Calf Subsidies

Schedule 13 – in the House of Commons at 12:00 am on 25th June 1974.

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1.22 a.m.

Photo of Mr Norman Buchan Mr Norman Buchan , Renfrewshire West

I beg to move

That the Calf Subsidies (United Kingdom) (Variation) Scheme 1974, a draft of which was laid before this House on 10th June, be approved. When the main Calf Subsidies (United Kingdom) Scheme was introduced in the House on 22nd March I said that if it were desired at a later date to change the level of the subsidy rates, steps could readily be taken to produce a simple scheme to do this. As the House will recall, following the March meeting of the EEC Council of Ministers, my right hon. Friend the Minister announced that the Government had informed the Commission of their intention, subject to parliamentary approval, to increase the calf subsidy rates in Great Britain by £10 per calf. The purpose of this increase was to safeguard the position of beef producers in Great Britain following the agreement reached in the Council of Ministers in Brussels last March. That agreement allowed us to exercise the option of not taking beef into intervention and allow the consumer to benefit from increased supplies rather than take beef off the market at prices which housewives cannot afford.

The object of the draft scheme for which I now seek approval is to give effect to the £10 increase proposed last March in the calf subsidy rates for calves born in Great Britain.

I turn now to Northern Ireland, about which there is some interest and where the position as regards calf subsidy is a little different. When informing the House of the proposal to increase the subsidy rates for calves born in Great Britain, my right hon. Friend the Minister also announced that special arrangements, in the form of a beef marketing subsidy broadly equivalent to the £10 increase in calf subsidy, were to be made for Northern Ireland. We know the reason for it. The aim was to prevent any distortion in trade with the Republic arising from the differences in guide prices prevailing as a result of the agreement, and the problems that this would have created on each side of the border.

Therefore, the draft scheme provides for the rate of subsidy to remain unchanged for calves born in Northern Ireland. This was the scheme which we brought in to deal with the situation as it then prevailed. However, since the draft order was laid, things have happened. The Minister has announced that, following the agreement last week, the guide prices in the United Kingdom and the Irish Republic are to be the same as from 1st July. As a result, an increase of £10 in the calf subsidy rates for calves born in Northern Ireland will be necessary, because we no longer need the special arrangement. It will be replaced by the 10 addition to the subsidy in Northern Ireland, as in the rest of the United Kingdom. A further draft variation scheme to do this will be laid as soon as possible. This will ensure that there is no gap in the return there. It will apply as from 1st July, and it will be brought in, I hope, in about a week.

Photo of Ian Paisley Ian Paisley Leader of the Democratic Unionist Party

I am grateful to the hon. Gentleman for his explanation of the Northern Ireland position. It is clear that the scheme does not relate to Northern Ireland, but I draw the hon. Gentleman's attention to paragraph 1(1), which says that the scheme shall apply to the United Kingdom". Surely that should read "Great Britain". Northern Ireland is part of the United Kingdom, albeit that the hon. Member for St. Pancras, North (Mr. Stallard) does not want it to be. That is the way it is.

Photo of Mr Norman Buchan Mr Norman Buchan , Renfrewshire West

The explanation is to be found in the basic scheme, of which this is a variation. The basic scheme applies to the United Kingdom. It is the variation which we make in this scheme which in practice will refer financially only to Scotland, England and Wales. The next variation will apply to Northern Ireland.

Photo of Mr James Scott-Hopkins Mr James Scott-Hopkins , West Derbyshire

I do not think that the hon. Gentleman is right. The preamble to this variation scheme refers to a joint scheme for the whole of the United Kingdom". The hon. Gentleman will find the same words in the parent scheme. However, they are not relevant to this scheme, because Northern Ireland is excluded. I suggest that there has been a misprint in the drafting.

Photo of Mr Norman Buchan Mr Norman Buchan , Renfrewshire West

I have taken legal advice on this matter and my advice is that which I have given to the House. It comes from the same source as that which formulated the scheme. The main scheme applies to the United Kingdom, and the result of this variation will be the application of a different rate in Northern Ireland from that in the remainder of the United Kingdom. That advice is now challenged, and it will have to be decided by hon. Members at the end of this debate.

The advice that I must give the House is that the reference to the United Kingdom refers to the parent scheme. The variation refers to England, Scotland and Wales. I imagine that hon. Members will be surprised to discover that the draft scheme varying the position in Northern Ireland will also make the same reference, in which case it will no doubt be said that Northern Ireland is not the United Kingdom. But, I repeat, this is a variation and not the parent scheme.

To return to our "muttons"—if that is an appropriate word when dealing with beef—and to the reason for doing it in this way, we have in the meantime to have the present draft scheme in operation by 1st July because we want those calves born in Great Britain, the producers of which are able to benefit from the higher rate, to become eligible at eight months of age. The draft scheme will provide for the rates on live calves—Stage A—born on or after 30th October 1973 to be increased until further notice to £18·50 for males and £2 less, £16·50, for heifers. It also provides for increased rates for Stage B to be the same as for Stage A and to be paid on carcases of animals born in Great Britain, certified on or after 16th December 1974 until further notice.

The cost of this is quite considerable. The cost of the increase in the subsidy rates in Great Britain is estimated to be about £30 million in a full year. In Northern Ireland, incidentally, the cost is expected to be about £5 million.

I have referred to the basic reasons for the draft and the reasons for the exclusion of Northern Ireland from it. I know that there is usually general approval for an order of this kind. I can only give the advice that I have received on this matter. From my previous experience, it seems sound advice, despite the point that has been made about the wording of the order. I hope that it proves acceptable to the House.

1.31 a.m.

Photo of Mr Peter Mills Mr Peter Mills , Devon West

I am afraid that the Opposition give only a lukewarm welcome to this motion, as we have serious reservations as to the effect it will have in helping the industry at this critical moment.

The industry is in serious trouble. That is not crying, "wolf", and it is no exaggeration. All that we can say is that this extra subsidy may help to soften the blow—no more—but it is not the answer that is needed at this critical time in the production of beef.

I want to ask several pertinent questions of the Minister of State. The House will want to know why the Minister has brought forward this increase. Certainly he has not done it to give away money. I suggest that what he is trying to do is to help the beef farmer at this moment.

The Minister feels that something must be done because of the present position of the industry. If that is so, let us look at the present position of the beef industry.

The best thing that I can do as an illustration is to quote a headline from the Western Morning News, which covers a large part of the West Country, where so many store cattle are produced. That headline says: Fat Cattle Prices Take Frightening Lurch. A very serious slump has occurred. This is a disaster to many producers of beef. I must declare an interest, in that I farm. I am concerned mostly with milk and sheep production and not with beef, but I am told that at present there is at least a £40 loss on each fat beef animal produced. That is nothing less than a disaster.

Beef producers are facing a desperate situation as a result of unprecedented rises in production costs and a very weak market at present, aggravated by imports assisted by foreign export refunds. That is the situation. Whatever the long-term value of this £10 rise in the calf subsidy, it will be of no help to producers now.

I should like, therefore, to quote from the Press notice that was handed out when the Minister announced this increase in the calf subsidy. The notice said that the aim of the increase was subject to parliamentary approval of the necessary order, to safeguard the position of beef producers in Great Britain. That is why the Minister has brought the order before the House to increase the subsidy by £10. Is that the right way to safeguard the beef producers, because that is the hon. Gentleman's aim? I do not believe so. It is not the producer of store cattle or calves who needs help now; it is the fattener. The Government were on the right lines in their approach in Northern Ireland, where they gave the fattener a slaughter premium. It is strange for the Government to have changed their position in Northern Ireland, but no doubt we shall be able to debate that matter when the further scheme comes before us.

The action taken tonight does not safeguard beef producers. It is no good encouraging future production, as the increased subsidy does, if the fattener cannot get a fair return. If the fattener cannot see a profit in the operation he will not pay the very high price for store cattle. Even though the rearer of the calves will get an extra £10 he will get less for his store cattle, because the man who buys them cannot get a fair return. The Government must introduce an end subsidy before it is too late. I hope we may be told whether that is what the Minister of Agriculture has in mind. The phrase in the Press notice to safeguard the position of beef producers' is not being put into effect at the moment. I do not believe that the increased subsidy will restore confidence in the beef industry. As one who has travelled the country preaching the gospel of expansion in agriculture, particularly in beef, I bitterly regret having said then that there was a good future in beef production. Confidence has gone completely.

If the House does not accept my word for it, the Ministry's figures for calf slaughterings tell the story. On 18th May 1974 the figure was 5,100; a year previously the figure was 1,800. On 8th June this year 5,000 calves were slaughtered in one week. In the previous year the figure was 1,500. It will be interesting to see whether the trend continues now that the scheme has been introduced and now that confidence has gone.

The industry should have been encouraged by the statement of the Secretary of State for Foreign and Commonwealth Affairs on 14th June, but that will do nothing to solve the immediate problems facing the beef producer and to maintain the confidence that is so desperately needed. The tragedy is that store cattle are going to the slaughterhouse because their owners are far more scared of hanging on to them than they are of selling them at a loss. What a position to be in! In spite of calf subsidies, goodness knows what a farmer must feel when he disposes of an animal which cost far more to rear than he can ever hope to recoup. I regret saying these things but I believe that confidence is melting away.

My fourth question is whether the extra £10 on the calf subsidy will safeguard the future supplies of beef for the consumer. The answer must be "No" with the sort of slaughtering that is taking place. Heaven knows what the position will be for consumers in the months and years to come. Meat that is now disposed of at below cost means very dear meat later, and £10 extra on a calf will not help the consumer in the long run. I make the strong plea to consumers to be prepared to pay a fair price for beef so as to cover the costs of production and to give a fair return. If they do not pay a fair price now they will pay through the nose for meat later. In my view the calf subsidy does nothing to safeguard future supplies of beef for the consumer.

My fifth question is whether this scheme is a substitute for a deficiency payments system, an intervention system or a slaughter premium. The answer to that is also "No". I find it difficult to understand why the Minister does not appear to understand the situation. There are repeated probings and Questions in the House. We have asked the Minister of State and the Minister of Agriculture, Fisheries and Food for some form of underpinning. Each time the Minister of State has told us that he is doing something for beef by giving this extra calf subsidy, but the calf subsidy does not give the support that is needed. Of all the commodities that are produced by British farmers, beef is the one that needs underpinning. A calf subsidy, in my view, certainly helps the rearer but it does not help the fattener.

Finally, I ask whether the Government have done enough in this dire situation. My own opinion is that they have not. I shall quote what the Minister said on an earlier occasion. I have a cutting from the Farmers Weekly of 15th February—before the last General Election. It contains many interesting views of the Minister at that time. He said: We would hold an annual price review … but combined with strategic reviews looking five years ahead. If crises occurred, we would introduce interim reviews to deal with them … Labour would not allow the livestock centres to suffer as they have done over past months. Instead, last autumn it would have introduced production grants". The hon. Gentleman then referred to increased subsidies and other matters. He went on to say that if possible they would hold another price review, guaranteeing producers no loss of income. Those are very good words—no one could grumble about them—but this £10 on the calf subsidy does not guarantee to producers the loss of income—up to £30 to £40 on a bullock—which they are experiencing.

I hope that the Minister will try to answer some of these questions. We do not fully welcome the scheme. It will help soften the blow, but it does nothing to tackle the real problem facing British beef producers.

1.45 a.m.

Photo of Ian Paisley Ian Paisley Leader of the Democratic Unionist Party

I do not want to dwell on the kernel of this scheme dealing with beef calves. Some of my colleagues will be doing that if they catch your eye, Mr. Deputy Speaker. They are far more capable of doing so. I want to raise a point that I raised with the Minister at the outset of the debate. I feel that the scheme is not in order. The Minister cannot argue that this refers to the Act under which the scheme is made. If he reads the preamble carefully he will find the words hereby make the following scheme. That must refer to this scheme. In paragraph 1 it says: This scheme"— that must refer to the scheme that is defined as "the following scheme" in the preamble— shall apply to the United Kingdom". The Minister should tell the House why, for some reason or other, those who drafted the scheme did not include Northern Ireland. I do not see why one scheme could not cover the whole of the United Kingdom. I do not understand why we must have another draft scheme to cover the United Kingdom. The Minister is aware that the Minister of Agriculture is in charge of the overall agricultural policy for the whole of the United Kingdom. He made a promise on 19th June when he said: In consequence, the special subsidy in Northern Ireland will end on the same date, and subject to parliamentary approval, Northern Ireland producers will become eligible for the full rate of calf subsidy payable in Great Britain."—[OFFICIAL REPORT, 19th June 1974; Vol. 875, c. 480.]

Photo of Mr Norman Buchan Mr Norman Buchan , Renfrewshire West

That is precisely what I thought I had promised. We are sticking to that. It will happen. The fact that there is a second scheme coming in may be an argument why it could have been done in a different way. There is no question but that the guarantee and the promise will be carried out.

Photo of Ian Paisley Ian Paisley Leader of the Democratic Unionist Party

I accept the Minister's assurance. I am saying that I do not believe that the scheme is worded properly. It does not apply to the United Kingdom; it applies only to calves born in England, Wales or Scotland. It is no use our arguing otherwise. There is definitely something wrong with this. The Minister needs to take it back and look carefully at it.

It is of importance to the House and to the people of Northern Ireland, because we are firm—irrespective of what is said about Ulster nationalism—that we are part of the United Kingdom. That is the only contribution I want to make to the debate.

1.50 a.m.

Photo of Mr James Scott-Hopkins Mr James Scott-Hopkins , West Derbyshire

I agree with the hon. Member for Antrim, North (Rev. Ian Paisley) that the drafting of the statutory instrument is faulty. I accept that since the scheme was laid before the House the circumstances have changed, but the fact remains that the drafting is at fault.

The Minister has taken legal advice on the matter, and I shall not argue with him across the Floor of the House, but why has he not laid before the House a scheme relating to Northern Ireland? The hon. Gentleman spoke about laying it before the House by 1st July, but that is only four parliamentary days from now. The hon. Gentleman simply does not have time to introduce the scheme by the appropriate date, and the hon. Gentleman and his Department are at fault on this issue.

I am sure that the hon. Member for Cardigan (Mr. Howells) is interested in this scheme from the point of view of Wales. The Secretary of State for Wales is not mentioned in connection with the payment of subsidy under the new paragraph 4, and he should be. The Minister is proposing to substitute a new paragraph 10 for paragraph 10 of the original statutory instrument, and as the Secretary of State for Wales is mentioned in paragraph 10 of that document he should be mentioned here in relation to the new paragraph 4.

The Minister and the Secretary of State for Scotland are mentioned in page 2, at lines 4 and 5, but there is no reference to the Secretary of State for Wales. Is not the Minister acting jointly with others? That is not written into the scheme. That is one fault, and the other, unless I am mistaken, is that farmers in Wales will be out of order in receiving payments under sub-paragraph (a) because they will not get them from the Secretary of State for Wales.

Our anxieties about this scheme were well put by my hon. Friend the Member for Devon, West (Mr. Mills). This provision is inadequate, and I am sorry that we are pre-empting our debate tomorrow by debating this topic tonight. It would have been better if the Government had decided to debate this scheme after tomorrow's debate.

I hope that when the Minister of Agriculture, Fisheries and Food answers the debate tomorrow he will deal with the motion that has been put down by my right hon. and hon. Friends about the livestock sector. I understand the hon. Gentleman's difficulties tonight. He cannot pre-empt what his Minister may say tomorrow, but let the Minister of State be in no doubt that we regard this as an inadequate substitute for what ought to be done. This is inadequate recompense for the mistakes that the Minister made when he removed the existing floor to the beef market as soon as the Government came to power.

My hon. Friend talked about despair throughout the country over the present situation, and Derbyshire is no exception. I have received countless letters from worried constituents. My hon. Friend mentioned a loss of £40 per beast, yet the Minister is giving £10, or £1 per cwt. to livestock farmers who have been suffering for the last few months.

What is worse is that the calf market has collapsed. The reason for that is twofold—first, lack of action by the Minister, or perhaps I should say that the action he has taken has removed whatever hope the fattener had of getting a decent return.

Secondly, beef fatteners are not prepared to go into the market and buy store cattle or calves for fattening and putting on to the market in 1975. On Monday, Bakewell calf market—one of the biggest calf markets in the Midlands—had disastrous calf sales compared with a year ago. This is not surprising. Most calves are going for slaughter. The Minister of State is living in a dream world if he thinks that the increase of £10 per calf will have any effect in stopping the present slaughtering. I am sure that he is just as worried about the situation as we are.

The Minister of State will know that this measure alone will not be sufficient. Perhaps what his right hon. Friend will say tomorrow will restore some confidence to the fatteners. If not, I prophesy that at the end of 1975 beef will be as rare on the market as we have known it this century. There will be a glut of beef coming off the grass at the end of the summer and the beginning of the autumn, but, unless action is taken quickly, there will be no stocking up by fatteners for the coming year. The calf market will not recover unless confidence is given to fatteners.

I ask the Minister of State to accept that what he is doing in the scheme is only the smallest palliative in a very dangerous situation. This situation must not be overplayed—it is easy to talk oneself into much greater trouble—but never, in all the years that I have been in agricultural politics, have I known such despair as there is at present in this sector of the livestock industry. It is not confined to the beef farmer, the fattener or the calf rearer; it is spreading to the dairy sector.

Tomorrow the Minister of Agriculture must tell us how he views the monetary compensatory amounts. This is part of the weakening process of the market which is affecting the beef trade.

One accepts the scheme with great reluctance, knowing full well that it is not sufficient and that it will not restore confidence to any sector of the beef market. I hope that tomorrow the Minister of Agriculture will say something of substance which will help to put right some of the damage he has done during the past three months, during which he has been serving his second tenure of office as Minister. The past three months have been disastrous for agriculture. I say that with regret, for I think that the Minister is doing his best. However, he has got himself into an impossible position, and this scheme, badly drafted as it is, is no solution.

2.0 a.m.

Photo of Mr Geraint Howells Mr Geraint Howells , Cardigan

Having had an interest in the production and marketing of livestock for many years, I declare my interest.

My colleagues and I welcome the scheme, which will increase the calf subsidy by £10 per head. It is a step in the right direction, but I am sure that even the Minister is worried and disappointed by the slaughtering figures, which show a substantial increase this summer. The statistics show clearly that livestock producers will not be encouraged to rear more calves just for the sake of the extra £10. They have lost all confidence in the future.

We might as well face reality. The beef market has collapsed. Unless the Government introduce a price guarantee system for beef in the near future, farmers will run riot. Many will become bankrupt by the autumn. Young farmers and new entrants to farming are having sleepless nights because of financial worries.

I support the scheme, but I urge the Minister to do something positive and constructive to help beef producers out of the present crisis and to restore confidence and stability in our great agricultural industry.

Unfortunately the previous Government did away with the guarantee deficiency price system for beef. This year the present Government did away with intervention support. So beef producers are left entirely without a bottom to the market. Beef prices have dropped to the unrealistic figure of between £12 and £13 per cwt. We receive 50 per cent. less than we received a year ago. We also receive 50 per cent. less than our fellow farmers on the Continent. Something must be done in the near future to solve this financial crisis, which is worse than that of the 1930s. We beg the Minister to do something to help beef producers in the near future.

2.3 a.m.

Photo of Mr John Nott Mr John Nott , St Ives

I support my hon. Friend the Member for Devon, West (Mr. Mills). I do so as an hon. Member who is hardly likely to be called in the very short debate tomorrow and who represents one of the most intensively farmed areas in the United Kingdom. With average agricultural holdings of about 40 acres in my constituency, I say with some confidence that I probably have as many members of the farming community there as has any other hon. Member. Although the principal areas of activity are milk and horticulture, a significant and growing proportion of the farming community is engaged in the production of beef.

Agriculture remains the principal industry in West Cornwall, in spite of the growing importance of tourism. It is the farming community that still dominates the life of the county and upholds its peculiarly Cornish character and tradition. The consequences of a further decline in the confidence of the industry and the increasing threat of bankruptcy which faces men whose families have farmed the same land since the earliest times are extremely worrying. The social and economic framework represented by the farming community in my area is under greater pressure today than it has been at any time since the 1930s.

In this context the scheme, which varies the calf subsidy, is relevant, but it is almost totally inadequate to meet the needs of the times. It will do nothing to reverse the accelerating pace of calf slaughtering—which is running at a far greater pace than it was last year—it will do nothing to stop falling prices in the market, and it will do nothing to correct the total collapse of self-confidence which is almost universally abroad, certainly in West Cornwall.

Although I possess a small farm, I make no pretence at having any great technical knowledge of the agriculture industry. But my understanding of its problems is like the wisdom of Solomon beside the sheer ignorance of agricultural matters that one meets in Whitehall—and here I am speaking particularly of my own old Department, the Treasury. Were it not for Ministers in Tory administrations who have some familiarity with agricultural issues, the Whitehall bureaucracy would have successfully destroyed the agricultural interest long before now.

I have some sympathy, in this respect, for the Minister of State, and even more for the Minister of Agriculture himself. A Minister of Agriculture at any time has a hard task in Whitehall, but in the present circumstances it is clear that the pressures—coming, I fear, from the Treasury, to a great extent—are such that the right hon. Gentleman is just not able to persuade his colleagues to do what is evidently essential for the protection of our beef industry at the present.

The cry now is obviously "Cheaper food", or "Arrest the rise in the price of food, at almost any cost, and hang the consequences in eighteen months' time." The scheme offers an increase of £10 in the calf subsidy, but it is a crazy notion of priorities that we should have a reduction of 1p a pint on milk while the very integrity of the industry which produces that milk is being undermined and threatened.

Producers of beef have all experienced the impact of huge cost increases and falling returns. I have been to markets in my constituency recently and I can say that the market for young cattle has completely collapsed. Farmers in my area with very small farms are grossly overstocked. They are unable to sell their animals other than at a loss. In addition, after the poor spring, the hay and silage crops have been poor. Taking all these factors into account, the coming winter is going to be very serious.

The Government's response, in this scheme, to the problems of the beef industry in particular is completely inadequate. If the Ministry's Press notice said that the aim of the scheme was to safeguard the position of beef producers in Great Britain, the scheme will not do that.

What is needed is help for the fattener at this moment. My hon. Friend the Member for Derbyshire, West (Mr. Scott-Hopkins) said that it was perhaps a pity that this debate preceded rather than followed the major debate on agriculture tomorrow. As someone who has tried but never yet succeeded in being called in a major agriculture debate—tomorrow only four back benchers are likely to be successful in this respect—I thank the House for being patient enough to hear me say a few things about the beef producers in my constituency in this short debate.

2.10 a.m.

Photo of Mr William Ross Mr William Ross , County Londonderry

Although the scheme does not refer directly to Northern Ireland it has some bearing on the situation there. The situation for agriculture as a whole in Northern Ireland is, to say the least, serious.

Any increase of subsidy is welcomed by farmers. We never turn money away. I speak from personal experience. I have been a farmer since I was 14 years of age, up to March this year, when I came to this House. As a working farmer I should declare my interest in what happens in the farming community.

The subsidy of £10 per calf does not attack the kernel of the problem. The problem in farming is more deep-rooted and fundamental than a £10 subsidy on a calf will cure.

There is a complete loss of confidence in the livestock industry—a loss of confidence which is widespread and has manifested itself with the high slaughter rate of cattle. It is the breeding stock that is going. The Minister of Agriculture, Fisheries and Food and the Government must make up their minds what they want from the farming community and how they will go about getting it.

The farming community is in limbo. It does not know where it is going. In 1972 the previous administration told us that there would be a beef shortage until at least 1980, and that even then there would still be a 15 per cent. shortfall. That forecast is six years out of date. Apparently there is now a glut and there are 100,000 tonnes of beef in cold storage in the Common Market.

The going price for cattle at present is far too low, when we consider that it costs about £20 per live cwt. to fatten a beast. The situation in Northern Ireland is serious in this context, because fat cattle carry a subsidy of £1·76 per live cwt.

Mr. Deputy Speaker:

Order. I understand that there will be an opportunity to debate the Irish situation on the subsidy at a later date. I hope that I am not misleading the House, but that is my understanding.

Photo of Mr William Ross Mr William Ross , County Londonderry

If the Northern Ireland situation is out of order this evening, I must restrict myself to the scheme.

It is clear that, by and large, the situation throughout the country is serious for the beef market. Calves must come from breeding stock, but breeding stock is being slaughtered at an alarming rate. As long as that situation continues there is no hope of a quick recovery.

The autumn calf sales will be disastrous for our breeders. Prices were down last year over the country as a whole. They will be worse this year. Until such time as there is an increase in the price of beef this situation will continue.

I should like to follow the point made by the hon. Member for Antrim, North (Rev. Ian Paisley) about the scheme. It is evident that the scheme has not been properly drafted. It was amusing to note that another hon. Member who followed him made the hole in the scheme rather bigger. I hope that whenever the scheme for Northern Ireland comes before the House it will be properly drafted.

2.13 a.m.

Photo of Mr Paul Hawkins Mr Paul Hawkins , South West Norfolk

I feel that it would be wrong to look a gift horse of £30 million in the mouth. In the old days, when I used to sell a lot of horses—I must declare my interest as a livestock auctioneer—I had to look in a horse's mouth to see whether it would be able to work long enough. I do not believe that this scheme will work well enough for farmers and beef producers to justify the expenditure of this £30 million. I believe that it is being spent in the wrong way.

In view of my interest as an auctioneer, I want to illustrate what I have to say—it will not take more than two or three minutes—by referring to two major markets in my area: store cattle at Bury St. Edmunds, in Suffolk, and fat cattle at King's Lynn. Between May 1973 and May 1974, in store cattle prices, Friesians have had the biggest drop, for reasons which are well known. Young Friesians take a lot of concentrated feeding stuffs to bring to the fattening stage, or they have to go much older, when they are not wanted, as we have not the export trade now.

These store cattle weighing between 4 cwt. and 5 cwt. have dropped in price from an average of £22·78 per cwt. to £13·65 per cwt. That is a drop of over £9 per cwt. Thus these young cattle have dropped in price by £45 per head.

Referring to fat cattle at King's Lynn between June 1973 and June 1974, the price of lightweight steers dropped nearly £3 per cwt., from £20·05 to £17·15. Heavy steers have dropped £2·26 per cwt. This is an awful loss, which cannot be borne for long.

I do not think it is the Minister's fault that we have had to spend the money on the calf subsidy rather than put it on the end price. This was a political decision of the Cabinet, which refused to have the price of beef put up, as they thought. They looked only to the short term. They did not look to future supplies of beef.

We must also have a fall-back price. I hope that when he speaks tomorrow the Minister will be able to give us some intervention or fall-back, or some price that will put stability and a little confidence back in the market.

If the Minister cannot fix a fall-back price or give some form of subsidy for the short term, will he direct certification officers—who are available and being paid now to look after the sheep and pig subsidies—to start certifying now, so that the people who are selling cattle at the moment will have had their cattle registered for a subsidy in the future?

I do not want to look this gift horse in the mouth. I feel sure the wrong means are being used to give confidence to this industry, a confidence that will be shaken for a long time.

I know of men in my constituency who have been paid off. They will not return to the industry. Once one has paid off good stockmen it is very difficult to entice them back.

Photo of Mr Harry West Mr Harry West , Fermanagh and South Tyrone

I suppose I should declare my interest in this matter. I am a livestock producer. I should like to speak of this matter in the context of the United Kingdom.

The Ministers on the Front Bench must have regard to the serious warnings they have had from Opposition speakers with regard to the future of the beef industry in the United Kingdom. This assistance given to the beef livestock industry is a drop in the ocean in comparison with what is needed.

It must be impressed upon hon. Members on the Front Bench and on the Government generally that the agriculture industry is not like a manufacturing industry. One cannot switch it off and then switch it on again in one week, or one month, and expect it to go back into gear and achieve its full potential. Agricultural production is a long-term business. If the beef industry collapses—it appears to be on the verge of collapsing now—it will take between one and a half and two years to get beef from the home producer on to the market.

That is very serious. If it is allowed to happen, through prices inadequate to cover farmers' costs, the product will become scarce and the market price will rise. We had this experience in the egg industry a short time ago. It is essential in the interests of good housekeeping that the Government do not let down the industry or any other aspect of agricultural enterprise, particularly because of the industry's import-saving potential.

What is needed is a slaughter premium in the fatstock industry that will give the farmer a return of 20p per cwt. That is not an extravagant claim. Unless something like that is done, the nation will find that there is a scarcity of beef, and hence we shall have high-cost beef.

Let no one believe that we can go into the wide world and buy cheap beef to replace the drop in home production. There was a time in our memory when cheap supplies of beef were on the world market, but the underdeveloped countries are now developing and are buying up the supplies of cheap food around the world. Those supplies will not be available in the amounts that we knew in the past. If meat has to be imported it will be imported at a high price.

The warning is there for the Government. I hope that they will heed it and will do something substantial, quickly, to arrest this serious situation.

2.22 a.m.

Photo of Mr Gwynoro Jones Mr Gwynoro Jones , Carmarthen

Conservative Members have no monopoly of interest in agriculture. I say that in case the hon. Member who is to conclude the debate for the Opposition tries to develop that theme.

I represent what is probably one of the most agricultural constituencies in the whole of Britain. I have 4,000 working farmers. One hon. Member claimed that he had a small farm which he did not know too much about. He said that he did not know too much about agriculture. I have constituents who feel that there are too many of the hon. Gentleman's type in farming these days—people who buy farms and leave it at that rather than farm themselves.

I wish just to make two or three points briefly, because I hope to catch the eye of the Chair later today. My right hon. Friend the Minister of Agriculture, Fisheries and Food said last week that if the situation became worse he would not hesitate to intervene at the appropriate moment. My hon. Friend the Minister knows me to be a reasonable, moderate Member. I strongly believe, as a result of my contacts and my knowledge of agriculture in Carmarthenshire, that that time has arrived. We cannot for much longer go along as we are now going, giving words of comfort to the industry and leaving the matter there.

In the livestock sector the present holders of the agriculture portfolio have inherited a major problem. I am surprised that two Conservative Members were able to express anger with apparent aplomb at the present policy, knowing full well that for months before 28th February British agriculture was on the decline and confidence was waning. It has now ebbed to a low point, at which it must not continue.

My hon. Friend the Minister of State and his officials—and, indeed, my right hon. Friend the Minister of Agriculture, Fisheries and Food—may be loth to listen to the cries of Members of the Opposition, but I hope that they will take it from me that the time has come for my right hon. Friend the Minister to boost confidence in the industry. There are many danger signals in terms of, for instance, slaughtering and use of feeding stuffs, and many other indicators of the situation.

I support what the right hon. Member for Fermanagh and South Tyrone (Mr. West) said. We cannot play with the agriculture industry as if it were a hot or cold water tap and expect that at a given time it will respond to the situation. It will take a considerable time to repair the damage that has been done. I am not concerned with arguing who is at fault.

The agriculture industry is expecting Parliament and my hon. Friend the Minister of State—who now has responsibility for this matter—to deliver the goods in these grave times.

2.26 p.m.

Photo of Mr Michael Jopling Mr Michael Jopling , Westmorland

I must declare my interest, which I believe is well known to the House. I am a farmer and I run a beef breeding operation, I was not determined, at the start of the debate, to take part in it but after listening to the opening speech by the Minister of State, which was a most astonishing example of complacency, I felt that I could not but intervene.

In introducing the scheme the Minister of State did not once refer to the current crisis afflicting the agriculture industry. With agriculture—and the livestock sector in particular—in its present state it is unbelievable that a senior Minister of the Government could have opened a debate such as this without referring to the perilous situation facing many thousands of farmers in Britain today.

I wish to bring together some of the views expressed on both sides of the House about the current crisis, which the Minister of State so signally ignored in his opening speech. I trust that the House is aware of the extent of the crisis which afflicts the industry. Confidence in the beef sector of the industry has now gone, and in the breeding and production of beef confidence is of the essence. There is no other facet of the agriculture industry in which confidence is more important.

Figures quoted in the debate have made clear that the crisis which the industry is facing is completely unprecedented in the period going back until before the war. If the Minister of State can think of any other situation in that period in which the beef sector has faced a problem as big as the current problem, with the sweeping away of confidence, I should like to know about it. The only matter which I can recall for the purposes of comparison was in the early months of 1970, when farmers demonstrated in the streets of towns. It was no coincidence that the hon. Gentleman and his right hon. and hon. Friends presided over that crisis as well.

The hon. Gentleman and his right hon. and hon. Friends have avoided acknowledging the need for immediate action to deal with the present crisis.

I should like to hear the hon. Gentleman's reply to a suggestion put to me by farmers over the weekend regarding the scheme. Only calves born before 30th October last year are eligible to be punched after 1st July, when they are live, for this new increased subsidy, but carcases which are produced after 16th December this year will qualify for the same subsidy if they have not already been punched. So on 16th December any cattle born before 30th October last will qualify for the subsidy. I accept that the majority of them will probably already have been punched, but it will be in the farmers' interests not to punch them in the next few weeks. If they are left they will qualify for the increased subsidy on 16th December, although they were born before the starting date. I know that this is correct, because I rang the Ministry this afternoon to clarify the situation.

Our principal complaint about the scheme is that it does nothing immediate, and does nothing about the cattle coming up for slaughter now. We want to know why the Government did not make the starting date retrospective, before 30th October.

The Minister must give a full reply on the broader situation. The policy of this Government on calves and beef production has been one long dither and a series of U-turns in the last few months. I can only repeat the statement in the Minister's Press statement of 25th March, which said that the purpose was to safeguard the position of beef producers in Great Britain by an increase of £10 per calf in the calf subsidy. Only a few days later, on 5th April, according to another Press notice, in a speech that the Minister had made in his constituency he said: We shall, subject to parliamentary approval, be increasing the calf subsidy by £10 per calf. He continued: We have the agreement of the Community to both these measures, which will help to assure the level of future supplies. It is interesting to see what has happened to the calf-rearing industry, which the measure was intended to help, since it was announced on 23rd March. According to the Ministry's own statistics, 58,800 calves have been slaughtered, compared with only 24,300 in the similar period last year. That shows the policy of the Government in the worst possible light. It shows that the steps they have taken and the pious hopes they have expressed since this new step was taken have been wholly ineffective.

The Government's policy towards the beef industry and their assurance that the consumers will have sufficient beef in the months to come are totally discredited. I am sorry that the Minister himself has not been here to listen to this important debate on the crisis in the industry.

This increase in the calf subsidy has done nothing to stop the decline in beef production and to halt the drain in confidence which the industry has experienced in the past three or four months. The main reason is that the beef industry has been left without any residual guarantees of any sort for the first time since shortly after the war. That is why the confidence of producers has been sapped. The Government have introduced this pathetic palliative as a sop to the fundamental of taking away the guarantees, about which the Minister made a great fuss in years gone by and when he was Minister in the previous Labour administration.

The Government have some explaining to do, and I hope that the Minister of State will not say that we must wait for tomorrow's debate to hear whether his Ministry takes this matter seriously. We want to know tonight what is the Government's attitude to the current beef crisis. We want some fairly good answers before we decide whether to accept this miserable and inadequate increase in the subsidy.

2.36 a.m.

Photo of Mr Norman Buchan Mr Norman Buchan , Renfrewshire West

I congratulate the hon. Member for Westmorland (Mr. Jopling). This is the first time that I have had the pleasure of seeing him gracing the Opposition Dispatch Box. It could do with some gracing, considering the rest of his colleagues.

I wish first to deal with one or two general matters and then to move on to more specific ones. The first general matter must concern Northern Ireland. I dealt with it fairly fully in my opening remarks, but clearly there is still some doubt. I shall investigate the position further, but I must repeat to hon. Members that the assurances which I have received are on the lines that I indicated earlier.

Reference was made to the delay. The position is that the scheme had already been laid when the decision was reached last week. It was only when the decision was reached that we could equate Northern Ireland with the remainder of the United Kingdom. We could not have included Northern Ireland earlier, because the circumstances were different. The reason for the delay is that the rules of this House are strange beyond the ken of man, and the affirmative procedure is apparently one of the most complicated of them all. But it will be done in good time—I hope, in about a week. In any event, it will not affect the payment of the money, which is the important consideration. It will start as from 1st July.

The second matter was raised at the outset by the hon. Member for Devon, West (Mr. Mills), and it came down to a question of whether this was the right way of helping beef producers and whether it would be effective. The hon. Gentleman forgets that this situation was not of our choosing. We had to cope with it, having inherited it. It is nor good enough for the Opposition to say "Why did not you do X?" when they created the circumstances in which it was not possible for us to do X. We had to cope with that situation.

The Opposition removed one safety net, in the shape of the guarantee, and they will remember that I fought hard against it—

Photo of Mr Peter Mills Mr Peter Mills , Devon West

And we put in another.

Photo of Mr Norman Buchan Mr Norman Buchan , Renfrewshire West

They put in another. But are they seriously saying that they are prepared to do two things—first, to raise consumer prices and, second, to indulge in the large-scale intervention buying which that would make necessary? Are they saying that? There is dead silence. They know that the people of this country—

Photo of Mr Norman Buchan Mr Norman Buchan , Renfrewshire West

Ah!The hon. Member for Devon, West says "No" to the second question, but he and his hon. Friends say nothing in reply to the first. Why the hesitancy?

Photo of Mr James Scott-Hopkins Mr James Scott-Hopkins , West Derbyshire

Surely the way that the hon. Gentleman put the question is not correct, for a start. Speaking personally, I would certainly support inter vention buying. This was what should have been done, and this was what we agreed to do—and this is what I believe his right hon. Friend the Minister will do. On the second point, there is no reason why better methods of disposal of that which has been bought into intervention should not be agreed within the Community. In that case, the consumer would not necessarily have to pay the increased prices.

Photo of Mr Norman Buchan Mr Norman Buchan , Renfrewshire West

With respect to the hon. Gentleman, there are two prongs to the argument. 'The argument is that prices should have been raised. The problem facing us in Europe is that the prices are already so high that there is consumer resistance. So that prong remains. Hon. Members of the Opposition are then impaled on the second prong, because it increases the amount of intervention buying that they would have to do. Whatever the hon. Member for Derbyshire. West (Mr. Scott-Hopkins) says, there are about 49 million other people in Britain who would not find large-scale intervention buying acceptable. Intervention buying means that beef would be removed from our shops and stored in tens of thousands of tons. The Opposition must know the terms. They imposed the system upon us. I do not need to teach them the system. They must face this problem. Those on the Opposition Front Bench ought not to leave it to their loyal back benchers to try to get them out of the mess into which they have put themselves. That is the situation. We know that they would not risk doing this. They would not dare to do it.

Furthermore, I have news for the Opposition. In Britain we do not have the physical facilities to do it, anyway. First, it could not have been done. Second, the Opposition would have been afraid to do it. The hon. Member for Derbyshire, West would have been stumping the country shoving every piece of carcase into store, unhelped by his hon. Friends who had put him in that situation.

We do not accept the charge that has been made. The safety net which was removed by the Opposition when they removed the guarantee is not replaced by high prices and intervention, because that would not have been acceptable.

We saw that an alternative was necessary. That alternative was to put in direct support. Then comes the problem of X. How were we to do it? When I was an Opposition spokesman, I argued for feeding stuffs support. We found the kind of problem with which we were faced when we honourably took the decision to negotiate within the Common Market. We were then bound by the conditions of the Market, and we were able to achieve this method. Correctly, we adopted this method, which injects £30 million into the industry. It means that altogether about £100 million is going to the livestock industry.

The argument is that this did not fall into the right sector. The figure is £100 million, or thereabouts, and that means about £2·50 per cwt. of beef in this country as the present form of support, if one includes hill farming and so on. I accept that we face difficulties. I do not dodge them. I am not complacent. Although the hon. Member for Westmor land suggested that, he knows that I am not. I am willing to accept that we are facing a very difficult situation. That is why we are taking measures to deal with it. But the problem is to face that fact at present.

It is important to realise that agriculture is not something that can be turned on and off like a tap. That being so, and if this is a long-term problem, we have put the support in at the right point. It is on the calf side that the support should come for the future. Hon. Members of the Opposition say that that is not so because the slaughtering figures disprove it. I challenge that. The slaughtering figures are too high, and I should like to see them a lot lower, but the slaughtering figures for calves do not reflect the crisis. They are not the crisis point. There is far too much talk about this matter by all sections—the National Farmers Union and hon. Members of the Opposition—which does not help.

If there is a difficulty here it is not reflected in the slaughtering figures. I should like to see those figures lower, but the comparison which has been made is on the basis of a much larger herd. Last month, for example, slaughterings were running at the rate of about 4,600 a week. In 1971 it was 3,800 a week for the same period. The herd increased, however, in the two years up to 1972. The years 1972 and 1973 were years of abnormally low slaughterings, because of the high price of beef. Disregarding these abnormal years, and by comparison with normal times, calf slaughterings are now running at about the average. Nevertheless, I deplore the increase and I should like to maintain the level of the last two years. The figures do not indicate any difficulty.

I was asked about a quotation of mine which appeared in the Farmers Weekly on 15th February. I like that quotation, which dealt with the Annual Price Review and the long-term review. I referred to a five-year herd review. We have already started discussions on that.

On a scheme like this we are always asked about the effective dates. I was asked why the scheme would not deal with calves born before 30th October. Whatever date is chosen, someone will always fall just on the wrong side of it. There is another reason, however, in that to have gone for an earlier date would have required retrospective legislation. Some producers who had moved out of the scope of the scheme would have had difficulty in proving their eligibility. We finally settled on the best date from all points of view.

I do not tonight want to take up the complicated point about the Stage B situation. I would prefer to read what has been said about it. There is a reason for the difference. We have tried to arrange for payments under the procedure that would have applied had they been made under Stage A. They are all related to the same period of birth and growth.

Many hon. Members had hoped for a full answer from me on generalised points. I cannot help them. They are asking me to pre-empt tomorrow's debate. I thought that the important thing tonight was to deal with the calf scheme. Hon. Members have raised other matters. If they choose to turn the debate into a discussion on what they regard as a serious situation on the beef crisis they cannot complain if they do not get a reply.

We do not accept the diagnosis of Opposition hon. Members, and we do not accept their methods of dealing with the present situation. We believe that price alone is what has created the problem within Europe and that the crisis, if there is one, is the result of the European situation. We shall deal with it in the way that my right hon. Friend outlined in Brussels last week, when he referred to laying before the EEC the sort of arguments that have been raised tonight, including the slaughter premium. Evidence of our intention has already been shown in relation to the pig industry. We were able to take action, and we took it. The improvement that has taken place in the feed supply is largely due to the efforts of my right hon. Friend. We are very pleased to have received a great deal of co-operation from the industry, which has been very helpful.

Putting all these matters together, I would discard the use of the word "crisis". We are facing a difficult situation, but the production of beef is a long-term issue. We have had two good years and we are going through a difficult time in the third year. I say to the beef producers, looking at the matter objectively, that beef must do well in Britain—

It being one and a half hours after the commencement of Proceedings on the Motion, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted Business).

Question agreed to.

Resolved,That the Calf Subsidies (United Kingdom) (Variation) Scheme 1974, a draft of which was laid before this House on 10th June, be approved