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Eggs (Guaranteed Prices)

– in the House of Commons at 12:00 am on 6th June 1957.

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6.50 p.m.

The Minister of Agriculture, Fisheries and Food (Mr. Derick Heathcoat Amory):

I beg to move, That the Eggs (Guaranteed Prices) Order, 1957, dated 22nd May, 1957, a copy of which was laid before this House on 23rd May, be approved. This Order makes arrangements for providing guaranteed prices for eggs through the new British Egg Marketing Board. The Order replaces an existing Order, which was also made under Section 4 of the Agriculture Act, 1947, which gave authority for the Government's present support buying arrangements. The present guarantee arrangements have been in force since 1953, when rationing and price control of eggs ended, and they were interim arrangements intended to tide over the period until permanent marketing arrangements came into being. The Egg Marketing Board has been set up under the Agricultural Marketing Acts and will start exercising its marketing functions at the end of this month. New guarantee arrangements will be necessary from that time onwards, and these are provided for under this Order.

In future, as in the case of milk and wool, the guarantee will be paid to the Board and not direct to individual producers. This is essentially a machinery Order which simply lays down the procedure to be followed each year in determining what payments are due to be made to the Board to implement the guarantee. The Order itself does not fix the guaranteed prices. The guaranteed prices and the standards for eggs will be fixed, as they have been fixed up to now, each year after the Annual Price Review. The detailed financial arrangements under which the Board will administer the guarantees will be embodied in an agreement between the Ministers and the Board, which I hope will soon be signed. Copies of this agreement will later be made available in the Library of the House.

When the Egg Marketing Scheme came before the House last December I outlined the financial arrangements which we proposed to make with the Board if the Scheme were approved, and this Order provides the authority for those arrangements. The procedure will be briefly as follows: each year after the Annual Price Review Ministers will fix the standards for eggs and the guaranteed price per dozen, and will also make an estimate of the average selling price for the coming year. The Board will then be paid a rate of subsidy which will represent the difference between the guaranteed price and the estimated selling price for each dozen eggs it buys.

This Order also provides arrangements which are designed to give the Board an incentive to get the best out of the market. I admit that these arrangements are a little complicated. If the actual selling price differs from the estimated selling price by no more than 2d. a dozen, then the Board will keep the surplus if the actual price is above the estimated price and will stand the loss up to the 2d. if the actual price turns out to be below the estimated price.

Beyond this band of 2d. on either side. any difference will be shared between the Board and the Government. For instance, if the actual price is more than 2d. a dozen below the estimate, then the Government will make up 90 per cent. of the deficiency beyond the 2d. If the actual price is more than 2d. above the estimated price, then the Board will pay back to the Government 50 per cent. of the difference above the 2d.

This year the guaranteed price of hen eggs is 4s. 1¼d. a dozen and the estimated market price is 2s. 10d. There are special provisions in Clause 10 of the Order which relate to the first year of working. These are needed because the Government will be operating under the existing arrangements for the first three months of the present year but the prices which were fixed after the Annual Price Review, to apply when the Board took over, referred to the whole year.

Consequently, the results of the operations during the first quarter of the year will have to be taken into account in determining what will be paid to the Board or to the Exchequer, as the case may be, in the risk-sharing arrangements which I have just described. The Order contains provisions to cover this point and also provides certain financial adjustments to be made at the point when the Board takes over from the Government. Thereafter, the Board will be answerable to the producers, who voted it in with such an overwhelming majority.

The Board will buy all the hen eggs which pass through packing stations, which is far and away the bigger number of the eggs sold, and will itself fix the prices which are to be paid for the eggs to the producers. The Government will no longer fix those prices.

The Board has said that it does not intend at present to make any substantial changes in the physical channels through which eggs will be marketed. Packers will continue to operate much as they do at present, therefore, except that instead of operating as principals, as they do now, they will buy from producers as agents of the Board and the Board will fix the wholesale prices at which it will sell eggs, much in the same way as the Government fix them at present through NEDAL. The Government at present fix through NEDAL the prices at which it will sell eggs to the wholesalers.

Subject to the limitations in the financial agreement between the Board and the Government, the Board will be entirely free to use the powers which it has obtained under the Scheme to market eggs in whichever way it thinks best. The chairman of the Board has announced that it will have three main aims—to sell more eggs, to speed their journey from the farm to the shopping basket, and to encourage high quality production. I know that the House will wish the Board every success in attaining those three objectives. It is taking over a wide responsibility at a difficult time, and I am sure that it deserves our support and encouragement. I am sure, too, that it will tackle the problems with a full sense of responsibility not only to the producers but to the public at large.

We have all been concerned at the high cost of the subsidy on eggs during recent months. It was primarily that very high subsidy cost which led the Government to reduce the guaranteed price for hen eggs by 1¾d. a dozen at the last Annual Price Review. I recently felt it necessary to warn producers that, subject to the usual careful and thorough review next year, and subject to the provisions of our long-term assurances, it seemed to me that, unless there is some major change between now and next February, a further reduction in the level of the guarantees must be expected. In present circumstances, we cannot afford any further expansion. Indeed, some reduction from the quantities which are in prospect seems to be desirable.

Photo of Sir Leslie Plummer Sir Leslie Plummer , Deptford

Would the Minister be a little more explicit and tell us what he means by a "major change"? Does he mean a major change in consumption or does he mean a major change in a decrease in production?

Mr. Amory:

It might arise from both. For instance, a major change in the market price would have a bearing on the situation. Of course, it is quite likely that that would arise from a change in consumption.

I hope very much that the lower prices which have been current recently will have stimulated a higher demand. In fact, there are signs that that seems to be happening. If that went on it could affect the position considerably. Also, we shall take into consideration, as we always do, any changes in the costs of production between now and then. I wanted to cover myself, because I am not now taking a decision—that would be wholly and entirely wrong at this stage—as to what we shall do. I am only giving a warning to the industry of what, in view of the probable trend of events, the situation will require when the time comes.

Production has now expanded to a point where the most strenuous efforts must be made to encourage demand if supplies are to be absorbed without an intolerable burden of subsidy. That means a very vigorous selling policy and skilful market operations as well. The voting for the Board made it amply clear that the big majority of producers want these responsibilities to be undertaken by their own Board. The problems facing the industry mean that the Board will be confronted with a formidable challenge, but I am confident that it will give a good account of itself.

7.2 p.m.

Photo of Mr Frederick Willey Mr Frederick Willey , Sunderland North

The right hon. Gentleman and his hon. Friend the Joint Parliamentary Secretary always speak with a pleasant, engaging air of innocence which I used to think was gregarious simulation, but I am being driven to the mournful conclusion that it is genuine. They are quite innocent about agricultural problems, and when the right hon. Gentleman strays beyond the strict limits of his brief, what he says about agriculture is most disturbing.

We are in the further difficulty this evening that we have not the agreement before us, and I want to protest about that. When we discussed the Egg Marketing Board, the then Parliamentary Secretary said: No financial agreement could be made until a Scheme has come into being and a board has been appointed. As soon as the board has been constituted, the details of the arrangement will be settled. My right hon. Friend gave the outline. When that is done a Section 4 Order under the 1947 Agriculture Act will be brought before the House in order to implement that agreement, so that the House will have a full opportunity to debate it."—[OFFICIAL REPORT, 12th December, 1956; Vol. 562, c. 388.] That is just what we are not having. We should have had an explanation from the right hon. Gentleman why the agreement is not before us now. He knows that on previous occasions I have taken up a similar point with him. I do not know why we should be discussing this Order tonight. Why could not we have the agreement before us so that we could discuss it properly in the context of the Order?

That is important for another reason. As the right hon. Gentleman has revealed, the results of the Government's trading operations during the first quarter of the year will have to be taken into account in determining what is due to the Board or the Ministers at the end of the year under the risk-sharing arrangement described in the memorandum which the Ministry has made available to us.

We ought to have had this information before us today. I should like to know whether there were any difficulties in the negotiations between the right hon. Gentleman and the Board. Is the Board to be placed in an impossible position this year in view of the unfortunate experiences of the Government before the Board took over? I complain that we have not this information before us. I complain that this is a breach of the undertaking given to the House by the Parliamentary Secretary when we discussed the Egg Marketing Board. We want to know whether the Board is in a fair position to carry out its responsibilities this year.

I want to know whether there are any differences of opinion between the Board and the Government as to the arrangements which are to be made for the first quarter of the present year. I realise that, with regard to the agreement generally, by carrying out a little research I can form a pretty good idea what its provisions will be, but again I point out that the Price Review White Paper shows that those provisions are subject to a quite important proviso, because the provisions in the White Paper are themselves Subject to the terms of the financial agreement …". I thought that the least we should have from the right hon. Gentleman would be an assurance that not only is the Board not to be prejudiced by the account that is to be taken of the first quarter of the present year but also that there will be no attempt to use the financial agreement to affect in any way the position as it appears in the White Paper.

I wish to say a few words about the first three months' experience under the present Price Review. The right hon. Gentleman has always taken the view that this was some unexpected result of unexpected climatic conditions. When I talked about the right hon. Gentleman's innocence I had this particularly in mind. When we discussed the Egg Marketing Board, I pointed out to him then that, almost certainly, difficulties would face the egg producers such as those which were facing milk producers, and I asked the right hon. Gentleman what he was doing about it. I did not even get a reply. In fact, nothing was done about it.

There are many factors which arise, and these affect the provisions of the Order. The right hon. Gentleman has referred indirectly to the question of a price policy, but I gather that he is abnegating all responsibility for that now.

Mr. Amory:

Mr. Amory indicated dissent.

Photo of Mr Frederick Willey Mr Frederick Willey , Sunderland North

I gathered from the right hon. Gentleman that he was, but certainly that is a matter which very much affects egg production.

I raised other questions about technology and the economics of the industry. If I had had any reply about them, I could have been satisfied that the right hon. Gentleman was concerned about them, but he was innocent of these things. It must be realised that egg production is not easy to regulate, especially when we have practically satisfied the whole of our domestic requirements, but it is because we could anticipate an increase in egg production—one had only to look at the figures—that we expected the right hon. Gentleman to take steps to equate supply with demand. It is no use saying that domestic production is meeting our full demands at home unless we endeavour to ensure that our home consumption and production correspond.

On the question of making the adjustment affecting the first three months of the year, I ask the right hon. Gentleman whether we have to take account of any eggs in store. There is an ugly rumour that at the time when we were exporting eggs to Denmark we were not putting eggs into store, because the stores were already full of eggs. That seems preposterous. I should like to know whether that was so.

Mr. Amory:

I do not quite understand what was preposterous.

Photo of Mr Frederick Willey Mr Frederick Willey , Sunderland North

It would be preposterous if, at the time of the flush, storage capacity was already used to the full with the previous years' eggs so that we could not use it. That is being alleged. I should like the right hon. Gentleman to tell us whether, in arriving at the amount for the three months, account will be taken of eggs put in store. How many eggs were put into store, in other words, off-loaded, in the flush period?

I do not want to go into the question of the export of eggs, particularly as the hon. Member for Kidderminster (Mr. Nabarro) is not here. The hon. Gentleman has been kind enough to explain to me the difficulty he has in being with us tonight, and has asked me to convey his apologies to the right hon. Gentleman. I would merely ask the right hon. Gentleman what account will be taken of the amount of the subsidy on eggs exported when the right hon. Gentleman strikes a balance with the Egg Marketing Board for the first three months.

The right hon. Gentleman's warning is not the right way to tackle the problem of subsidy. Are we to get these warnings, months in advance of any Price Review, that there will be further reductions in the price support? I should have thought that the problem was to keep domestic production in line as far as possible with domestic demand.

Mr. Amory:

That is the object.

Photo of Mr Frederick Willey Mr Frederick Willey , Sunderland North

If that is the object, why give these warnings on the same day as the right hon. Gentleman has said that at the height of the flush it was only a question of encouraging a 1 per cent. increase in consumption? That is what he told us in Question Time.

Instead of that, we get this sledge hammer. We have seen the effect of this sort of thing before. I do not want to mention other foodstuffs in respect of which we had exactly the same approach. Instead of saying, "Let us try to deal with this problem", the only thing the right hon. Gentleman can say is, "I give you repeated warning that there will be a further reduction in the price support when we reach the next Price Review."

What effect will the new arrangements made by this Order have upon the subsidy? The right hon. Gentleman knows that the figures were worked out for 1954–55, when it was shown that if these arrangements had then operated they would have resulted in an increase of £6 million in the subsidy. It also revealed, by the way, that the Ministry's estimates were wrong by 4d. a dozen. I do not know whether that is why we have the 4d. band. What is the present estimate of the effect on the subsidy of the new arrangements?

The right hon. Gentleman mentioned what he regarded as physical channels. I gather that he is satisfied that the Egg Board has assured him that there will be no alteration in the physical channels. By that I presume that he is referring to the packing stations and the present arrangements for distribution.

Let me remind him that when we were discussing the Egg Marketing Board I pointed out that that matter had been repeatedly criticised by the Public Accounts Committee. I am not criticising the packing stations as such, but the system of the distribution of the subsidy. I should have thought the right hon. Gentleman would have had a little more imagination and would have been able to tell us that he had devised an improvement in those arrangements. I pointed out these matters when we debated the Egg Marketing Scheme, and I only point them out again because I still have not had a reply about any of them. They affect both the security of the producer and the liability of the taxpayer.

I would mention two or three matters which I raised in Standing Committee when we discussed the Agriculture Bill. and again about which I received no reply whatsoever from the Government Benches. These matters are germane to the present Order. This is an illustration of the operation of the assurances provided by the Agriculture Bill. The Government have anticipated the provisions of the Bill. No one complains about that, but I asked questions arising from the long-term assurances that the Government claim to have given. Incidentally, I said that the consumption of eggs had fallen over the past year or two. The Parliamentary Secretary denied that. He was good enough the other day to apologise for the right hon. Gentleman; perhaps the right hon. Gentleman will now apologise for the Parliamentary Secretary. He knows the figures well enough, and that there has been a decline from 1954 to 1956. I have the figures here if the right hon. Gentleman wishes to challenge them.

This is a very important matter. If the right hon. Gentleman, earlier today, was talking about increasing consumption by 1 per cent. at a particular time of the year as being the problem that we were facing, he should look to this fall in consumption to see what factors caused it. In the light of these facts he might be a little repentant and rather more optimistic.

I want to turn to specific matters which I put to the right hon. Gentleman and the Joint Parliamentary Secretary during the Committee stage of the Agriculture Bill. The right hon. Gentleman has not replied to these points even yet. The first point, which seems of some importance, is that the right hon. Gentleman has again talked about a reduction of 1¾d. To reach that figure he has to take account of the feed formula. In giving the assurances, was that formula taken into regard? That point has not yet been made clear. It is clear by inference, but we might as well get it explicit, because it can affect other commodities.

The second point I raised on which I have not yet had a reply is that we have had a change in the feed-price formula itself. Where do we get with long-term assurances if we are played about with like this? Now, in the middle of the Price Review year we are having another change, something entirely different, in the system of price support. Even if we disregard the uncertainty brought about by that major change, we have these minor changes without so much as an explanation from the right hon. Gentleman.

On the major change made by this Order it was the right hon. Gentleman's case that the reduction in the price support, which has been made before the implementation of this Order, was the maximum which could be incurred under the long-term assurances. In fact it may be slightly more, but I recognise the difficulty of working in terms of currency. I gather that the position we face when we consider the present Order is that the Government have already made the maximum reduction they could make under the long-term assurances. However, when we consider the present Order, there is a dispute between the right hon. Gentleman and the National Farmers' Union. I called the right hon. Gentleman's attention to that matter when we discussed this subject.

Photo of Sir Henry Legge-Bourke Sir Henry Legge-Bourke , Isle of Ely

On a point of order. I think I heard the Minister say, when he was telling the House of the contents of this Order, that this was purely machinery and the actual sums involved were not relevant to this Order. Might I suggest to you, Mr. Speaker, with respect, that the points the hon. Member for Sunderland, North (Mr. Willey) is now putting before the House are essentially concerned with the actual amounts? Would, it, therefore, be in order to consider them?

Photo of Mr William Morrison Mr William Morrison , Cirencester and Tewkesbury

I think I heard the Minister make some reference in his speech to the cost of this subsidy. I do not see how I can rule out anything that the Minister considers relevant to the Order.

Photo of Mr Frederick Willey Mr Frederick Willey , Sunderland North

I am anxious not to go into any great detail on this matter. I am sure that the right hon. Gentleman will concede that this Order alters the method of price support. Under the provisions which were obtaining, the Govern- ment had enforced the maximum reduction they could enforce under their long-term assurances. I said that when we come to consider the new provisions we find that there is a dispute between the right hon. Gentleman and the National Farmers' Unions. That was a point on which the National Farmers' Unions were not able to agree with the right hon. Gentleman. The Unions said: The unions and the Board regret that because in their view this figure of the estimated wholesale price is higher than production prospects warrant, it could mean that in addition to a reduction of 13/4d. in the average price, producers' returns could fall depending on the extent to which the realised price fell below 2s. 10d. I wish to put a very important question to the right hon. Gentleman. What steps is he going to take to ensure that the return to the producer will not fall below that which was guaranteed before these new arrangements came into operation? He may be wrong and the National Farmers' Unions may be right. What steps is he going to take to implement his long-term assurances? Is he, in the first year of the operation of these assurances, going to make nonsense of them? I hope that he will deal with that point. I cannot understand why he has not referred to it as I had already raised the matter in Standing Committee.

The National Farmers' Unions conceded that this point of difference did not affect their acceptance of the Review as a whole. However, unlike the Minister, they said that these present arrangements can result in the producers getting less than they would have got if the old arrangements had continued, but the old arrangements would have enforced a maximum reduction on the producers. What steps is the Minister going to take to honour his guarantee to the producers that when we reach the end of the Review year they will not be worse off than they ought to be under the long-term assurances given by the right hon. Gentleman?

Having raised those points, which I think are very material to the view that we take of this Order and the change in the arrangements, I join with the right hon. Gentleman in welcoming the Egg Marketing Board, and wish it every success. I agree with what the right hon. Gentleman said about encouraging a lively sales policy. I thought he might have given a little more enheartening reply to my hon. Friend the Member for Oldbury and Halesowen (Mr. Moyle), who I thought at Question Time made a very practical suggestion about schools. Why were those steps not taken this year?

In spite of objections by hon. Members opposite, when we were in office, we conducted extensive advertising campaigns to get eggs moving in the flush periods. I do not want to say more about that tonight, except that it is enheartening that the Egg Marketing Board will do just what the right hon. Gentleman himself has failed to do. Although the difficulty has always been rather exaggerated, I join with the right hon. Gentleman in hoping that the time taken for the egg to get from the producer to the consumer will be speeded.

I have raised these criticisms because I feel—this is where the right hon. Gentleman seems to be such an innocent —that the Egg Marketing Board has been given an extraordinarily difficult job, a job which is rather more difficult than it might have been. This afternoon the right hon. Gentleman has again unnecessarily aggravated this sense of insecurity. I hope that at any rate he will be able to go some way towards assuring me that he has the difficulties of producers in mind.

The least that the right hon. Gentleman can do is to give the assurance for which I have asked that at the end of the present year the producer will find he is no worse off than if the previous arrangements had continued—in other words, that he will have no dubiety in saying that the Government accept their declared responsibility with regard to their long-term assurances and are not going to hide behind the device of the changed method of price support, but will safeguard the producer against any loss in the price which has been guaranteed to them.

I hope also that the right hon. Gentleman will do what he can to assist the Egg Marketing Board and to encourage it to take the steps such as my hon. Friend the Member for Oldbury and Halesowen suggested. I am convinced, and I am sure the whole House is convinced, that there is considerable room for an increase in the consumption of eggs. As in the case of milk—these problems are not divorced—there has been a tendency for the consumption to fall in the last few years. We should much prefer a lively, determined policy to increase the consumption of eggs, because that is the best way to deal with the difficulties experienced by producers.

7.26 p.m.

Mr. Amory:

The hon. Member has had to exercise his utmost ingenuity to try to cast gloom over our proceedings and to imply that in some way the policy of the Government has failed. On the contrary, in this sphere the policy of the Government has been extremely successful.

We have succeeded in promoting a very steady and spectacular expansion in the poultry section of the industry during recent years. We have succeeded in achieving a position where about 100 per cent. of the eggs we consume are home-produced and a position in which the consumer has been able to obtain eggs at extremely reasonable prices. That is a situation at which, in general, we can all rejoice.

I turn to the particular points made by the hon. Member. He asked why it has not been possible to produce the financial agreement here and now. In short, the answer is because that financial agreement has not yet been completed. It does not become necessary until the beginning of next month, but I have described the contents of the financial agreement to the House on all relevant points. There is really nothing more in the financial agreement than that.

The hon. Member asked whether we have reached agreement on the provisions to deal with the first three months of this year. The answer is "Yes." We have agreed in principle with the Egg Marketing Board that a provision shall be put into the financial agreement to deal with that period. We cannot cover all the details until we are nearer the end of the period concerned, the first three months.

The hon. Member asked whether eggs in store would be taken into consideration in that agreement. The answer is yes—that will have a bearing on the situation. They will be taken into account in the financial provisions which have to be made for the hand-over. The hon. Gentleman asked what quantity of eggs were in store this spring. The quantity was less than in any recent years and at no time exceeded 30,000 boxes.

Photo of Mr Frederick Willey Mr Frederick Willey , Sunderland North

Why is this so? Were we exporting eggs when we could have stored them in this country? Or is it the case, as has been alleged, that the storage capacity is fully used up by the eggs previously stored?

Mr. Amory:

As the hon. Gentleman knows, commercial decisions have to be taken every day in these matters about what is in the interests of future trading. I have given him the information for which he asked.

The hon. Gentleman seems to criticise me for giving a warning of probable trends in the future and the action required. Earlier he appeared to criticise me for not attempting to forecast the trend of production and the consequences. My job is to give all the guidance possible to the industry about the probable trends of developments and the actions that the Government think it likely they will have to take in the light of those developments.

This time last year I did exactly the opposite. In the case of cattle, instead of giving a warning of a probable need for a further reduction in the guaranteed price, I gave an assurance to the industry that at the next Price Review there would be an increase, and the industry was grateful for that warning. The hon. Gentleman asked why we had not notified the local education authorities, but my right hon. Friend did do so.

The hon. Gentleman asked about advertising. That is one of the reasons why we are in favour of and recommended the formation of marketing boards. We believe that such a board is in a better position than is a Government Department, even when backed with trading agencies, to deal with commercial matters such as advertising, publicity and trade development. That is one of the reasons why we are keen on this Board and were satisfied that it would be suitable. I have no doubt that the Board will be in a much better position to undertake long-term advertising programmes and developments of that kind than a Government Department. It confirms our view that Government Departments generally are not appropriately established for commercial operation.

Photo of Mr Frederick Willey Mr Frederick Willey , Sunderland North

Surely the right hon. Gentleman would agree that, not having taken action, it is not an answer to say that the action will be taken by the Board which will deal with things sensibly. I am inquiring why the right hon. Gentleman has not dealt sensibly with them. When he says that a Government Department cannot indulge in this sort of advertising, I would remind him that the Ministry of Food did so most effectively and particularly with regard to eggs. The right hon. Gentleman is saying no more than, "I have fallen down on my job."

Mr. Amory:

On the contrary. We carried out this operation in the Ministry of Food and since. But I believe that, in future, such work will be carried out more effectively because the Board will be a more appropriate instrument for doing it than a Government Department.

The hon. Gentleman asked about the feed formula. The change we have made there has been fully agreed with the National Farmers' Unions and will not affect the value of the guarantee at all. The hon. Gentleman asked whether the reduction we made in the last Price Review was the maximum which could be made under the provisions of our long-term assurances. The answer is that it was nearly the maximum. I fancy that under the scheme we could have gone a farthing higher.

Finally, the hon. Gentleman asked whether we could guarantee that producers would receive a guaranteed price of 4s. 1¼d. for the current year. What the producers will actually receive during the current year will depend largely on what the Board decides to pay them in cash. At the time of the Annual Review, the basis for the financial agreement had been agreed with the farmers' unions. These financial arrangements under which the Board will work and which I have described had been agreed, and the estimated market price for the year had also been announced. I think it was included in the Government's White Paper.

What the Board will be able to earn for the producers will depend on how successful it is in obtaining the best price that the market will pay. That is why we have included this band, and therefore we cannot say precisely what the sum available for the producers will be. It may be slightly less and, equally, it may be slightly more.

I have attempted to cover all the points raised by the hon. Gentleman, and I hope that the House will now approve the Order.

Question put and agreed to.

Resolved,That the Eggs (Guaranteed Prices) Order, 1957, dated 22nd May, 1957, a copy of which was laid before this House on 23rd May, be approved.