Orders of the Day — Agriculture

Part of the debate – in the House of Commons at 12:00 am on 29 June 1964.

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Photo of Mr Jeremy Thorpe Mr Jeremy Thorpe , North Devon 12:00, 29 June 1964

What an extraordinary position—that the Government of the day should believe that they must be told all about these commissions. Obviously, they have not made up their mind on them. Surely the right hon. Gentleman is aware that it is not the job of the Opposition, but of the Government, to decide these issues. If the right hon. Gentleman wants to know the sort of powers these commodity commissions will have he should read the Verdon Smith Report. I recommend paragraph 845, where he will see that these aspects are discussed in some detail. I must say, from the Answer the Prime Minister gave me on 9th June and from the remarks of the right hon. Gentleman today, that further digestion of the admirable Verdon Smith Report would be meritorious from the Government's point of view.

However, I wish, first, to deal with the general philosophy—the general pattern—we want to see in farming. The 1947 and 1957 Acts, which all three parties voted for, had as their intention to give a measure of security to the farming community, to provide a regular flow of food at the right price to the housewife and to maintain a relatively free import policy. We now know that in recent years those Acts have failed to achieve those objectives.

Although the cost of farm support has risen from £190 million in 1954–55 to £20 million in 1964–65, the Index of Retail Prices has still gone up by 15 per cent. Although the net output of the farming community has gone up by 50 per cent. since the war, their incomes have gone up barely 10 per cent. compared with the 40 per cent. to 50 per cent. in other parts of the economy. Therefore, the aim of keeping down food prices and giving stability to the farmer has not been achieved. It is obvious that those Acts have to some extent been successful, but certainly not to the extent it was hoped—and they have certainly not enabled the farmer to keep pace with other sections of the community. Indeed, the taxpayer has been facing an increasingly higher subsidy bill.

As a result of all this, the Government, rightly, introduced a Measure which gave them certain powers regarding the limitation of imports. We Liberals go much further, and support the concept of the managed market. We consider this to be the only logical way of dealing with these matters. We supported the idea of the managed market in Europe and we are equally in favour of it for this country. A managed market, with target prices to be fixed after an Annual Price Review, with commodity commissions for cereals and meat, with powers to intervene on the market by stocks and to advise the Minister to regulate markets, is obviously the only answer.

I believe that it would enable the farmer more and more to derive his income from the market and less and less from support. This would be the right way to move forward. We could also hope for more efficient marketing, particularly when one considers that at present for every £1 the consumer pays, only 6s. goes back to the farmer. If one studies the margins of meat profits elsewhere one finds that, for example, in Germany the housewife and farmer have a price not nearly as far apart as the price which exists in terms of meat profits in this country. It is essential that we work towards a managed market, but we will not be successful in doing that unless and until we have commodity commissions, at any rate for these two products.

This brings me to the subject of meat, and it is interesting to note that while we had a surplus in 1961—and needed a £78 million Supplementary Estimate—we have had a shortage in 1964. Both events appear to have had one thing in common—that they took the Minister by surprise. Despite the massive labours of the Verdon Smith Committee, the Government have not yet agreed to a single measure or proposal put forward in that Report. Why, for example, have the Government not been able to do something along the lines of the sug- gestion made in paragraph 895, where it is stated: To enable consumers to judge and compare prices and to improve competition between retailers, we recommend that, as a minimum requirement, all meat retailers should display in a prominent position comprehensive price lists of the meat currently being offered for sale; and further that, if it is practicable, the marketing of cuts of meat with both the price per lb. and the total price of the joint should be made compulsory …". Surely it should have been possible for the Government to have introduced a suggestion of that sort by now. There is no reason why months and months of negotiation should be necessary to ensure that that suggestion is enforced. Why, for example, have the Government not taken any action over the suggestion the Verdon Smith Committee made in paragraph 899, where it is stated: Genuine price competition is … the correct means to ensure the efficiency of the retail meat trade. … Attempts by retailers to prevent wholesalers from selling meat directly to caterers and institutions are not in the interests of efficient distribution …". In paragraph 892, the Committee suggested that far more evidence about the chain of costs involved in the various centres should be made available to the public. It was on this subject that the Prime Minister was, perhaps, not as familiar as he might have been with the contents of the Verdon Smith Report, because on 9th June I asked the right hon. Gentleman: … whether, to allay widespread anxiety over margins charged in the meat distributing trade, he will instruct the President of the Board of Trade to consult the Minister of Labour and the Minister of Agriculture, Fisheries and Food with a view to publishing simultaneously each week the retail prices of meat already collected weekly by the Ministry of Labour to which the right hon. Gentleman replied: In its report to Agriculture Ministers last February the Verdon Smith Committee stated that it could find no evidence that margins in the wholesale or retail meat trades in the period 1958–62 as a whole had been excessive. Obviously, the Prime Minister had not read the Report properly, because he should have known that in paragraph 487 the Committee stated: As we have already pointed out, detailed comparison of wholesale and retail prices is impossible because of the inadequacies of the data, and the results of the survey of independent retailers' accounts ending in 1962 were probably considerably influenced by their trade in the second half of 1961. We therefore regard this evidence as inconclusive. The Prime Minister told me that there was no evidence to support the allegation, but that was certainly not what the Verdon Smith Report stated, for that Report specifically spoke of "the inadequacies of data".

It is interesting to note that in his reply to me on 9th June the Prime Minister said, after I had pressed him to go further: I am certain that my right hon. Friend is always willing to consider whether he can give any better figures which would serve the public … Following that, I asked the right hon. Gentleman, since none of those figures were published in any event, whether he realised that it was difficult for the consumer to judge whether or not the figures were good, to which the right hon. Gentleman replied: I did not say that these figures were published. I said that if my right hon. Friend could help the public in any way he would certainly do so. But this is certainly not a way in which the public could be helped."—[OFFICIAL REPORT, 9th June 1964; Vol. 696, c. 235–6.] I urge the Government to give us more information about their intentions in regard to these statistics because there is no doubt that if we do not have a statutory authority, such as that recommended by the Verdon Smith Committee, we will certainly need some form of board which will be in a position to make forecasts of important trends and pricings and advise the Minister.

The third point to which I wish to refer today is the question of production grants. I am certain that not only is the purpose of agricultural support to provide a steady flow of foodstuffs, but also to give a reasonable price with reasonable security to the farmer. Production grants are vital if farmers are to become more efficient and competitive. I would like to see the Small Farmer Scheme extended, at least as a start. It has been a good scheme, but at present accounts for only 2 per cent. of the total bill. We should abolish the man-hours formula, which is hopelessly archaic and artificial, and in its place I would like to see grants of up to 50 per cent. available for the erection, alteration and enlargement of permanent farm buildings, excluding farm houses. I know that under Part II one can get one- third grant spread over 10 years, but more often than not that does not go to the large man.

Another form of assistance is the hill cow subsidy payments. I come from a part of the country where we are having an extensive review of the eligibility of farmers to continue to receive assistance. Unfortunately, our worst fears have now been realised. I am happy to see that the Secretary of State for Scotland appears to be getting a fair amount of enjoyment from my speech, but perhaps I may tell him something that may alter his expression. I am talking of a series of farmers who have every expectation of being put out of business by the Government and by this act; and this will not be forgotten.

The latest available figures in Devon show that 436 farms have been reviewed to see whether they were eligible for continued hill cow subsidy payment. Of those, 254 have been declared ineligible, and I understand that, so far, of 100 appeals, 10 have been successful, three have been partly successful, and 87 have been rejected. In North Devon alone, 52 farms have been reviewed; three have been kept in, three have been partially kept in, in the case of three there has been no decision, and 39 have been excluded.

That means that farmers who came in on the inducement of the hill cow subsidy scheme, whose land at the time was not thought suitable for any other purpose, are suddenly to have this assistance withdrawn from them. This is not a review so much as a complete reinterpre-tation of the scheme ab initio.

Perhaps I may give an example of how viciously—and one may say that—this review is working. A farm at Knowstone, in my constituency, is 750 ft. up. In 1952, it was selected by the agricultural executive committee as a representative example for the whole of the West of how, £ for £, the Livestock Rearing Act could help on marginal land. The land is marshy, and one finds the breeding herd hidden for the most part by heavier rushes. This has been a livestock rearing area for centuries—it was really not much good for anything else. As I say, this farm was such a perfect example of the sort of terrain for which the hill cow subsidy was meant that it was the subject of articles in the farming Press, and was specially selected by the A.E.C. in 1952.

The farmer has now been told that it is suitable for crops, dairying, and the fattening of cattle or sheep. I should have thought that to be an impossible act even for the Archangel Gabriel, were he to turn his hand to such an activity. The farmer appealed, and has received a duplicated form—there are so many of them they have to be duplicated—to say that his appeal has been rejected. That man now loses his subsidy, his winter keep, he is left with a very barren farm, and his income will at once drop by £750. I would, therefore, ask the Minister to look again at how this review is being carried out in the West Country, because very many small farmers who hve no alternative means of gaining a livelihood are finding that the carpet is being pulled from under their feet.

Page 44 of the Conservative Party's publication on agriculture, referred to by the hon. Member for Leek (Mr. Harold Davies), says, of credit: The Conservative Party has never believed in easy credit for agriculture. How right that is. When one considers that the average interest charges on loans to the agricultural community run to about £26 million a year, one begins to realise how vital credit is to farmers, and particularly to small farmers.

A survey recently carried out at the University of Exeter showed that 40 farms that had benefited from the Small Farmer Scheme had insufficient capital. The farmers bought seeds and fertilisers with Government assistance, and then found that they had not enough money to buy the cattle or sheep to put on the ground that benefited from the fertiliser and seed put in the soil.

We have to tackle afresh the whole idea of credit for the agricultural industry. The L.I.C. is doing quite a good job, but it cannot make advances on the security of any holding under 50 acres. The A.M.C. can only lend at Bank Rate plus 1½ per cent., and thereafter must show a profit on borrowings. I should like to see both the L.I.C. and the A.M.C. closed down, and a land bank established which could give credit facilities of up to 100 per cent. of the value of the farm, at current rates of interest, backed initially by the Treasury, and which could also guarantee other banks making loans. There is nothing radical in that suggestion; many other countries successfully operate such banks. If we are to have the concept of a managed market, production grants properly angled and credit readily available, then agriculture can face a secure and expanding future.

I want to refer with emphasis to the activities of the Egg Marketing Board. The House knows that under the Egg Marketing Scheme the Board was given wide powers. All producers except those with flocks of 50 or under were required to register, and all eggs were to be sold by the Board, except in those instances where a licence was granted to sell direct to consumers or retailers.

A problem now arises relating to what are known as "seconds"—second-quality eggs. Prior to 1st January, 1964, egg packing stations could sell second-quality eggs to anyone they wished, but as a result of an announcement made by the Board on 24th October, 1962, only processers approved by the Board could purchase second-quality eggs. That date—24th October, 1962—is very important. This trade is worth nearly £1½ million per annum, and it becomes apparent that the Board was in possession of a monopoly, and a very valuable monopoly. Since the Board was set up by Parliament, since it was armed with statutory powers by Parliament, since the Minister has already, under Section 19 of the 1958 Agriculture Act, made a reference to a committee of investigation about the activities of the Board, one is entitled to ask whether that power of approval has been exercised wisely and fairly.

One small farm in the West Country—in the constituency of the Parliamentary Secretary—takes the view that the Board has not acted fairly, but has, in fact, acted in a way that is not only manifestly unjust, but which will put this small company right out of business. I think that the facts will show that the Egg Marketing Board has behaved disgracefully that the committee of investigation has not probed sufficiently into the available evidence and, even on the evidence available, has reached conclusions that are totally unacceptable. Here I pay tribute to the newspapers who have probed this case.

What are the facts of this case? There are two men in Cornwall, Mr. Roose and Mr. Baker, both of whom have been in the egg industry for several years; Mr. Roose, back to 1958, and Mr. Baker from 1961. At the end of 1961, a large bakery firm in Plymouth stated that it was not any longer prepared to buy unpasteurised liquid eggs, but that if pasteurised eggs could be produced locally it would be happy to give the processers a long-term assurance. Mr. Roose and Mr. Baker therefore decided to pasteurise liquid eggs for bakery and other industrial purposes. They had every right to do this. Second quality eggs were freely purchasable from packing stations. It was a trade they understood.

In March, 1962, they had discussions with a firm which was a supplier. It was a little time before the specifications arrived, because the plant was manufactured only in America, but eventually—in September, 1962—they received their quotation, and on 5th October they paid a deposit of £390 on nearly £1,300 worth of equipment. So, on 5th October, they had entered into a contract, had paid their deposit, had agreed to take delivery and had hire-purchase facilities with a firm which would help them to pay off the balance.

Suddenly on 24th October, with no prior warning, came an announcement from the Board that it, and it alone, would decide who had the right to process second quality eggs. Straight away these men wrote to the Board and said, "We should like to tell you that we are in this business and have just bought some very expensive equipment, and we take it that it will be in order for us to buy eggs from you." The Board replied on 19th November that it surmised that the installation of the plant had been stimulated by the news of the announcement that the monopoly would be handed out. There was not a shred of evidence for this conclusion, but throughout this has been the reaction of the Board.

That was the attitude of the Board. What is much more serious is what followed—the evasion of the Board. By December, 1962, it wrote and said that it could not give a guarantee and was not hopeful of granting a franchise because, in any event, a very great deal of preparatory work had still to be done. But we already know from the findings of the Committee of Investigation, on page 10, that before the Board made the decision it had already virtually selected as the Board's agents a firm in Taunton, which was thereby going to be given a monopoly for the whole of the South-West. There was no question of inviting applications; there was no question of going through the applications on their merits. There was a prior arrangement before there was any question of a public announcement, and this firm, to the exclusion of all others, was promised a monopoly.

It took the Board one year to "come clean" and say definitely that this little firm should not be supplied. We now know that there has been a carve-up between 10 firms, and that the Board met the 10 successful firms after the Cornish application had been received and that that application, from all that one can tell, was never properly considered by the Board. The effect is that the men I mentioned face bankruptcy and ruin because they cannot get supplies as they are not one of the 10 processors approved by the Board.

The Board went further, and it is this behaviour which leads the Committee of Investigation, set up by the Minister, with a Queen's Counsel presiding, to say that there were no grounds for complaints that the Board acted unreasonably. The Board felt that it had to give excuses for its rejection. It had already given a monopoly before announcing the scheme. It said that the standards at the packing station did not comply with the Board's standards of hygiene and quality.

That has been rebutted by the finding of the Committee of Investigation. We also know that, although these allegations were made on 5th February, it was not until 6th February that the Board carried out an inspection. So it rejected on 5th February and inspected on 6th February. This is the Board of which the Queen's Counsel said that there were no grounds for complaint that the Board had acted unreasonably.

There is a final point of interest. The Board is told by the Committee of Investigation that if it had broken the contract with the company supplying their machinery no action for damages would follow, in the view of the Queen's Counsel who presided, because a man from the selling company had stated that he did not think his firm would ask for the cost of installation or for the deposit to be forfeited. This comes from a Queen's Counsel who says, on page 10: In the absence of anything in writing, we do not know precisely what passed between the parties to this contract when the question of a possible breach was raised. On that evidence he concludes that no action could have been brought.

In an Answer to a Question today from the hon. Member for Brixton (Mr. Lipton) the Minister was asked whether he would make a Section 20 direction to the Board, and he has refused. In a sense, the Minister has no alternative but to refuse. By Section 20(4,a) he can make a direction only if he has not been told by the Committee that there have been errors or omissions. Therefore, the only course open to the Minister is to order a fresh inquiry, and, in my view, this he has the power to do. If the Parliamentary Secretary has any doubt, I am prepared to argue the legal toss with him on a later occasion.

I merely say that, first, the inquiry dealt only with the facts submitted. The transcript of evidence is not available, and I believe that the Minister should request both sides to agree that it should be disclosed. The interests of persons affected have been ignored, and the series of conclusions reached are either inadequate or based on non-existent evidence.

I should like to know how the lucky 10 were selected, and when. We know, for example, that the managing director of one of the lucky 10, given this "licence to make money", was formerly a member of the Special Committee. It would be interesting to know whether he had attended a meeting of the 10, and if so, in which capacity—as a member of the special committee granting the franchise or as the managing director of a firm about to receive it.

I should like the Minister to agree that the little firm that I have mentioned is not asking for special treatment. It is asking for fair treatment, and it has not been given it. I would ask the Minister to agree that it is a valuable monopoly which is being granted, and that it is vital in the public interest to ensure that the power is being fairly exercised. It is clear that prior agreement was granted to the Taunton firm—before the publication of the scheme. It is clear that there was no proper consideration of the application of the Cornish firm. It is clear that the rejection was based on a report which was written before the inspection was carried out. It is clear that there was a long and unreasonable delay before these people were finally told that they would not be permitted to have supplies.

I suggest to the right hon. Gentleman that in this case the firm has been wrongly treated by a statutory Board. It is a firm which faces ruin. These people have as much right to have their claim considered as any other company connected with the egg industry. If we are to have this worst type of bureaucracy on the part of a public board, with arrogance, deceit and evasion, as it seems to be, surely this is a case where the Minister must decide there should be a thorough inquiry, and that, pending that inquiry, the firm should be allowed to buy second quality eggs, upon which it depends for economic survival.