§ 6.16 p.m.
§ Debate resumed.
§ VISCOUNT FALMOUTH
My Lords, to take up the point made by the noble Lord, Lord Sainsbury, I see from the list of speakers that I am twelfth man, batting at number eleven. I claim the privilege, therefore, to be short. Your Lordships are now well acquainted with the provisions of the Agricultural Price Review of 1964. This is a most important Review, and must be considered jointly with the Agriculture and Horticulture Bill which your Lordships' House has recently been considering. All your Lordships must surely welcome the fact that this is an agreed Price Review, and I think we are all united and desiring the welfare of this great industry.
The Government have been very skilled in steering a middle course between the four shoals of GATT and the Kennedy round, the taxpayer, the consumer and the home farmer. The marketing problems which have been to 1315 the fore and which are, so to speak, built in in the industry, are perhaps four in number. These problems are well-known to the House and, indeed, they must be a kind of hardy perennial at each of these agricultural debates. I hope that your Lordships will not consider me presumptuous to touch on them briefly when considering the Review. I will list these four problems as, first, surpluses at home and abroad; secondly, pressures of imports from abroad; thirdly, the natural desire for cheap food; and fourthly, the ever-increasing payments from the Treasury to agriculture to support it.
First, with regard to surpluses, the Review sets out to deal with this problem by the introduction of standard quantities for the home producer. I think this year it is 3.3 million tons for wheat and 6.5 million tons for barley. I know your Lordships will agree with me that the scheme is a clever one, and, indeed, is much simpler to operate than it looks. As your Lordships know, the target indicator price is fixed for the standard quantities at each Review. For wheat this price to-day is 20s.; that is, 6s. 6d. below the guaranteed price. This 6s. 6d. is the deficiency payment to the farmer if the standard quantity is just achieved and the average price is the same as the target indicator price. Supplies over and above the standard quantities or over and above (shall I call it?) the T.I.P. or average market price lead to a corresponding adjustment in the deficiency payment. The calculation to decide this payment is not a difficult one, as we see if we refer to page 42. I think, too, we should note that in this Price Review there is no question, so to speak, of "quota-ing" the products of individual farms, except in so far as potatoes are concerned. I hope, indeed, that the fluctuations of the English cereal market will not be great enough to disturb these arrangements.
Secondly, pressures from abroad. The 1964 Act, now in course of going through Parliament, will allow the authorities to place minimum prices on overseas cereals. This, I suppose, will be closely linked to the T.I.P., while the agreements with the main producers overseas will limit what they send. I understand that the alterations of the minimum import price can be made 1316 quickly so as to prevent dumping. The previous anti-dumping Acts can be slow and cumbersome, and I am sure your Lordships would agree that it is to be hoped that these provisions will be put into operation as soon as possible after the passing of the Bill, so as not to prevent the successful working of this Price Review.
Let me deal now with the desire for cheap food. One halfpenny on milk is, of course, an increase in the food bill to the housewife, but this must be looked at in the light of the £24 million increase in Treasury support for milk and the fall in the rate of increase of milk production. Lastly, the necessity to keep a firm hold on Exchequer support is, of course, to be greatly helped by preventing the entry of under-price cereals into the market from abroad.
The importance of these changes in our system are very great, and I think your Lordships must agree with me that it is a well-timed action that the agreement with our overseas suppliers has been made before this Price Review. The Price Review represents a time for thinking ahead in the industry. It is easy for us to criticise Governments for blowing hot and cold from one moment to the next by encouraging or discouraging farm produce. But, as we know from our own experience, surpluses and shortages are of the very nature of agriculture. Probably nothing will alter that, and it must be hoped that these new arrangements, if worked wisely, will work against these fluctuations.
Before I sit down, there are perhaps two practical points which I should like to put before your Lordships at this time. They follow on, I think, from the Price Review. First, there is the question of the small farm and, secondly, the spread of the increasing population into the countryside. As the noble Lord, Lord Wise, said, it is not an easy thing to get a fair living from a small farm—and I have many connections myself with small farmers. As the noble Lord opposite said, we must remember that this problem is much greater in Europe. It may well be that there are no great changes which can be made speedily. Agriculture itself is a slow business. Swift changes often do great harm, and if amalgamations come it can be only a slow process.
1317 Increase of the population and its overflow into the countryside mean greater markets for the home farmer. But in the regions where the population is expanding the farmer is at a considerable disadvantage in attracting the right type of young labour for his farm, especially when he is competing against such prosperous industries as the building trade. Particularly in the southern suburbs of London, excellent work is done in the primary and secondary schools in encouraging young people to take an active and intelligent interest in the land, in the hope that they may enter into this industry. I hope that the Minister, with all his responsibilities in reconciling conflicting interests, will defend the existence of good agricultural land, so far as he can, so that no more of it than is absolutely necessary can be taken for building.
§ 6.27 p.m.
§ LORD WALSTON
My Lords, we are always grateful to my noble friend Lord Williams of Barnburgh for debates of this kind. To-day I think we are particularly grateful to him for three special reasons. First, I feel that to-day's debate has been, if anything, even more valuable and a more informed debate than those we have had in the past. That is saying a great deal, because the standard has always been high. Secondly, this is a particularly important occasion because it seems the beginning of a new form of agricultural Price Review and price support and, therefore, it has special significance. Thirdly, it is of special importance because, in my view at least—and there are many who share this view with me—this is the last occasion for many years to come on which noble Lords opposite and their friends will have the opportunity of taking the actions they have taken. So I think that for all those reasons it is worth looking, as many noble Lords have done, not only at the immediate position of agriculture as it is to-day and the immediate impact of the Price Review, but at the rather wider context, both of the past and of the future.
So far as the past is concerned, we have, of course, heard a great deal of pleasure expressed at the Price Review today because it has been an agreed Review. As a farmer, I am delighted 1318 that we have got over recoupment—a repulsive word, but it is useful shorthand, and I think noble Lords know what it means. But it is always dangerous, as the Prime Minister was at pains to point out with regard to the trade figures when they were not so favourable in January, to draw conclusions from one month alone. One must look at the whole picture of our trade balance. Similarly, it is dangerous to draw conclusions from one Price Review alone, whether it happens by coincidence, as my noble friend has said, to he the Price Review in the year of an Election or not. So I do ask your Lordships to look back over the past ten years, when we are now congratulating ourselves as farmers on this over-recoupment of £7 million or so, and see what has been happening.
We know perfectly well there has been an under-recoupment in the past ten years to a total of £175 million. In other words, under-recoupment has been running at an average rate of £17½ million per annum. So, grateful though we are for this over-recoupment this year, it really is not a terribly significant figure when viewed in the light of the accumulated under-recoupment of £175 million.
There was some query about this when my noble friend Lord Williams of Barnburgh mentioned these figures, so may I just remind noble Lords of what has been happening in the past ten years, from 1951–52 to 1961–62—the last year for which I have figures available? The actual net income, adjusted for changes in the prices of consumer goods and services, dropped from £314 million to £310 million. So there can be little dispute that during the last ten or twelve years the actual position of farmers, in real terms, has been steadily declining.
My Lords, would the noble Lord mind explaining that point a little further, because if he will look at Appendix II, "Aggregrate Farming Net Income", he will see that between the years he has quoted, adjusted to normal weather conditions, total income has gone up from £331 million to £438 million—which by my calculations, means a rise of £100 million?
§ LORD WALSTON
That, of course, is perfectly true; and it does show how dangerous it is, if I may say so without any offence to the noble Earl, to use statistics without reading what goes before them. Of course, the actual income has gone up according to those figures. But I said adjusted to "real" purchasing power, and, as we know, during the tenure of office of the present Government the purchasing power of the pound has declined very considerably. Therefore, although you may have more pounds passing into your pocket during the present time, you can buy less with them. This answer, which was given by the Minister in another place, did make that adjustment. I am grateful to the noble Earl for allowing me to make it clear—because it is an important point—that even though the number of pounds in a farmer's account may be greater than it was before, the actual amount that he is able to buy with his pound has declined. Therefore, his absolute standard of living is lower now than it was before. I hope that makes it clear to the noble Lord.
That is not all that has happened during this time. As your Lordships know, the Government were worried a few years ago by the problems which arose with meat when the deficiency payments (and therefore the taxpayers' contribution) for meat rose to alarming proportions, but it appeared that the price in shops did not fall correspondingly with the price that the farmer himself was getting in the open market. As a result, the Government set up what has come to be known as the Verdon-Smith Committee, which made an inquiry into the marketing of meat. I share with other noble Lords (I think it was the noble Lord, Lord Amherst of Hackney who mentioned this) interest in this matter and the hope that perhaps one day we shall be able to discuss this in more detail. But I do not think the present moment is the time to do so.
But I would draw your Lordships' attention to some figures which emerged from the Verdon-Smith Report. If you refer to the profits, as ascertained by the National Farmers' Union statisticians, from 357 farms, with an average of 225 acres, concerned primarily with livestock production, beef, mutton and pigs—the farms being ide[...]cal samples—you will 1320 find that over the period 1957–58 to 1961–62 their profit rose by 3 per cent. That is not a very high rise, especially considering the decline in the purchasing power of the pound; but at least there was a rise. But if you then look up some very interesting figures in the Appendix of the Verdon-Smith Report you will find that the profits of the provincial wholesalers of meat during the same period rose, not by 3 per cent., but by 51 per cent. The profits of the independent retailers, the people who come after the wholesalers, during the same period rose, not by 3 per cent., but by 36 per cent. In other words, during that period—and I use that period solely because the Verdon-Smith Committee use it, and not for any other reason—while farmers, the producers of meat, were struggling along with a 3 per cent. rise, which was far too little to make good the rise in the cost of living, the retailers were just about able to keep even with a 36 per cent. rise, and the wholesalers were able to make an increased profit of 51 per cent. I think it is worth pointing out, my Lords, that the Verdon-Smith Committee themselves say that they do not think these profits were unreasonable, and there is no reason to alter the system because of them. Surely, if it is not unreasonable for wholesalers to have an increased profit of 50 per cent., or thereabouts, in five years, and for retailers to have an increased profit of 36 per cent. in that period, it must be unreasonable for farmers to have a profit of only 3 per cent.
That is meat. Now let us have a look at arable farming. What happens there? During a similar period—and again quote the National Farmers' Union figures. The noble Lord is laughing at this; I hope he has studied them himself.
§ LORD WALSTON
Unfortunately, I have not my own here; I wish I had. It is possible that if I did, some noble Lords would say that I am not entirely typical of the ordinary run of arable farmers. After all, most arable farmers do not spend most of their time sitting in your Lordships' Chamber; they are probably far better occupied. Taking the N.F.U. figures—once more of a sample of 155 farms of 196 acres, again identical 1321 samples—we find that they did rather better than live stock producers. They had an increased profit of 5 per cent.—a lordly figure of 1 per cent. per annum. Unfortunately, neither the Verdon-Smith Report nor anything of a similar kind has looked into cereal marketing, so all I could do WAS to look at Stock Exchange reports of the profits of some of those concerns most closely associated with cereal marketing and utilisation. I looked at a firm called Associated British Foods, which is, I believe, concerned with bakery in a rather large way, and I found that during the period from 1958 to 1963 their profits increased by 64 per cent. We must remember that the farmers' profits increased by 5 per cent. Spiller's increased their profits by 94 per cent.; but they were not particularly efficient compared with Rank's, whose profits increased by 103 per cent. There again, you have somewhat of a difference between the farmer, the producer, under this present system and this present Government, and the other people who come between him and the consumer.
Let us have a look at milk, about which we have heard quite a lot. Here, I must say, I have a slight difference of opinion with my noble friend Lord Williams of Barnburgh. He suggested that the housewife was now going to pay 4d. a gallon more for her milk. My calculations suggest that she is going to pay something over 5d. a gallon more, because for eight months in the year she is going to pay Id. a pint more—I hope I have these figures correctly—and for four months in the year she will pay ½d. a pint more. That gives an average, unweighted, I grant, of 5⅓d. She is going to pay 1d. a pint more for four months and a ½d, a pint more for eight months.
§ LORD WALSTON
I do not know if I shall be able to clarify the noble Lord's head. One penny a pint more than at the present time, under the new system. The average increase she is going to pay will be something over 5d.
LORD ST. OSWALD
More than she has done is one thing. Is the noble Lord saying more than she is doing now?—because if so he is wrong.
§ LORD WALSTON
More than in the past twelve months; over the next twelve months she is going to pay, on a non-weighted average basis, something over 5d. a gallon more. Noble Lords have been talking of 2¼d. to be paid to the farmer. I am not at all sure they are not being unjust to the Government. I think it may be 2.79d. per gallon more. However, I do not think we need go into these rather complicated calculations.
What has happened in the past? Between the years 1955 and 1963 the average price to the producer has declined by 10 per cent. The retail price has increased by 28 per cent. These figures are to be found in the Milk Marketing Board's latest Report. From the National Farmers' Union, and their invaluable set of statistics, we find that from 1957–58 to 1961–62 milk producers' profits, dairymen's profits, on 384 farms of 96 acres—once more identical samples—have declined by 10 per cent., which is not surprising considering that the average price has declined by 10 per cent. too. The figures go hand in hand. Take Express Dairies—what has happened to their profits? They have gone up by 114 per cent. during that time. I think that these are figures to which we ought to pay quite a lot of attention; we should study them with considerable care if we are genuinely interested in the ultimate objective of any sound agricultural policy which is to ensure that the consumer gets his food at the lowest possible price and in adequate quantities.
I think it is significant that under this Price Review, in which the milk producer has been given this lordly increase of 2¼d. or 2.79d. per gallon, the consumer, in fact, will have to pay not 2¼d. or 2.79d. more but 5⅓d. per gallon more. The noble Lord knows perfectly well, and I know perfectly well, that there are many and complicated reasons for that. I am not suggesting—it is not so—that in this case the retailer of milk is getting a higher margin. He is not. There are many complicated factors which come in between, though I will not weary your Lordships by explaining how that comes about. The important thing is that the increase to the farmer is more than passed on to the consumer, and that is something to which, as people who are primarily interested in the welfare of the 1323 consumer, we should be giving very serious attention.
What serious attention are Her Majesty's Government giving to this? They have introduced this grand new concept of standard quantities and agreements with overseas producers, so far, unfortunately, only for wheat or cereals. We wish them luck in pursuing this concept with other commodities and with other countries. But we do not wish them luck in pursuing it in the same way they have been pursuing it up to the present time, because what they have been doing—and I will not go over the arguments we have had in the past weeks—is to give more money to overseas producers without getting any corresponding return for it, other than the possibility of reducing the amount of deficiency payment that has to be paid. We on this side of the House are wholeheartedly behind any policy which is going to regulate markets and promote order in the production and marketing of primary commodities of all kinds. We have been prepared on occasion, as the Government have been, to pay rather more for certain commodities than we have been paying in the past. But if we are going to do that we want something in return. We want two things in return. One is that should the market turn against us, as buyers, and should there be a world shortage of the particular commodity, we shall gain some advantage from having bought rather above open market price in the past. The second thing we want is that the extra money we pay out for these essential commodities shall, so far as possible, go to the countries which need it most, and especially, so far as possible, to Commonwealth countries.
Let us look at these cereal agreements in that light. We have no long-term agreement for ensuring our supplies of cereals at a regular price if there should be a world cereal shortage—and it is not at all unlikely that that may happen in the next few years. Sometimes we are terrified of super-abundance; sometimes we are faced with shortage. Who could have foretold, a couple of years ago, that the world price for sugar would have risen from £25 to £101 a ton? Who would have dared to get up in public 1324 and say that the Commonwealth Sugar Agreement was good, not only because it helped the Commonwealth and the developing countries, but because it would ensure that this country got its sugar at half the world price? Nobody would have considered that. It is not altogether unrealistic to say at the present time that it may well be that the world price of wheat may rise to £28 or £30 a ton. Why did Her Majesty's Government not take this opportunity, when they were offering some of the biggest wheat-exporting countries of the world a bottom to their markets, by undertaking to pay not less than £18 a ton or whatever it was, to ensure that they, as a quid pro quo for this, would undertake not to sell to us for more than £24 or £26? That would have been sound common sense, good business sense. But the Government have thrown away that opportunity, and I think the consumer should have something to say about that.
What about these countries to which we are offering this minimum price? Two of them, admittedly, are members of the Commonwealth, Australia and Canada. But by no stretch of the imagination can they be held to be underdeveloped countries, poor countries in need of help; and by no stretch of the imagination can the United States be held to be such a country. Therefore, although I am not against the idea behind the regularisation of price and controlling of markets, I do regard it as unfortunate that the great opportunity we had for ensuring that, should world prices rise, this country would get at least a proportion of its food at relatively low prices, was missed. And we have also missed the opportunity of helping those members of the Commonwealth who most need help, the developing countries. There is a further point about this that I should like to ask the noble Lord—namely, what is the effect going to be of this floor in the price? Sometimes we are told that in fact it will make no difference at all.
§ LORD WALSTON
I am delighted to hear the noble Lord say that it will. If it will make a difference, the only difference it can make, surely, is that, 1325 instead of on occasion buying our wheat, maize or barley at £13, £15 or £17 a ton, we are going to pay more for it. If we are going to pay more for it it can only mean that the price of those commodities, when they get on to the table or into the kitchen in the form of bread or flour or breakfast cereals, or whatever it may be, must be higher; unless, of course, the noble Lord were to say that the profits of all the middlemen are already so great that they can easily absorb these higher costs without passing them on. In any case, to have allowed them to get away with this in the past is a complete indictment of the policy that he and his colleagues have been following in past years. He cannot have it both ways.
So if it is going to mean that we are going to pay higher prices even for a small proportion of our imports, and if there have not been undue profits on the part of the middlemen in the past, then the price of the food to the housewife must rise, if not much, at any rate to some extent. It means also that the price of feedingstuffs to the farmer must rise because a large part of these things are made up of imported cereals. Some of the increased cost of feedingstuffs will have to be borne directly by the farmer. The dairy farmer has no written-in clause to adjust his price of milk to the cost of the feedingstuffs. Other increased costs will be passed on once more to the consumer, because the egg and pig producers have such a clause, and the cost of eggs and pork will go up.
Therefore, it is clear that if this new system of the Government is going to mean anything at all, it must mean some increase in the cost of living. We have already seen that it is going to mean that the price of milk will go up; there is no doubt about that at all. It will probably mean that the price of cereal products will go up, and possibly even the price of eggs and bacon will go up, albeit to only a small extent. I am not saying that we are against it for that reason, but I think the Government ought to be bold enough to tell us if it is in fact so; and if it is not going to make any difference at all to the price of these various commodities, they ought to explain to us clearly how in fact they figure this out.
1326 Now I want to come to one other point mentioned, mainly by the noble Earl, Lord Ferrers, about, I think his words were, the fair share of the increased efficiency that should be left to the farmer. I have already given figures to suggest that in the past the increased efficiency of farmers, amounting to some £25 million a year, has resulted in a very small increase indeed in the spending power of the farmer—in fact, a decline. Not only would I, but other farmers throughout the country would be extremely interested to know whether the Government's idea of a fair share of increased efficiency is exactly what it has been over the last ten years. or if they have altered their idea of what is a fair share at the present time.
There is another remark of the noble Earl, which is also in the White Paper itself, concerning the fair share of the increased market which should accrue to the British farmer. Paragraph 7 of the White Paper purports to deal with this. Discussing the standard quantities, it says that theywill be determined at each Annual Review taking account of the growth of the demand for cereals for human consumption and animal feed"—this is significant—and any changes necessary as a result of reviewing the balance between home production and imports.I am not quite sure what those words mean. They could mean that the Government of the day will say that these changes, which are necessary, may in fact change the ratio between imports and home production in such a way that it will react adversely on the British farmer.
LORD ST. OSWALD
My Lords, would the noble Lord just indicate the passage he is referring to? I am sorry, I missed it.
§ LORD WALSTON
It is paragraph 7 of the White Paper, the Annual Review and Determination of Guarantees, 1964. It is perfectly true that the final sentence of the paragraph says:The Government intend to increase the levels of the standard quantities as required to provide this opportunity for home producers in the future.May we take that—this is a point on which I hope we can have a categorical 1327 assurance from the Minister—as meaning that the Government have undertaken, not only that the standard quantities will not be reduced in the years to come, but that they will in fact be raised in successive years at successive Price Reviews?
There is one other point which was mentioned by the noble Earl, Lord Ferrers, that I should like to take up. He finished up his exhortatory peroration with the words "a strong, modern and vigorous agriculture can face the future with confidence." He is quite right: it can. Are the Government taking the steps that are necessary, and have they taken the steps which were necessary, to see that we have a strong, modern and vigorous agriculture? It is difficult to know that. I am not being dogmatic, but I have grave fears upon the matter.
We all know that in the last ten or eleven years the labour force on the land has declined by 30 per cent. I think that most of us have no qualms about that, because we believe that, so long as we can produce the amount of food which this country should have—I believe it should be an increasing quantity—with fewer men, so much the better, not only for agriculture but for the country as a whole. I am not complaining about the reduction of 30 per cent. in the labour force over this period, provided that it takes place, as it has taken place, without rural unemployment and without hardships to those who were formerly working upon the land. But a figure we do not hear so much about, and one which is of far greater significance, is that those between the ages of 25 and 44 who have left the land in the same period do not number the overall average of 30 per cent., but in fact 45 per cent. This in fact means that we are moving towards an agriculture without a well spread age group of young boys, old men, middle-aged men, skilled men; we are moving into an agriculture where we have a relatively large number of young boys, unskilled, who as soon as they get better jobs move on to something else, and a large proportion of elderly and old men.
We are having this serious drift of farm workers just at the time when they 1328 are skilled, just at the time when they are at their peak of productive capacity and efficiency. They are drifting away into other occupations. That is what these figures from the Ministry show us, and I cannot believe that an agriculture where that is happening, or indeed any industry where that is happening, can be considered strong, modern and vigorous.
I do not know whether the same thing is happening among farmers. There are no statistics to show it. I should doubt if it were at the present time, but we all know what happened in the bad old days in the late 'twenties and the late 'thirties. Very few young men of intelligence, ambition and vigour went into farming, if they could possibly go into anything else. Very few went into designing agricultural machinery or into agricultural research, all ancillary trades essential for a healthy, vigorous and prosperous agriculture. They did not do so, because the industry was rapidly declining in its prosperity. I have great fears that if this present trend goes on, we shall in the years to come find that not only our farmworkers, but our farmers too, are composed only of old and young, and that our agricultural scientists and agricultural engineers, consist not of bright young men, coming in with bright ideas, full of energy and ambition, but of old men who are there and cannot get out. This is the sort of agriculture which cannot meet the challenge of the years to come.
To sum up, my Lords, the object of any agricultural policy must be first of all to safeguard the legitimate interests of the consumer: to give him, at the lowest reasonable price, the food he requires; to safeguard the interests of the taxpayer, and see that his money is not squandered; and to safeguard the interests of the farmer and the farm-worker by seeing that the people who produce the food get a fair reward. I do not believe that even this present Price Review and the beginnings of change in the Government's policy show any glimmer of light in either of those respects. For the consumer there will be higher prices—higher admittedly for milk; higher probably for cereal products, and possibly also for meat products. For the taxpayer the White Paper itself makes it clear that the total charge on the taxpayer will be £20 million more 1329 in the coming year than for the current year. So that there can be no justification on the ground that the taxpayers' money is going to be saved by this new system. And for the farmer, although he has moved up very slightly from his place at the bottom of the ladder, he is still at the end of the queue. And I am afraid that, so long as Her Majesty's Government pursue a policy of this sort, we shall not have in the years to come the strong, modern and vigorous agriculture which we all agree is necessary to face the future.
§ 7.2 p.m.
LORD ST. OSWALD
My Lords, I am most grateful to noble Lords who have taken part in this debate to-day for their many interesting and useful contributions. I am, I suppose, inevitably particularly grateful to those who have commended the White Paper, and there have been many commendations, though not many from the noble Lord, Lord Williams of Barnburgh. It is none the less always pure joy to take part in a debate with the noble Lord, Lord Williams of Barn-burgh.
I thought to-day he was even more acrobatic than usual. He read out an excerpt from a newspaper naming this as an Election Review. He said admiringly that the correspondent knew more than he did and had in fact an insight into the Prime Minister's motives, a really remarkable tribute. He then contradicted my noble friend when he deduced that the noble Lord was agreeing with that sapient scribe, and I am afraid that when I heard that, an irreverent and distorted jingle came into my head, which I shall be irreverent enough to repeat. I thought:You are stately, Lord Williams, the younger man said,And your hair has grown notably white, And while you consistently stand on your head,Do you think at your age it is right?I assure the noble Lord that that is uttered from the purest of motives.
§ LORD WILLIAMS OF BARNBURGH
My Lords, I am round to confess I am utterly lost, and I should like to know whether the noble Lord would tell us what he is trying to say.
LORD ST. OSWALD
I should have thought that I had made it clear. The noble Lord agreed with The Times article 1330 and then denied he had agreed with it when "smoked out" by my noble friend.
LORD ST. OSWALD
Quoted it, and said, if you please, that the correspondent had a remarkable insight into the Prime Minister's mind. If that is not agreeing with it I do not know what is. We also gather from the noble Lord that in his term of office he pleased everyone. He pleased the farmers, he pleased the consumer, he pleased the foreign supplier. He said this all by implication, of course—never directly. But I am bound to say a small, mischievous inquiry went through my head: did the Estimates Committee of his day really dance "Ring-a-ring-a-roses" round him when he presented his proposals?
In some communities—I return to the opening of my speech—even in some intelligent and influential bodies, in our country, it is sometimes forgotten how important a part agriculture plays in our economy. This could certainly not be said of your Lordships' House by anyone who has listened to or who reads this debate. The importance of agriculture has been witnessed by those of varying shades of political belief, all with a keen concern for its welfare.
My noble friend, Lord Ferrers, speaking earlier in the debate, devoted particular attention to the recent Price Review and to the commodity determinations which were then announced. The debate has rightly ranged a good deal wider than that subject, and I shall later be commenting on specific points raised by noble Lords in other interesting fields. But I should like to start by joining those who have set the Price Review in a broader context, and to identify, as it were, its place and function in the development of British agriculture. Your Lordships will have realised that, more so than in past years, the Price Review is tied up with outside matters. I refer, of course, to the new developments in agricultural policy which my right honourable friend announced last May in another place. As regards the present Price Review, these developments have particular and immediate meaning for cereals, where the new policy is promoted through a careful balance of interests of long-term 1331 benefit to the producer and his market—the introduction of standard quantities at home and restraint on import prices from overseas.
At the outset I should like to make two affirmations—one positive, one negative—both pleasing to those concerned, and pleasing, I should hope, to your Lordships to-day, at least in so far as your Lordships will accept them. The first is my belief that this policy, taken as a whole, will be of new and ever-enlarging benefit to the farming community. A measure of control over imports has been for many years an object of the Unions' policy. But in addition to this, the new arrangements will give a powerful stimulus to improve marketing; they will ensure that the industry's efforts are not frustrated by a sudden inrush of uncontrolled imports at low prices, or by the permanent threat of surpluses overhanging the market.
I recall that at this time last year one such inrush of Argentine beef had embarrassed and unbalanced the market, and the noble Lord, Lord Williams of Barnburgh, made much of it. It never entered my head to criticise him at that time for seeking to embarrass me or to unbalance the debate by "plugging" this instance for all it was worth—and perhaps rather more than it was worth, to an unbiased ear. What does seem strange, or at least illogical, to me is that he should now object to our seeking and negotiating to prevent this kind of embarrassment or unbalance repeating itself, to the dismay of either the market, of individual Ministers or of the Government as a whole. It is particularly strange that he should object to our efforts when we can claim their success on cereals, and their progress towards success in meat, the two commodities which have given most trouble in the past ten years and which, but for these arrangements, would foreseeably have given still more trouble in the years ahead.
§ LORD WILLIAMS OF BARNBURGH
My Lords, I think the noble Lord is committing the same error on this occasion as he has on two previous occasions when I have intervened in an agricultural debate. He is answering a speech that I never made.
§ LORD WILLIAMS OF BARNBURGH
The noble Lord is referring to my references to minimum prices. I did not say that the Government were doing wrong. I said they were doing the right thing in the wrong way.
LORD ST. OSWALD
Very well. What the noble Lord did was to disagree with our methods of controlling imports. I am right, I think, in that.
LORD ST. OSWALD
But, my Lords, he did not specify—and I suppose he would say that it is not up to him to specify—how he would do it. But, I must say that, from what he said, it did not sound to me as if he would have been able to do it by agreement with the foreign suppliers.
The noble Lord, Lord Walston, was in a notably more peaceable mood to-day than he was in a previous debate when he spoke on this particular theme, when he advocated what seemed to me rather rough-handed methods. I do not think I am misrepresenting him—indeed, if I am, he will no doubt tell me so—in recalling his view that we were in a position to tell the foreign overseas suppliers what our terms were. It seems to me that, in an age when it is considered outre to send a gunboat up a foreign river, the noble Lord was prepared to send a gunboat into the Canadian heartland.
LORD ST. OSWALD
I was speaking about the approach. So I understand that the noble Lord would, in fact, send an economic gunboat to our overseas suppliers. I am glad to hear that, and I hope that it will be hoisted in.
So far as these arrangements for cereals are concerned, the House is relatively familiar with their provisions (my noble friend Lord Falmouth, enviably, I thought, found them easy to understand), and familiar also with the advanced point which negotiations have reached. I will, of course, try to deal with specific points raised by noble Lords in the course of the debate. My 1333 noble friend Lord Ferrers referred in his speech to meat, and it is true that our negotiations on this with our overseas suppliers stopped short of final success. That does not mean that they were unsuccessful. Progress was made, for all the supplying countries have come to recognise that stability in our market depends on adequate, regular and properly phased supplies. One noble Lord, I think on the other side of the House, referred to the "love letters" which the noble Lord, Lord Williams of Barnburgh, had referred to in the debate on agriculture last year, and I think that at that time I corrected him and said they were not love letters but were business letters. Indeed, it was the noble Lard, Lord Sainsbury, was it not, who said that they were not only business letters but were successful business letters?
LORD ST. OSWALD
My Lords, our market-sharing approach is now well understood, and we hope that in the forthcoming sessions of the GATT Meat Group this way of dealing with the problems of the meat trade will also commend itself. Meanwhile, we are asking the overseas suppliers of the British market to join in a consultative body to keep under review the flow of meat on to our market in the coming months. This will, I hope, cover the period until we can arrive at a comprehensive agreement on supplies. With this prospect for meat, and the arrangements for cereals which are already almost complete, the industry can look forward to a clear indication from the Government of the levels of production which are in the national interest. Above all, the arrangements will mean that the whole system of guaranteed prices and deficiency payments to which farmers rightly attach so much value can be maintained.
The second thing I want to stress is that this is not a policy which involves raising the level of food prices. On reading through the Hansard records both of Clause 1 of the Agriculture and Horticulture Bill in Committee in your Lordships' House and of my statement 1334 on the Review last Wednesday, I blamed myself, and I still blame myself, for not making this clearer, and for not using the openings given by noble Lords to emphasise even more strongly that we do not intend to use the new powers to jack up the general level of cereals prices. We intend to use them, only as necessary, to cut off any imports at unreasonably low prices which would otherwise disrupt our market generally. Had the sort of minimum import prices we have in mind been in operation over the past few years, the effect on the cost of imported cereals as a whole, and so on the balance of payments and on the cost of living, would have been small.
This, I think, is where the noble Lord, Lord Walston, did me the honour of misquoting me, or possibly misquoting somebody else. The levels of minimum import prices will, of course, have to be prescribed and approved by Parliament in an order, and it would clearly not be right for me to discuss the precise level at this time. But, as your Lordships know, the target indicator prices for 1964–65 have been fixed at 20s. a cwt. for wheat and 19s. a cwt. for barley, and these prices have been fixed in relation to the proposed minimum import prices after allowing for the recognised handling differentials, quality differences and marketing conditions, which must always affect any price comparisons between home-produced cereals at the farm gate and imported cereals at the port.
The Government have made it quite clear that we are certainly not intending to go over to a complete managed-market system. On the contrary—and in view of some of the remarks which have been passed during the debate, I should like to give this point very great stress—we are introducing only the minimum degree of regulation which we need in order to provide the more stable conditions necessary in present-day circumstances to safeguard the present system of support for cereals which has been the basis of our cheap food policy.
The noble Lord, Lord Walston, asked what was a fair share of increased consumption: was it the same as before? My answer must be that it never has been a rigid fraction, and we do not 1335 see it ever becoming a rigid fraction. He also asked: will the standard quantities be raised in future years? The noble Lord has a more vivid imagination than I, and perhaps he can foresee the British islanders losing their appetite or ceasing to have babies, or something similar, in which case, presumably, there would be less requirement for food; but I cannot see that, and therefore I tell him with confidence that, as the general consumption goes up, so will the standard quantities.
§ LORD WALSTON
My Lords, we can take it, then, as absolutely definite that any increased consumption of cereals in this country will be shared in some proportion between the home producer and the importer?
§ LORD WALSTON
But the noble Lord will not specify to any extent whether that proportion will be 5 to 95, 50–50, or how it might be? It could be only 5 per cent. for the home producer and 95 per cent. for the importer.
LORD ST. OSWALD
My Lords, as I have said, it never has been fixed at a rigid proportion, and I do not foresee its being fixed at a rigid proportion or fraction. Therefore I cannot give the noble Lord that figure.
Noble Lords on the Benches opposite—I am thinking particularly of the noble Lord, Lord Henley—have spoken about the possibility of using food surpluses for the Western nations to feed the hungry in underdeveloped areas. He specified the possibility of sending dried milk. In fact, under the World Food Plan we did offer dried milk, but the offer was not accepted. Undoubtedly, however, it must be looked on as one of the possibilities. Mention was made of the World Food Board. This, of course, is a very stimulating idea, and we sympathise with its general aim of ensuring that enough food is produced and distributed to bring the consumption of all peoples up to a reasonable standard.
Many noble Lords, quite properly, made comment about the level of farm incomes, and it might be helpful if I were to say a few words on this subject. Noble Lords on the opposite Ben- 1336 ches, and particularly the noble Lords, Lord Williams of Barnburgh and Lord Walston, have tried to make a case to show that farm incomes have lagged a long way behind the incomes of other sectors of the community in recent years. Recently a good deal of play has been made with the fact that farmers' costs have gone up by £188 million in the last ten years while the change from the increase in guaranteed prices was only £15 million. So the argument has been made that farmers have to find £170-odd million from their own pockets. That was not the argument presented by the noble Lord, Lord Walston, but in any case this argument omits that it is pointed out that over the same period increased efficiency has been worth something like £250 million to the industry, and that is a net gain of over £70 million. In fact, compared with similar classes of business, the incomes of farmers are shown up to advantage.
Looking at the rest of the community, we find it is the wage earners who have had the biggest increase over the period to which we are referring. But what we are talking about to-day is the increase in the guaranteed prices given under the current Review in the context of the present state of agriculture. The Government naturally welcome an improvement in farmers' incomes at any time; but we have always to bear in mind the risk of excessive production and the size of the Exchequer bill. This year, for the first time recently, the production prospects and measures taken in the Price Review to achieve a greater stability in cereals and fatstock marketing made it possible for the Government to give the industry a substantial award.
I think I ought to say a word about the gloomy picture of agriculture which was painted by the noble Lord, Lord Wise, and which my noble friend Lord Hamilton of Dalzell found strange. The noble Lord, Lord Wise, spoke of the outgoing tenants breathing a sigh of relief. I see that the noble Lord has himself become an outgoing speaker—I hope with not too happy a sigh of relief at missing my speech. What he did not mention was anything to do with those who would be taking their place. I think that anybody on the land knows that 1337 when a farm falls vacant, even a fairly decent farm, there is a queue of applicants. The noble Lord, Lord Williams of Barnburgh, and I, being neighbours, both read the Agricultural Supplement to one of the papers recently. I think it is fair to quote from one of the articles in that Supplement:Today those farmers who were fortunate enough to take a farm or buy one for those sort of figures"—that is to say, £100 an acre for freehold arable landare looked upon as being fortunate people. The same type of farm today would cost between £160/£200 or more per acre and it would be necessary to offer a rent of at least £8 per acre to be in the running for a tenancy. … The old contention that farm values were being pushed up by wealthy industrialists with money to burn and a desire to farm as a hobby or to enhance their prestige no longer can be accepted. With few exceptions vacant farms are being purchased by farmers for their own or their sons' occupation and in many cases by adjoining or neighbouring owners or occupiers with a view to increasing the sire of their holding to more economic levels.I am bound to ask, my Lords, if there is anything in the contentions of noble Lords opposite, why are farmers queueing up to buy these farms at increased prices or take them at increased rents? Farmers are not mad; they are very intelligent people; and these are the facts.
The noble Lord, Lord Sainsbury, raised the question of what he called "the beef drain". Unfortunately, the Trade and Navigation Account figures for recent weeks are not available. If they were, I should be able to help him. But we know that the export of cattle beef is negligible in proportion to the total marketings. Moreover, the animals involved are, in general, not the ones on which the subsidy has been paid. I am sorry not to be able to give him a more specific answer.
No noble Lord spoke of the increase in the guaranteed price of milk as being a "panic measure" to deal with the threat of a milk shortage, although the term "milk shortage" has been mentioned. But these are terms which have been used; and very strange and ill-considered they seem to be. In the White Paper noble Lords will find that in the current year supplies of milk going to manufacture have constituted more than a quarter of the total sup- 1338 plies. The forecast for 1963–64 is that 1,724 million gallons will be consumed liquid while 785 million gallons will be used to manufacture. This is considerably more than the reserve margin written into the standard quantity, and there has never been any prospect of even a temporary or local scarcity of milk. I think the noble Lord, Lord Sainsbury, worked it out at 26 per cent. The reserve is, in fact, 20 per cent.
I do not know that I can say very much more. Although I should like to answer the questions of other noble Lords, I think the hour is fairly late. There was one other matter which seemed to me to be important and that was the question that my noble friend Lord Falmouth asked about good land going over into building land and whether we should do our best to defend the good land for agriculture and see that, where possible, the second-class or third-class land went for building. That is being done; these considerations are very much in our minds.
My Lords, in conclusion I would once again refer to the general picture. It has seemed to us, in arriving at the determinations of the recent Price Review, that for once—for the first time in several years—it is possible to give the industry a substantial measure of benefit from its ever-increasing efficiency and productivity, without incurring the danger of starting a spiral of rising production and falling prices. Some noble Lords have to-day made comment on the fact that this will be the final Price Review before an Election. I still do not know whether the noble Lord, Lord Williams of Barnburgh, was saying so or not. I hope he knows. My answer to that is that they should read the information in the White Paper concerning the economic background and prospects of the industry, and then compare conditions with what they have been in recent years. Being fair-minded as well as noble Lords, I think they will agree that this is a fair Review which will greatly enhance the future prospects of the industry.
My right honourable friend described our agricultural objectives in a speech in another place in May of last year. We see the main problem facing agriculture as the problem of balancing supply and commercial demand. In recent 1339 years there has been a tendency, as has been said earlier, for supply to outstrip commercial demand, and this has too often led to depressed markets and high subsidies. Our overseas suppliers have also been concerned at their falling returns on our market. The Government's aim, therefore, has been, and still is, to promote greater stability in the market by bringing supply and demand more closely into line. At home, we have sought to do this by extending the use of the standard quantity concept. As far as overseas suppliers are concerned, we have already reached agreement with our bacon and cereals suppliers to regulate supplies or prices. The noble Lord, Lord Williams of Barn-burgh, asked a question about this. This was a negotiated agreement, on which the various suppliers, our own domestic producers and the Government sat around the table and discussed their proper shares.
This Price Review has been an encouraging one. But it could not give us full encouragement—it could not give farmers the sort of encouragement which we think worth giving—if we saw it as standing by itself in isolation. We do not. The fact that it has been an agreed Review is, of course, a relief and a positive pleasure to an Agricultural Minister. But the best side of the agreement is that it is not simply founded and dependent upon the £31 million added to the guarantees this year. It is founded in a mutual appreciation of present conditions, and it is facing the future. It recognises as its theme the truth brought out by my noble friend Lord Abinger that the interests of the farmer and of the consumer are mutual interests.
What we hope, what we intend, is that from now production and commercial demand will march forward together. The meaning of this will be clear, and I hope more than merely welcome to noble Lords. I am no more than echoing my right honourable friend's words that if, from now on, production and commercial demand can be matched, and equated with growth, taking full advantage of growth, then the benefits of our system will at last far eclipse the dangers. Granted this victory—and one can never be starry-eyed about agricultural certainties—any future Minister of Agriculture 1340 will henceforward be able to give greater weight, the sort of weight he would wish to give, to the levels of farm returns, to the rewards of sweat and skill and devotion to the land. There is an exhilaration in that prospect, which many of us must feel. And though, politically, it may go hard for the noble Lord, Lord Williams of Barnburgh, to advertise that exhilaration, humanly he must be sharing it with me at this moment.
§ LORD WILLIAMS OF BARNBURGH
My Lords, it would be extremely ungenerous on my part to detain the House for more than a minute after your Lordships have been decent enough to stay here for so long to listen to so many of us. The only answer I would give to the series of questions which the noble Lord has put to me—Why are people willing to pay higher prices for land than hitherto?; why is it difficult to get a farm tenancy without paying £7 or £8 an acre?—is extremely simple, and one which I thought the noble Lord would have known and understood. It is, simply, the 1947 Act.
I would express my thanks to all noble Lords who have taken part in this debate, which I think has been extremely useful. I agree that this Price Review is very different from many of its predecessors. The Government had an experience in Europe in 1962 and early 1963 which perhaps has helped them to change their 1864 minds. That is all to the good. We welcome it and hope that during the next few weeks, at all events, they will continue with this policy. I beg leave to withdraw my Motion for Papers.
§ Motion for Papers, by leave, withdrawn.