarantees. The Minister knows how high they were, and if he cannot tell us the figure for this year perhaps he will refer to the figure for last year so that we may know what we are talking about and can appreciate what is involved.

No one begrudges the farmer his ability to produce beef, and it may not necessarily be the farmer who is to blame. It may be the exporter or the dealer. The weakness to which I refer is in the way in which the foodstuff is marketed, the fact that the Government are in no position properly and adequately to guarantee to the consumer that he will get the benefit from what he has paid for and paid pretty dearly at certain times. Very often the market is weak when there is plenty to choose from. But first the taxpayer has to pay through the deficiency payment, and often at a higher rate than the Minister thinks.

A decent marketing scheme may well be forced on the farmers, even by this Government. We have been considering other matters in which standard quantities are required, for example, in relation to cereals. The Measure which was passed includes power to do the same in respect of fatstock. Sooner or later, we shall realise how chaotic is a position in which year after year we go on not knowing what it is to cost anyone. It is the housewife who suffers. We shall be driven to realise the need to establish some proper commodity system. That is bound to come and, from the point of view of the proper organisation of agriculture, the sooner it comes the better.

A few farmers would be prepared to argue about this. They want security. Let us consider what we are told about the hill sheep farms. Those farmers have to bring their animals to market at a particular time. They can hardly study the market, and what study they can undertake extends over a very short period. They may suffer at the hands of dealers. That does not worry the men in the lush pastures.

I have not paid much attention to the question of pigs and the food conversion rate and the rest of it, but it is important to notice that when the rate goes up to 4d. a cwt. the guarantee will go up 3d. a score deadweight. That is good. When the cost of living for pigs goes up, we put up the guarantee. We cannot do it for the old-age pensioners, but we can do it for the pigs. How much is involved here? Do the Government know? It is difficult for them to estimate. Obviously they anticipate that there will be an increase in relation to the beef price and the conversion rate.

I have a brother-in-law in the feed business, and so I have to listen to a great deal on this subject. I am interested to know on what the Government base their formula and whether it is accurate or not. Is it something which is incurred against an eventuality? Or are we convinced that the eventuality will come about and there will be this steady increase in relation to the basic price? Once we tend to make such provisions we tend to guarantee that there will be an increase. People are prepared to take advantage of this in the knowledge that the Government will increase their guarantee by 3d. per deadweight score.

Although we welcome the improvements that have been made, it must not be assumed that we are not critical of the continuance by the Government of a system which contains obvious weaknesses, as we have seen, and which costs the taxpayer pretty dearly. It may not have cost so much last year, but certainly three years ago we paid dearly for this type of guarantee without gaining the advantages which we should like to see accruing to the consumer.

8.27 p.m.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. James Scott-Hopkins)

I will try to answer the various points which have been raised in this short debate. My hon. Friend the Member for Richmond, Yorks (Mr. Kitson) referred to the lower age limit of eight months for certification for the Government subsidy. I am sure that he will accept that there has to be a limit and it has been set at eight months. So far as I know, there has been no difficulty for farmers or the N.F.U. about the general application of this period. The application form advises that certification should be done before 12 months, but the calf cannot qualify before the age of eight months. I will look into the case he mentioned. I am more than willing to examine specific difficulties arising from this scheme.

My hon. Friend raised the general point about Freisian heifers and asked why they do not qualify for the heifer subsidy. He knows the argument. The purpose of the Order is to give an incentive to beef producers. Whilst I accept his figures about milk producers and other breeds, there would be no way of ensuring that the Freisian heifer qualifying for calf subsidy for beef production would not find its way to the dairy herd. It might or might not. Of course, my hon. Friend might think it a good thing if the animal reached the dairy herd because more calves would come from it.

Mr. Kitson

This happens with the short-horned Red Poll cattle at present. They can get the subsidy, but can also get into the dairy herd. That is the difference I do not like.

Mr. Scott-Hopkins

They are a separate type of animal used mainly for beef breeding. Much as I would like to, I can offer my hon. Friend no hope on this subject at present.

The hon. and learned Member for Cardigan (Mr. Bowen) asked for the Welsh figure. I have not separate figures for England and Wales, but I can tell him that the figure for Northern Ireland was 50,000, so the figure for England and Wales together was 350,000. I do not know whether that will help him very much, but it narrows the field slightly. He can exclude Northern Ireland from the total.

The hon. Member for South Ayrshire (Mr. Emrys Hughes) asked about the Annual Price Review in relation to these two Statutory Instruments. Both he and his hon. Friend the Member for Dunbartonshire, East (Mr. Bence) asked how much of this money was involved and where it went. This is a subsidy paid for calves. It goes to the producers when the calves have been certified after reaching the age of eight months.

In the case of fat cattle, the deficiency payment goes to the person marketing certifiable beasts—that is, most usually, the producer. I am not in a position to say what the producers do with it when they get it. I have no figures at my disposal showing what the ordinary Scottish farmer does with the money he receives from various sources. I was also asked what percentage of this went into landlords' pockets. That is really too far away from the Statutory Instruments for me to be able to give a coherent answer. It is not relevant. What farmers and producers do with fatstock deficiency payments and calf subsidy payments is their affair.

The hon. Member for Dunbartonshire, East raised the question of the export of cattle and other fatstock to Europe and this point was taken up by the hon. Member for Kilmarnock (Mr. Ross). The hon. Member for Dunbartonshire, East made a tremendous song and dance about subsidising housewives in the various parts of France with which he is presumably familiar, but this is not what happens.

Mr. Bence

indicated dissent.

Mr. Scott-Hopkins

The hon. Member mentioned Paris, Cannes and Nice. I assumed that he was familiar with these places.

Mr. Ross

He could not pronounce them as well as the hon. Gentleman can.

Mr. Scott-Hopkins

That was because he was pandering to the House's well-known wish to understand what he was saying.

The deficiency payment goes to the producer. The British housewife buys her meat at the world market prices. The deficiency payment makes up to the producer the difference between that price and the guaranteed price which is determined as a result of deliberations between the Government and the farmers during the Annual Price Review.

The animal is sold at the world market price at the time. From that moment onwards it is no concern of the producer where it goes. It may well be that it goes overseas. But, as the hon. Member for Kilmarnock said, we must not exaggerate the situation. He put the current figure for imports at only 1 per cent. or 2 per cent., and it must be remembered that during the last three months exports to Europe have been running at a quite unusually high level. This is because there has been a shortage of meat in Western Europe generally.

An important cause has been the low level of supplies from the main exporting countries. The reasons for this go back as far as the winter of 1962–63, which created these shortages by upsetting the calving programmes. The demand for meat is stronger. None of the fatstock deficiency payment or calf subsidy payment goes to anybody outside this country. It goes to the producer here.

I must emphasise that we are concerned with only about 3,000 of the 12,000 cattle exported during March. As my hon. Friend the Member for Richmond, Yorks. said, the rest are of types not eligible for subsidy. If we prevented our meat being exported to the Continent, they would have to get supplies from other sources, namely, from the traditional exporters to our own market. So, in the long run, there would be no advantage to the housewife here, let alone to producers or traders here.

There can be considerable advantages in this small trade. I must again emphasise that it is a small trade in relation to total slaughterings. In January and March of last year there was a surplus of meat here, which meant that prices were right down. This kind of trade is a very useful outlet and helps to put a certain amount of floor into the market.

Mr. Bence

This is an extraordinarily long way round to get to the point. The point surely is that the farmer gets no benefit from this until the world market price exceeds the guaranteed price. It has not done that. We are still making a deficiency payment. The farmer gets nothing out of it. The housewife, especially in Scotland, where much of this beef is going, because it is a big beef rearing area, gets no benefit. Every butcher says that there is a shortage of beef going on to the market in Scotland. That is why we are paying 8s. 6d. per lb, for sirloin—it is not being pitched there.

During the last year or two the Government have put on quotas and imports have fallen, so the market has narrowed. The people getting the benefit from the high Continental prices are the dealers. The person paying the high price is the consumer, the person who has to buy on a market where the volume of beef being pitched has fallen.

Mr. Scott-Hopkins

I am sure that the hon. Gentleman made a slip of the tongue. He did not mean that the Government had put quotas on beef. That only applies to the understanding on bacon market sharing, which was arrived at last October. I am sure the hon. Gentleman would wish to correct that statement. There is no question of quotas on exports of beef to this country.

The hon. Gentleman's comments as to who is benefiting from this are not accurate. He must read the Order. When the deficiency payment falls below a certain rate, there are bonus payments. Obviously, if there are buyers who want to buy the meat in order to send it to a strong market elsewhere, this will strengthen the market and improve the position for the producers. It is no good the hon. Gentleman making faces. What I say is so. I advise the hon. Gentleman to read the Fatstock Order and he will then realise what I am talking about.

Mr. Ross

It means that what we are effectively doing is subsidising exports.

Mr. Scott-Hopkins

The deficiency payment is made after the meat has been sold at the world market price. The average weekly price is calculated on this basis. The deficiency payment makes up the difference between that price and the standard price for the week, and it goes to the person who markets the certifiable beast. That beast is sold at world market prices. There is no element of subsidy in that.

Mr. Bence

As I understand it, a beast is marketed in the ring by the farmer. It is bought by the dealer and that is the price at which the farmer gets his deficiency payment. When the beast is slaughtered the carcase goes to the butcher, abbatoir or elsewhere; but the farmer got his deficiency payment before the beast was slaughtered

Mr. Scott-Hopkins

There are different forms of marketing, although this is not the occasion on which to go into the intricacies of the marketing system. A great deal of fatstock goes direct from the farmer on to the hook, and it is at that point that the farmer gets the price for the beast and, therefore, the deficiency payment. In many cases the farmer sells direct to another farmer. In other cases he puts the beast into the market and it is bought by an abbatoir.

The hon. Gentleman is not right in saying that the majority, or even a large proportion, of fat beasts which go to the market are bought by dealers. As I have pointed out, there are different forms of marketing and much beef goes direct into the abbatoirs. That is the way the trade has been built up over the years, but it has no bearing on the hon. Member's general point about beef going overseas after receiving a deficiency payment.

The hon. Member for Kilmarnock asked about the significance of 29th October. He will know that in the White Paper, following the Annual Review, it is shown that we agreed with the N.F.U. that the Scheme, which finishes in October, should be renewed for a further three years from that date. The hon. Member queried whether the Government intended to continue the Scheme for many years, but there will be other opportunities to discuss that subject.

The hon. Member for Kilmarnock then spoke about the level of prices and wondered whether they would be continued. He was, I believe, talking about the fatstock subsidy for the year after this. As he knows, this will be reviewed at the next Annual Price Review, when a determination will be made. He will not expect me to go into that matter now. The hon. Member also suggested that, until my hon. Friend made his clear speech explaining how the deficiency payment levels worked, he did not have the necessary information. He will be aware that this information is available in the Vote Office. The Fatstock Guarantee Scheme is there for all hon. Members to see and it includes the tables of standard prices to which my hon. Friend referred. I am sure that the hon. Member for Kilmarnock has seen this document. A closer study of it will give him the facts he wants.

The hon. Member for Kilmarnock then asked me to break down the calf subsidy figures for Scotland as opposed to England and Wales. I am sure that he will appreciate that I cannot do that. Neither am I able to give him an estimate of what the second Scheme will cost this year. Many factors come into this and it would not be prudent of me now, in week three or four, to give a forecast covering the whole of the 52-week period.

I can assure the hon. Member that it is the purpose of this Scheme and of the new standard prices and bonuses, which have been worked out in conjunction with the N.F.U., to encourage better marketing patterns, which will have a beneficial effect on the farmers and taxpayers.

Mr. Ross

Surely the Government must have had some figure in mind when they decided on this Scheme in discussions with the farmers. What figure had they in mind?

Mr. Scott-Hopkins

Although the final audit adjustment for last year has not been made, the cattle guarantee cost about £43 million. Since then there has been a 3s. per cwt. increase in the guaranteed price.

Our purpose is to encourage orderly marketing and to make farmers pay more attention to the movements of the market so that they will not be inclined to drop on to a falling market, but will, as far as practicable, be able to sell at the right time for the right profit.

Mr. Ross

But we must have Estimates in this House. The Government are to put in Estimates of what they think will be the cost. What is the Government's Estimate here?

Mr. Scott-Hopkins

The hon. Member will realise that the Estimates were put in at £43 million. He will also know that the increase in the value of support for cattle at the Price Review is £4.5 million. In this matter, the hon. Gentleman's mathematics are as good as mine.

The hon. Member will realise that the feed formula, which is based on the food conversion ratio, can work up or down. It has been in existence for a long time. The feed formula affects the guaranteed price to pig producers, and the purpose of these changes is to bring about a more realistic relationship between the adjustments under the feed formula and the conversion ratios achieved in current rates of live-weight gain. There have been great advances in techniques in past years, and food conversion ratios have improved. We seek in the Order to reflect the modem food conversion ratios. This has not been so in the past, when we were using an older and more out of date formula. There is no change for the consumer.

I have covered all the main points that have been put in this debate——

Mr. Ross

Can the hon. Member answer the point about paragraph 7(2)?

Mr. Scott-Hopkins

I apologise to the hon. Gentleman for my omission. As the hon. Member will know, imported cattle have to be in this country for a certain time in order to qualify for the full guarantee payment. They have to be fattened here for a certain time, and in addition it is only right and proper that they should qualify for a smaller rate of deficiency payment. In fact, we have only a differential rate for sheep.

By passing these Statutory Instruments, we shall be encouraging a more orderly system in the fatstock market by making the farming community pay more attention to market trends. In many ways we are simplifying the existing system. It may take a little time for the farming community to get used to it, and to not having, when they market, a provisional figure of deficiency payment that is liable to error on either side. I am certain, however, that once the system is understood and has worked for a short time the farming community will find it greatly to their benefit; and that the whole agricultural industry will, in the long run, benefit from adopting the new system. I have no hesitation in recommending these Statutory Instruments to the House.

Question put and agreed to.

Resolved, That the Calf Subsidies (England and Wales and Northern Ireland) (Amendment) Scheme 1964, a draft of which was laid before this House on 23rd April, be approved. Calf Subsidies (Scotland) (Amendment) Scheme 1964 [draft laid before the House, 23rd April], approved.—[Mr. Stodart.] Fatstock (Guarantee Payments) Order 1964 (S.I., 1964, No. 463), [copy laid before the House, 26th March], approved—[Mr. Scott-Hopkins.]