Orders of the Day — Agriculture and Prices

Part of the debate – in the House of Commons at 12:00 am on 14 March 1974.

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Photo of Mr Francis Pym Mr Francis Pym , Cambridgeshire 12:00, 14 March 1974

I am not so sure. The right hon. Member for Fermanagh and South Tyrone gave the Minister a warm welcome and said that we expected him to be a Tom Williams. I have to disillusion him, for the simple reason that we know the right hon. Gentleman. We have had him before. I hope that he will not repeat those reviews. In so far as the paragraph in the Gracious Speech goes, this represents common ground between the right hon. Gentleman and myself. The debate is not about ends, but about means.

In the last three and a half years there has been a considerable change in both the performance and prospects of the industry. I should like to summarise briefly the reviews introduced during the previous Parliament. There was an interim review in October 1970 to make up lost ground. In 1971 the review increased the value of the guarantees by approximately £130 million, and the first stage of the interim levies was introduced. In 1972 the review provided a considerable injection of money beyond cost increases, with particular emphasis on stock production. I believe that this was regarded generally as a useful review from the industry's point of view.

The Minister said this afternoon that my party was inclined to help the agriculture industry only when an election was in progress. The evidence of the reviews I have just mentioned gives the lie to that totally and absolutely. In 1973 the review was the first in the European Community context, and the 1974 review, just published, produced in exceptionally difficult circumstances about which I shall say more in a moment, relieved an unprecedented situation in the dairy sector by injecting £145 million into that sector alone.—[HON. MEMBERS: "Not enough".] It was a very useful amount, and it was, in fact, what the industry asked for at that time.

The result of that series of reviews has been dramatic. The figures speak for themselves and cannot be challenged. The gross capital formation in the industry increased by 134 per cent. compared with 65 per cent. under the previous Labour Government. Net incomes doubled compared with an increase of 20 per cent., and net product increased by 15 per cent. in three and a half years as against 5 per cent. in six years.

There has been a certain amount of discussion today about that increase in net product. The White Paper recently published shows that for all the commodities listed in one of the tables production as a percentage of total supplies has gone up in every case. Those figures demonstrate beyond any question of doubt the changed state of agriculture when we left office. It is a record of improvement of which the industry should be proud, together with my right hon. Friends the Members for Lowestoft (Mr. Prior) and Grantham (Mr. Godber), who can certainly take full credit for what was achieved in those years.

Today's unprecedented circumstances are set out in the 1974 White Paper. They are the agricultural aspect of the consequencies and implications of the worldwide commodity price explosion. Paragraph 2 of the 1974 White Paper puts the position bluntly. It states: The agricultural industry has suffered unprecedented increases in costs since the last Annual Review. The world shortages of proteins and cereals during the summer and autumn led to rises of about two-thirds in the costs of feedingstuffs. Prices of proteins fell from their peak levels in July but have since tended to increase again, while cereals prices remained high throughout the Autumn and have risen further since. Other costs, including labour, machinery, oil and fertilisers, have gone up significantly and so have interest rates. The grain position is the common denominator and the fundamental cause of the present problems, particularly of the livestock industry. No one predicted the world shortage that arose, and future forecasting is, as everyone knows, uncertain, to say the least.

I have a feeling that at today's prices the shortfall in supply is likely to be filled before too long, but I observe that all the forecasts of the Food and Agriculture Organisation, the United Nations, and OECD indicate that grain prices are unlikely to fall in the near future. However that may be, there has been created an imbalance—I agree with the hon. Gentleman about that—in our agriculture as well as in that of the rest of the world. Obviously, grain farmers have done well, but their advantage has been the disadvantage of livestock producers the world over. It is the adjustment of this imbalance that is most urgently required now, for the sake of the industry itself but no less for the sake of the consumer.

To hear some people talk, one would think that they thought the ruination of the producer was the salvation of the consumer, which is an upside-down argument if ever there was one. At present the most acute stress is in the pig sector. Apart from the effect of rocketing feed costs, the market has been seriously depressed, for several reasons. The three-day week has had its effect over the whole meat market, and a contributory factor has been the lack of confidence before the review in the dairy sector. The consequences of this, I hope temporary, lack of confidence meant that many—