Orders of the Day — Eggs Authority (Levy)

– in the House of Commons at 12:00 am on 22 March 1974.

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12.25 p.m.

Photo of Mr Norman Buchan Mr Norman Buchan , Renfrewshire West

I beg to move, That the Eggs Authority Levy Scheme (Approval) Order 1974, a copy of which was laid before this House on 14th March, be approved. This seems to be my day. I welcome the presence of the hon. Member for Devizes (Mr. Morrison). I recall that in a previous debate on agriculture I created a rhyme, or gave a variation on an existing rhyme, but I shall not do that again today. The hon. Gentleman is, or was, chairman of the Conservative Party committee on agriculture in the House and I am sure he will bring much expertise to the Opposition Front Bench, which could do with some strengthening. We are pleased to see him and we welcome effective opposition. Bearing in mind what was said earlier today this could be fractious or factitious—or whatever the definition may be.

I feel confident that the House will approve the levy scheme. It involves one or two problems but, by and large, it has been welcomed by the National Farmers' Union and by farming interests. It provides for an Eggs Authority to be financed in a different way. It will be financed by means of a levy on chicks used in egg production.

The previous Labour Government decided that the British Egg Marketing Board should be abolished and replaced by the Eggs Authority. The Agriculture Act 1970 provides the necessary statutory provisions for the formation of the authority, which has the general duty of improving the marketing of eggs. Particular functions undertaken by the authority include advertising—such as the "Go to work on an egg" motto—the collection and provision of marketing intelligence, and research and development.

At present the authority comprises 12 members, all appointed by agriculture Ministers. Five are appointed after consultation with producers' organisations, four after consultation with trade organisations, and the other three are independent members, of whom one is the chairman.

In the summer of 1973 the previous Government reviewed the need for the authority and it was decided that it should continue this year. We have accepted that it shall continue after March 1974, provided suitable financial arrangements can be worked out. The decision has been made on this and we are following the view of the previous Government.

Until now, most of the authority's finance has come from a levy on producers, which has taken the form of a deduction from the egg deficiency payments. In addition, a contribution towards the expenses of the authority's functions other than support buying and advertising may be made by Ministers with the approval of the Treasury. A contribution of 50 per cent. of the cost of the authority's eligible functions is currently being made. This will continue to be made in the coming year, but the egg deficiency payments end on 30th March. It has therefore been necessary to devise a new way of raising the levy, which has so far been deducted from the deficiency payments.

In January this year the authority submitted a scheme for raising the necessary finance by means of a levy on chicks intended for use in egg production. The scheme now before the House provides for a levy to be paid to the Eggs Authority by hatchers and importers on day-old chicks placed for egg laying. Hatchers and importers, in turn, are empowered to recover the levy from egg producers to whom they sell the chicks. The interests primarily concerned have generally agreed that this scheme is the most convenient and equitable method available of financing the authority, given the provisions of the 1970 Act.

The scheme defines a hatcher as any person engaged by way of business in the hatching of domestic fowls for egg laying in Great Britain or Northern Ireland". An importer is defined as any person engaged by way of business in the bringing (otherwise than only as a carrier), of live domestic fowls of laying stock into Great Britain or Northern Ireland from outside those areas…". Hatchers and importers who during any period of 12 months do not place more than 300 chicks for egg laying are exempt from the scheme.

The scheme also recognises the need to exempt from the levy chicks provided either by way of free replacement, or tolerance not exceeding 2 per cent. of the quantity ordered by the buyer, to compensate for chick mortality. The scheme also allows hatchers and importers a period of up to three months from the date when the chicks are placed before payment of the levy is due to the authority. Hatchers and importers will also be entitled to deduct reasonable costs incurred in the collection of the levy for producers.

The scheme requires hatchers to register with the authority and to keep such records as the authority may require.

The scheme embodied in the order which has been laid before the House also incorporates modifications made by Ministers to the authority's draft scheme. These modifications are specified in the order and are designed to clarify some of the definitions in the scheme. Because of the possibility that the order might not be approved in time, before 31st March, it was felt necessary to ensure that in the event of an order specifying the rate of levy for any accounting period not coming into operation until a date later than the commencement of the accounting period, hatchers and importers would be exempt from paying levy in retrospect on chicks placed before the rate of levy order came into effect.

The rate of levy to be charged per 100 chicks for the authority's 1974–75 accounting period will be determined by Ministers in a further order under subsection 2(b) of Section 13 of the Act which will, if the order receives the approval of both Houses of Parliament, be laid before Parliament in the near future. It is expected that the authority will require to raise by levy about £1,400,000 in the 1974–75 accounting period.

I was involved in earlier discussions when the Marketing Board was wound up. My opinions have now passed into history, but since the creation of the Eggs Authority most people involved recognise that it is performing a worthwhile service and that it is desirable that it should be enabled to continue its work.

The scheme we are now considering is as fair and reasonable an arrangement as could be devised within the Agriculture Act 1970.

12.30 p.m.

Photo of Mr Charles Morrison Mr Charles Morrison , Devizes

I thank the Minister for his congratulations and the pleasant comments he made about me. Those comments were even more pleasant than those he made on the last occasion on which he congratulated me. Whether that is a reflection on him or on me is not for me to say.

Photo of Mr Norman Buchan Mr Norman Buchan , Renfrewshire West

I am getting mellow in Government.

Photo of Mr Charles Morrison Mr Charles Morrison , Devizes

I trust that the House will support the levy, because it is necessary if the Eggs Authority is to fulfil its main functions of advertising, market intelligence, research and development and consumer information. I think that it is generally agreed that those functions are very useful to both producers and consumers.

There is an example of the way in which the authority can be of use to consumers in the pronouncement which the authority made last week, when it issued a tough warning about egg market prospects for 1974–75. Because of a forecast combination of high chick placings in the United Kingdom and in the EEC, stable yields of eggs, high feed costs, the likelihood of low producer prices, and a slight decline in consumption trends, the authority is forecasting a depression for egg producers in 1974 unless the level of chick placings is significantly reduced in the near future; and unless the slaughter of hens is increased to a high level. I should be grateful if the Minister could comment on that.

The House would also like the hon. Gentleman to comment on the effect of the French prohibition of egg exports to France owing to the occasional use of arsenical antibiotics in the United Kingdom feedstuffs. What action are the Government taking about the matter? Will they concede to the French, or will they continue the endeavours of my right hon. Friend the Member for Grantham (Mr. Godber) in the last Government to persuade the EEC to 2110w the use of such compounds?

The levy is not new, but the order involves a new method of its collection. It seems to me to be a fairer method. It will mean that all producers pay, rather than only about half of them, as happened under the old system.

I believe that the authority's income and levy are largely well spent, but it must be admitted that the recent National Egg Week was not a success. I hope that the authority will learn by its mistakes. It is perhaps fair to comment that many of the criticisms came from egg producers who did not co-operate in the week. I understand that those who did co-operate have benefited considerably. Are the Government satisfied with the way in which the authority divides its expenditure between its various responsibilities?

The Minister referred to the membership of the authority. He said that it has 12 members. It has been brought to my notice that the membership has to be reappointed by 1st April. Can the hon. Gentleman confirm that? If it is true, when will he make an announcement? Will any changes in membership be made? The General Election may have caused a delay in the reappointment of the authority. It is an important matter, as we shall have an authority which is not an authority if the members are not appointed.

I hope that the House will support the order.

12.35 p.m.

Photo of Mr Harold McCusker Mr Harold McCusker , County Armagh

My constituency is largely agricultural. I have the disadvantage of not being a farmer and of having no agricultural experience. It therefore behoves me to apply myself as diligently as I can to the problems of my constituents.

I was surprised to hear the Minister say that the scheme had obtained a general welcome. County Armagh egg producers do not welcome it, perhaps for reasons which apply only to Ulster and not to the rest of the United Kingdom.

Like the pig producers, egg producers in Northern Ireland suffer from the differential in feeding stuff prices. I have already made representations to the Minister of Agriculture and Fisheries about the differential. I ask the Minister to bring to the attention of his right hon. Friend the fact that our egg producers also suffer from a differential of £8 to £10 a ton for their feeding stuffs. Because of the differential, egg production in Northern Ireland is rapidly becoming uneconomic. Therefore, when such a scheme as the one before us is introduced it causes a great deal of concern, primarily because of the conditions prevailing in Northern Ireland.

At present the levy we pay for the Eggs Authority is obtained from deducting a portion of the present subsidy which our producers receive. It is suggested that by the end of the month the subsidy will be removed, and there will then be a levy on them of £2·84 per hundred birds. Therefore, the subsidy is being taken away and they are being asked for an extra £2·84 per hundred birds. In Northern Ireland this will raise about £225,000, it is hoped.

One constituent of mine will have to pay about £3,000 for his own birds and will then have the responsibility of collecting £25,000 for the birds which he will be supplying. It must be borne in mind that in large areas of Northern Ireland the rule of law does not exist. There are already people on rent and rate strikes and people who do not pay their road tax. Although legislation was introduced to enable the money to be deducted from their salaries, the Government wisely decided not to do that, because it would destroy the very good industrial relations in Northern Ireland.

Here we have a scheme which says that every hatcher and importer will have to pay a levy and then recover it as a debt from the farmers to whom he has supplied the chicks. It says clearly: to recover as a debt due to him from the person to whom he sells chicks the amount of levy imposed on the hatcher or importer by reference to the chicks so sold. It will be very difficult for some of the hatchers who have perhaps enjoyed a good working relationship with a number of farmers in difficult areas, particularly in County Armagh, now to tell them "On top of the money you have paid for the chicks, we want £2·84 per hundred chicks for the British Eggs Authority." There is every likelihood that the farmers will refuse to pay, and a good working relationship between the hatcher and the producer will be destroyed.

The matter is further complicated by the fact that in County Armagh there are various group production schemes in which the hatcher supplies the chicks, feeding stuffs and other items on credit for perhaps six to eight months and then hopes to recover his outlay by receipt of the eggs. The scheme provides that the levy is payable to the authority— on such a date or dates (not being sooner than the end of the second month next following the month during which the chicks were placed)". Does that mean that, in addition to the the credit that he is extending to the farmer, the hatcher must meet this levy, which could in some instances amount to £4,000 or £5,000? That is asking a little too much of him.

The scheme provides that the expenses incurred by the hatcher can be recovered but that the sum will be calculated in such manner as the authority may determine. Does that include the whole range of recovery activities which a hatcher might use? In Northern Ireland that might amount to a considerable sum of money. Might this involve the taking of legal action against a farmer? Once again, that might destroy the relationship which exists between the hatcher and the farmer.

We should examine the whole question of the value of the Eggs Authority. The first week in February was National Egg Week, and that apparently cost £120,000. During that same week 100,000 boxes of French eggs were imported. The price of eggs dropped between 6p and 7p per dozen. Many people in Northern Ireland wonder whether the egg week was an attempt to ensure that the French eggs were sold. May we have an assurance that that sort of thing will not happen in future?

12.41 p.m.

Photo of Mr Norman Buchan Mr Norman Buchan , Renfrewshire West

With the permission of the House, I will reply to the questions which have been asked.

The hon. Member for Devizes (Mr Morrison) asked about the appointment of the Authority. The Authority will be appointed next week to be ready for 1st April. He asked about the use of arsenical antibiotics. I assure him, and others, that the previous Government's attitude is being maintained. He also asked to what extent the work of the Eggs Authority had been successful, and referred to criticisms that had been made of the National Egg Week. He also said that those who co-operated most were the ones who felt that they had benefited most, so perhaps the week was not such a failure as some people think. There is always general resistance to being involved in an arrangement whereby money goes out on a Monday and the returns do not come back for a few weeks.

The hon. Member asked whether there was a right balance in the authority's expenditure. That is difficult to judge. Those who criticised National Egg Week would perhaps say that the advertising should be cut, but the evidence is that the expenditure on advertising has been successful. Where expenditure on advertising has dropped, there has been a drop in egg consumption. The general feeling is that the expenditure of a large amount of money on advertising benefits the industry. Marketing intelligence organised by the authority has been of immense benefit to the producer.

The hon. Gentleman spoke of anxieties, created by the Egg Authority's statement of the prospects for 1974–75, that the trend, if unchecked, would result in a decline in consumption because of the increased cost of production. Egg prices have been low in the past—for example, in 1972—with the result that confidence declined and production was cut. Throughout 1973 there was a reduction in supply and a significant increase in prices. The market, therefore, remained firm. Throughout 1973 egg prices were high, the industry recovered a great deal of its earlier confidence and chick placings increased. Placings for the second half of 1973 were about one-third higher than they were for the second half of 1972. Since then the market has remained steady and no major price changes have occurred. We are hopeful that there will be no price changes immediately. It is difficult to forecast future prospects, but it appears likely that further price reductions are in the pipeline.

I know that there are fears in the industry that over-production might lead to an unprofitable situation for producers, but it is difficult at this stage to judge what the position of producers is likely to be later this year. A lot will depend upon food costs and the movement in food costs, as well as the readi-Eggs Authority. That applies to pigs as well as to poultry. Given all that, ness of producers to co-operate with the it is not inevitable that producers will move into a serious loss-making situation. We may be over-alarmed about this, and I appeal to the industry not to lose confidence. No one can say for how long the cost of feed will remain at its present level. I feel that the prognostication given by the Eggs Authority is undeservedly gloomy, and I hope that what I have said will restore confidence to the industry.

I understand the background to which the hon. Member for Armagh (Mr. McCusker) referred. Even when we are discussing eggs, I suppose it is difficult to divorce ourselves from the problems of Northern Ireland. I will deal specifically with agriculture rather than with law and order. He has taken an unnecessarily gloomy and inaccurate view of the situation facing the producer in Northern Ireland. The Government pay a sea transport subvention. I was instrumental in bringing in a Bill in 1970 which provided for sea transport costs for Northern Ireland and Scotland. The subvention assists the Ulster producer to maintain markets within Britain, and it remains.

The burden on Ulster producers of this levy scheme will be less than was the burden of the old scheme. Although we are imposing a burden, it is a lighter one, and we should be thanked rather than criticised in Northern Ireland. The producers who received the subsidy bore all the cost of the Eggs Authority, and most farmers were in that category. All producers, including producer/retailers—which are not very common in Northern Ireland—will share the cost. That means that there should be a disproportionate benefit to Northern Ireland.

The egg authorities have reached arrangements with the hatchery interests to deal with recovery of expenses. I cannot go into details on the law and order implications at present. I hope that the hon. Member for Armagh and the producers whom he so ably represents will be reassured.

Photo of Mr Charles Morrison Mr Charles Morrison , Devizes

The hon. Gentleman has spoken rather optimistically about the prospects for egg producers. As we have seen in other schemes, such optimism has not always proved to be well founded. The pig industry is a good example of this at present. What action do the Government have in mind should trouble arise and the present optimism prove to be ill founded?

Photo of Mr Norman Buchan Mr Norman Buchan , Renfrewshire West

The hon. Gentleman will surely not expect an answer to that question. He knows why we have not been able to answer these problems, certainly in the pig industry. These are not problems of our making. Since the autumn I pressed a course of action upon the last Government. If they had taken steps to help reduce the cost of feeding stuffs agriculture would be in a better position. That did not happen, and we now have what is perhaps the most difficult situation ever to face a new Government's Minister of Agriculture. It is an almost intolerable position to have inherited, certainly on the livestock side. I get a little irritated when over the past few days we have been pressed for action, yet the Conservative Government took no action over the past six months.

On that happy note I commend the scheme to the House.

Question put and agreed to.

Resolved,That the Eggs Authority Levy Scheme (Approval) Order 1974, a copy of which was laid before this House on 14th March, be approved.