I will come to other things that hurt and I will follow the line of the hon. Gentleman's argument if he gives me a moment. One has to concede a further fact if one wants to be fair. To the 134s. 11d. paid for cattle in the third week of October, one adds the 27s. 4d. guarantee. That comes out at 162s. 3d. which is 5s. 2d. below last year's price and 2s. more than the 1964 price. This debate should have been about the problem of why, when these are the end prices, there has been this disastrous fall in prices at the autumn market sales.
We find here a good deal of difficulty in analysis. The only study I have seen is in this excellent production "Scottish Agricultural Economics" for 1964, where there is an attempt to draw a correlation between the farmers' selling price and the autumn market price. It shows that in prices for Blackface Wedder lambs over the last 10 years there was a 90 per cent. correlation between the end price and the prices of store animals. That means that something has gone very wrong this autumn, because the 10 per cent. fluctuating factor is really much greater than the article says. We have to get at the root cause if we are to produce cures, not only now but for future years. The problem has nothing to do with quantities, because plenty of animals have come on to the market. We are here dealing with a complex group of factors.
I think, and this is why I was a little sorry about some of the terms of the Minister, that in a classic sense, the trouble is due to lack of confidence. Because the farmers have had squeezed margins over 10 years they have become increasingly worried, as any one knowing the farming community will attest. On top of that, they have felt grave alarm that they will not get the proper price for the next set of lambs when fattened. Many farmers have learned to do their sums. They know that they do not do well in sheep, and have gone into barley on the lower ground. That means that there has not been the purchase of store lambs to fatten. On top of that there has been the credit problem. That has been cleared up now, but I thought that some hon. Members opposite put too much emphasise on the credit aspect.
There is, in addition, the cost problem, which the hon. Member for Torrington (Mr. Peter Mills) has mentioned, although we have to admit that, including cost, the net income of sheep farms in Scotland has risen over the last two years but it has not risen enough to restore confidence or give the necessary margin of capital for this particular set of difficulties.
I have said that this is a general crisis of confidence, and I do not use the word "confidence" in the political sense used by hon. Members opposite. Many farmers are quite clear that something has gone wrong with the structure of the industry. They have no particular confidence in either party—and, given the sort of speeches we have had tonight, I do not blame them if they are cynical about both parties. They are not bothered about the political kind of confidence. Their concern is confidence in their own industry, and the future of the livestock product. We must do something pretty immediately to restore the confidence that has been lost.
Now there are Members on both sides of the House who are very deeply committed to the free import policy. They want maximum free imports. Consumption of mutton has not gone up in this country significantly since the 1930s, and people may well take the view that we can afford a declining sheep industry. I think that this would be a mistake. May I give three reasons why this would be a mistaken policy.
First, I think that the present grave difficulties in the industry may lead to a cut back so that we do not achieve the expansion targets the Minister set out. I would ask the Minister, when thinking about this, to look at the difficulties in Scotland, where there was a set back in the ewe flock. Figures recently released by the Ministry show that the number of lambs has gone down from 3·8 million last year to 3·6 million this year. If the present rate of slaughter goes on there is considerable danger of a severe fall in the lamb crop next year and the year after.
The Minister must also reconsider his position in the light of the possibility of import substitution. There has been too much over-simplification of this aspect of expanding production. No economist has adequately worked out how much one gains on the balance of payments for a given rise in agricultural production, and the cost this would represent to the community. I see that the President of the National Farmers' Union says that if we achieved the National Plan targets it would save £200 million on the import bill, but a most distinguished Oxford economist, using the same figures, has said that the saving would be £50 million. If the Minister has some one in his Department doing research, perhaps we could be given the figures of the import saving we could expect from various levels in capital injection. Until we have that information, we cannot form our judgment on whether or not this would be valuable to the community. My own view is that it would be worth while, but that is just a hunch.
I suggest as a third reason for action the fact that trading patterns are changing so rapidly. We have only just felt the full impact of the Common Market tariff. We have seen its effect on Anglo-Irish trade. If we decide to go into the Common Market in the near future, this again will affect trading patterns. There is therefore a sound case for protecting this highly desirable section of our industry on social grounds until we see the final outcome of the immediate changes in trading patterns.
Having given reasons why the Minister might reconsider his attitude to the industry, I wish to go over what action he could take immediately. I say this sincerely as I think this is in large part not a crisis of end prices but one of confidence. One of the things which he could do would be to say that there is a problem, that he is concerned about it, and that he is worried. He should say this, not once or twice, but three or four times. We know in the farming industry that he has done many good things. We want to know what he is going to do now, and that he is worried by the recent price falls.
I know that he cannot put up the end price of mutton to a great extent. I know that every penny up in the price per pound costs the Exchequer £2 million in the Price Review. If on both sides of the House we fight without too much party propaganda we might squeeze £20 million out of the Chancellor of the Exchequer for the next Price Review, but it would be a mistake to ask for more than 2d. or 3d. on the price for sheep as there are so many demands from other sections of the industry. Now the Minister has been able to give some comfort to pig producers by promising to consider them favourably—leaving out the totals—in the next Price Review. Could he not say the same tonight to sheep producers—that he will give them favourable consideration in the next Review?
Could he not do the same as he has done for beef producers and say that the support for sheep will not be diminished over the next three years? Could he give sheep farmers confidence that they have long-term security? I should also like him to get rid of the supplement and abatement scheme because, as was pointed out by an hon. Member opposite, it has completely failed in the purpose for which it was produced by the Conservative Party, to regulate the flow of home-produced meat on to the market. We might as well recognise that and abolish it.
I should like him to examine the whole question of hill sheep production. If he finds that hill farmers are in difficulty, he should give them an immediate injection of cash. In my area April may be too late. We want a cash injection right away and we are prepared to have a quick examination to see where and how it is necessary.