Agriculture

Part of the debate – in the House of Commons at 12:00 am on 22 October 1976.

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Photo of Mr Paul Bryan Mr Paul Bryan , Howden 12:00, 22 October 1976

In the short speech that I intend to make I shall concentrate on the plight of the United Kingdom pig producers and processors who are having to compete against foreign producers in conditions that are so unfair that many bacon curers, however efficient, are bound to go to the wall unless these inequities are removed very soon.

East Yorkshire is one of the most prolific pig producing areas in the country. A fair number of the pigs come to be processed in my constituency. At the Yorkshire Farmers' bacon factory at Norton about 200,000 pigs per annum are put through. It must be one of the most modern units of its kind. It provides good employment for about 250 people in Norton. The firm has led the field since 1933, so there is plently of experience within it. I can safely say that if that plant is not viable there must be very few plants in the country that are. I hope that the Minister will summarise the position of the industry when he replies.

How many bacon curers have gone out of business over the past two years'? How many are in danger of bankruptcy? Reference has already been made to the factory of Scott Bowyers, in Bletchley. The firm is the largest employer in Bletchley, employing about 1,300 people. Apparently it is threatened with closure. For the past 20 years, there has been a running debate on the question whether the Danish bacon industry is unfairly subsidised. The MCA plus the AC have put a stop to that debate once and for all. The practical operation of the monetary compensatory amounts and the transitional compensatory amounts have clearly resulted in a subsidy of £329 per ton or 14p per pound for Danish bacon. If that situation is allowed to continue, clearly the British bacon curing industry is doomed.

It is a remarkable achievement that so far the home bacon industry has maintained its share of the total United Kingdom bacon market at about 50 per cent. Nevertheless, that is 50 per cent. of a market that has dropped from 12,500 tons a week in 1972 to 9,600 tons now. The most effective cure of the industry's troubles would be a change in the calculation of the pigmeat MCAs as they were detailed in the Meat and Livestock Commission's weekly European market survey. From what the Minister said this morning, that appears to be exactly the proposition that he will put to the Commission at its next meeting. I should be glad to have confirmation that that is so.

I should like to know what reaction to that proposal the right hon. Gentleman expects from the Commission. I thought that he seemed particularly optimistic today. The effect of the proposed change in the pigmeat MCA calculation seems so favourable to the United Kingdom that one can expect strong opposition from Denmark, the Netherlands and Western Germany—countries that benefit from the existing arrangements. The change would be entirely just, but the MCA on green bacon would decline by about £130 per ton, or 58 per cent. There would also be an 11·5 per cent. reduction of the MCA on canned ham. I am fearful that the Commission will be reluctant to support a change in the method of calculation until the United Kingdom makes at least a first move towards devaluing the green pound. I support the right hon. Gentleman's remark that he will have to give something before he receives a favour of that sort.

I do not believe that our new Minister of Agriculture, Fisheries and Food will get away with the theme that devaluation is of no great advantage to the farming community. In my post today I received the Agriculture EDC Interim Report, which I suppose is as authoritative a statement as one can get. It devotes paragraph 19 to deploring the present state of our industry. In paragraph 20 it is said that there is urgent need for additional financial resources to be injected. The whole of paragraph 21 is devoted to the financial effect that the devaluation of the green pound would have for farming.

Paragraph 21 states: One important mechanism through which the Government can divert resources to agriculture is a partial devaluation of the green pound, thus providing scope for an increase in support prices of most of the main farm products. It is 12 months since there was any adjustment in the green pound and it is now about 30 per cent. above the market rate for sterling. Farmers are therefore squeezed by having to meet costs which have, in the main, felt the full impact of inflation, while returns have been held down by applying an artificially low exchange rate in calculating CAP prices. So it goes on. Without a single doubt, this body regards devaluation of the green pound as very important for farming, whatever our new Minister may say. The report goes on to point out the long-term effect on the balance of payments and on the expansion of farming. I should like to hear more about that aspect when the Minister of State replies.

Finally, I should like to dwell on the question of the long-term finances of the industry. Over the last year or two the House has debated the question whether the new capital taxation that the Government have imposed on industry, and on farming in particular, will have an adverse effect. Time and again we have been told by Government spokesmen that we are overplaying our hand, because it will not have anything like the effect that we fear. It is difficult to argue, because in the early stages capital transfer tax does not make itself felt. But this report, in paragraph 25, tells us that it is estimated that the effect of capital transfer tax will build up to an average of £100 million per annum at present-day prices.