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Cereals (Deficiency Payments)

Volume 643: debated on Friday 30 June 1961

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11.5 a.m.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food
(Mr. W. M. F. Vane)

I beg to move,

That the Cereals (Deficiency Payments) (Amendment) Order, 1961 (S.I. 1961, No. 1072), dated 6th June, 1961, a copy of which was laid before this House on 8th June, be approved.

I do not know how the House would desire to deal with this and the following Motion,

That the Cereals (Protection of Guarantees) (Amendment) Order, 1961 (S.I. 1961, No. 1071), dated 5th June, 1961, a copy of which was laid before this House on 8th June, be approved.
If it would be convenient to discuss the two Orders together, I would approve that course.

If you please, Mr. Speaker. I hope that it will be convenient to discuss the two together.

Both Orders are concerned essentially with barley and amend the main Orders which provide for deficiency payments for cereals. Neither Order introduces any basic change in our support policy for cereal crops. They are necessary to put into effect the proposed arrangements for making deficiency payments for barley which were announced by my right hon. Friend the Minister in the House on 17th May. Hon. Members will remember that these proposals were welcomed by both sides of the House and the industry.

One of the difficulties which growers and the trade have encountered in the marketing of barley has been the tendency for a large proportion of the crop to be sold by growers immediately after the harvest or very early in the season. This has had the effect of depressing the market price at that time of the year. I am glad to say that it has now become accepted that it would be advantageous to both buyers and sellers if the quantities offered on the market could be more evenly spread throughout the season.

Last autumn brought the problem home to many in a marked way. There was a record crop, which, unfortunately, coincided with a long spell of wet weather during harvest time and immediately after. These circumstances meant that many barley growers in the end decided to sell their crop early to avoid losses from deterioration. Weather cannot, however, be regarded as the sole cause of these early marketings or of the price level at any one time. So far as it is a factor in any year, no Government can prevent weather having an effect on the market, but the Government can, at least, try to encourage more orderly marketing of the crop by introducing arrangements to provide growers with an incentive to hold barley until later in the season.

The incentive which we are proposing will be financed within the total sum payable for growers under the guarantee for barley. In short, the deficiency payments will be reduced by 9d. per cwt. on barley sold early in the season and increased by up to 1s. 6d. per cwt. for barley held and marketed late in the season.

No one would pretend that these adjustments will be a complete solution to all marketing problems, but they can, I am sure, make a valuable contribution. Last year, about 65 per cent. of all barley sold off farms was delivered between July and October. It is hoped that the proposed deductions and premiums will reduce this amount appreciably and relieve some of the pressure on the market in these months.

The details of the scheme have been worked out with representatives of the growers and the main users of barley, and I should like to express my appreciation of the help they have given in this respect. The Order does not set out the arrangements in detail, but I am sure that the House would like to hear again briefly the arrangements which my right hon. Friend made on 17th May. In July, August, September and October, there will be a deduction of 9d. per cwt. In November and December, there will be no deduction or premium. In January and February, there will be 1s. per cwt. premium, and in March, April, May or June a premium of 1s. 6d. per cwt.

It is a fundamental principle of these new arrangements that the total sum payable by the Exchequer as deficiency payments on the barley crop shall continue to be laid down by the method in the main 1955 Order—that is, the difference between the average realised price and the guaranteed price. The amending Order, therefore, provides for a redistribution of these deficiency funds, not for any change in the amount of the Government's liability under the guarantee. With the help of the Advisory Committee, we have fixed the rates for the 1961 crop so that the totals of the deductions and the additions should balance, so far as can be estimated.

This order, in sub-paragraph (b) of the Proviso set out in Article 2, provides for Ministers to take account of any difference between the total deductions and the additions when deciding the basic rate of acreage payment. For instance, if at the end of the season the total additions exceed the total deductions, the basic rate of acreage payment to all growers will be reduced by a small amount. Conversely, if the total deductions are more than the additional payments, then the basic rate of acreage payment to all growers will be increased. It is intended to make the deductions when making the advance payments to the growers concerned, and every effort will be made, even though there is this new arrangement, to issue these advance payments as early as possible. Additions for barley delivered later in the cereal year will have to be made at the end of the cereal year, that is, about the time when the final payments are made.

The Cereals (Protection of Guarantees) (Amendment) Order, 1961, introduces consequential and necessary Amendments to the main 1958 Order to make the new arrangements workable. It enables Ministers to obtain from growers and buyers of barley the additional information necessary to adjust the acreage payments to individual growers. These arrangements are broadly similar, having regard to the difference in the payments system, to those which apply to wheat, and will not be unfamiliar to those concerned as a necessary means to prevent financial abuse.

The most important change is that every person who, for re-sale or in the course of a trade or business other than farming, buys barley from a registered grower has to be registered by or on behalf of the Minister before buying. A farmer who buys barley from growers for use on his own holding need not be registered. This also provides for the keeping of records and the furnishing of returns by growers and buyers, and I will not weary the House with the details of these returns. We have done our best to make these requirements as simple as possible to operate the scheme effectively, and to safeguard the interests of the Exchequer.

This is a new scheme, and it is designed to contribute to the orderly marketing of the home barley crop. In the White Paper which followed this year's Price Review, it was stated that new arrangements for barley marketing would be introduced. These have now been worked out and agreed with the farmers and the corn trade, and these Orders are to give effect to them. I therefore commend them to the House.

11.14 a.m.

We welcome the encouragement given to growers to spread out more evenly throughout the year the marketing of barley, and the result could be that in certain circumstances the grower will get better prices and cost the taxpayer less. As the Joint Parliamentary Secretary has just reminded us, there was a scheme similar to this four or five years ago for wheat.

But is it not really a waste of paper and of Parliamentary time for us to be here discussing this today when a problem which is 100 times greater is neglected? I refer to the problem of dumping, which is really affecting the price of barley today. We are being flooded with French and Russian barley at enormous cost to the taxpayer. Has not the Government put in jeopardy the whole system of price support for agriculture? The taxpayer will not take kindly to handing over extra millions to barley farmers, and in the long run the whole of the agricultural community will suffer because the support system will be brought into disrepute.

It must have been obvious at the end of last year that a barley crisis was developing. First, it was obvious that because of the weather the acreage of barley planted in this country would increase. Secondly, it was obvious that if the price fell the taxpayer would be left with a very large deficiency payment. In February, I mentioned in this House a figure of between £30 million and £40 million for support. It is true that I gave some different reasons for this figure, but at that time I was told that there was no possible chance that such a figure would be reached; yet, nowadays, when this subject is discussed, the figure quoted is over £40 million.

At the beginning of this year, the National Farmers' Union, my hon. Friends and I and some hon. Members on the other side were pressing the Government to call a conference of barley exporting countries. We saw the problem which would arise, but the Government did nothing at all to tackle this problem. They did not call a conference. Now, they welcome the initiative of the International Federation of Agricultural Producers, which is calling a conference in London in August. But, of course, the damage is done, and this conference is a conference of producer organisations and not of Governments.

In fact, the last conference of the International Federation of Agricultural Producers at Dubrovnik last month recognised the limits of the powers of producers organisations and expressly referred to the action which Governments might take. This is one of the statements made:
"The Policy Committee noted that there had been a considerable further detrioration in the price of barley arising from the sales of Russian barley at excessively low prices and observed that any action to improve the position could only be effected through by-lateral discussions between the Governments of the United Kingdom and the U.S.S.R."
Incidentally, the report of the Grain Sub-Committee under a Canadian chairman, contained this sentence:
"Special attention was given to one aspect of the coarse grain situation, namely, the sales of barley to the United Kingdom on a subsidised basis."
They do not make any bones about it, and it is relevant when we come to discuss anti-dumping action to note that this Committee under its Canadian chairman makes no bones about describing the sales of barley as being subsidised.

I ask the Government at least to follow carefully what this conference in August will do, and to remember that, although there is over-production of barley in Europe, there are millions in other parts of the world who could use it. They should remember, too, that there are certain kinds of barley which can be mixed with rice to make rice go further. They should remember that it is our duty in the West to help the people of the poorer countries. In particular, it is up to the Government to put some teeth into this Resolution of the Dubrovnik Conference of the I.F.A.P. I shall not quote from all the Resolutions, but I shall read one or two short sentences:
"It recognises that there is a great unfulfilled need for food in the world today; that the agricultural resources of the world are sufficient or could be made sufficient to fulfill this need;—"
and this is the point for action—
"and resolves that an International Food Distribution Agency should be established under the auspices and general policy direction of F.A.O. to handle the food assistance included in the expanded programme of general economic aid".
I remind the House again that a conference of barley exporting countries was advocated by the National Farmers' Union and by my hon. Friends and me right at the beginning of the year. After several months' delay, a conference is to be held in August, but it is a conference of producers, not of Governments, and it is too late. The best we can hope from it is that the Government will take some action in the international field to help the International Federation of Agricultural Producers get the action it wants.

I have already talked about dumping. In the first four months of this year more barley came to this country from Russia than this country's total imports of barley from all sources in the same period last year. As the price comes tumbling down, so the problem gets worse and worse. Incidentally, it is strange that although the price of barley comes down, the price of beer seems to rise steadily. In the same way, the price of bread seems to rise as the price of wheat decreases. However, the House is discussing barley at the moment and I must not get out of order. Yesterday in a trade paper I saw French barley offered c.i.f. south coast ports at £14 8s. 6d. We know that French farmers receive £23. I remind the House again that the agricultural support system works only when imported food comes in at a fair economic price in relation to the cost of production. Further, the deficiency payment system is accepted by the consumer as a consumer and a taxpayer only when the home producer has to compete with imports sold at fair economic prices in relation to the cost of production.

The National Farmers' Union made an anti-dumping application to the Government on Monday of last week. When are we to be told of the Government's decision? I know that it took the Milk Marketing Board five months to get an answer from the Government on dumping. Are the Government out to beat that record? They seem to be very slow indeed. It looks as if they are abdicating and, as I said in another context, leaving the field to Lord Beaverbrook. I see that the Farming Express is now launching an anti-dumping league.

The agricultural community recognises that this issue goes beyond barley, because it affects public confidence in the support system. In the last agricultural debate I asked for a declaration by the Government that they recognised that the producer of agricultural products is as much entitled to protection under anti-dumping legislation as is the producer of manufactured goods. I repeat that request. But I go further. I want evidence that the Government mean business on dumping. Dumped Russian and French barley could be the end of the agricultural support system which we worked so hard to establish. Do the Government really expect us to sit back and watch them selling British agriculture down the Volga?

The Government argue that it is difficult to find the cost of production for Russian barley and, therefore, difficult to invoke the anti-dumping provisions. For the sake of argument I will accept that, but it does not apply to French barley. The French admit that it is dumped. It matters little to a farmer whether he is sold down the Seine or the Volga. The whole agricultural community is beginning to realise that this problem affects them.

The only explanation that I can find—I do so with great reluctance—is that the Minister of Agriculture has been beaten in the Cabinet on the whole future of British agriculture. I believe the explanation is that the Government have decided that in the world of international trade British agriculture is expendable. That is the only explanation I can think of for the Government's attitude in refusing to take action against dumping. The Government should be frank and admit it.

11.25 a.m.

I confirm that there is considerable anxiety in the farming community about the future of the deficiency payments scheme. This is because of the large amount which will be asked from the taxpayers to make up the deficits on these schemes, this in turn being due to the sale in our market of products from abroad—apparently very much under cost price. I hope that the Joint Parliamentary Secretary, though I understand that this is a narrow debate, will be able to say something about this. I hope that he will be able to say that he is either now having, or will have, consultations with the Governments concerned. It is now apparent—it has been apparent for some time—that if the Common Market were to come into being without our participation we should be the obvious dumping ground for its surplus products. This is certainly a reason for entering into negotiations with a view to getting inside the Common Market.

Order. Before the debate gets wholly out of order, I think I should remind the House that the topic must be barley, with some small exception relating to registration and some small mention of wheat. The topic today is barley.

I am obliged, Mr. Speaker. I had not intended to go on to talk about barley growers being sold down the Rhine, the Seine or any other European river. A great deal of this trouble arises from outside those areas, and I hope that negotiations are either contemplated or going on between both Governments this side and the other side of the Iron Curtain and in and outside the Six.

I come now to the Orders. I think I heard the Joint Parliamentary Secretary say that a farmer who buys barley need not register. Perhaps he will confirm that.

A farmer who buys barley from a neighbour to feed his own stock, need not be registered.

The Parliamentary Secretary then said that the procedure, not only in the Cereals (Deficiency Payments) (Amendment) Order but also in the Cereals (Protection of Guarantees) (Amendment) Order has been discussed and agreed with the various parties. Presumably those are chiefly dealers in barley, distillers, maltsters, etc. I do not know whether the form of the request for particulars has been agreed, but can we take it that the general outline of the form has been agreed? Is it thought that both farmers who are buying barley for feed and dealers in other sorts of barley will have no difficulty in complying with these particulars?

11.28 a.m.

I wish to ask the Joint Parliamentary Secretary two questions regarding barley. In my opinion, the second Order to which he referred penalised two classes of farmers. The man who is hard up has to sell his barley early in the season and he is penalised. And the one man who should not be penalised is the hard-up man. To me, this seems the wrong way to operate. It will benefit people who do not require to be benefited, such as the brewers and distillers who always buy early. That is the reason for the large amount of buying of barley in July, August and September. So we shall be benefiting the brewers and distillers who have put up the price of beer and whisky and we shall be penalising the hard-up farmer who is obliged to sell his barley early.

The hon. Member for Orkney and Shetland (Mr. Grimond) has referred to the second point which I wish to raise, the question of direct selling from farm to farm, of which there is a considerable amount. The Joint Parliamentary Secretary told the hon. Member for Orkney and Shetland that no record had to be made by a farmer who bought from a neighbour for feedingstuffs. But what about the farmer who sells? How is his subsidy to be calculated if he makes no record of his direct barley sales? Will not this raise quite a problem? I feel certain that it will cause considerable difficulty. If a return has to be made, or if it is desired to benefit from the increased subsidy later in the year, everything will be sold through merchants. That will add to the cost of the barley because, as hon. Members will be aware, merchants do not work for nothing.

I wish now to wander a little from the content of the Orders and come to the question of dumping. I am sorry for the Minister and the Joint Parliamentary Secretary because any controls that existed previously regarding the handling of problems caused by dumping were discarded many years ago. Now the position is that the Government cannot do anything about it. I do not see how they can possibly deal with the situation because the action which is taken is always too late. It is not necessary for there to be a big flow of surplus barley in order to affect the price. It requires only one shipload and down goes the price. In nearly every country in the world—we do not, of course, know what happens in Russia—there is a subsidy of some sort or other and so it is difficult to maintain that a world price exists. This is all a matter of surpluses, and we are the natural dumping ground for them. But without suitable controls, and bulk buying is one of them, how can we deal with the situation?

What has happened about the price of feedingstuffs? We find that the barley price has dropped by almost 50 per cent., but the price of poultry and pig feeding-stuffs has not dropped to that extent. The price of beer has gone up and the price of whisky has not gone down. Although this Order will help towards the orderly marketing of barley at home, the big question is the problem of dumping, and I think that we shall have to adopt some other system in order to deal with that.

11.33 a.m.

Hon. Members on this side of the House welcome these Orders, and that applies especially in my case and that of my constituents. It is always pleasant to deal with the Ministry of Agriculture, Fisheries and Food. The Ministry believes that it is necessary to give a man a financial incentive in order to persuade him to do something, rather than to pray that the man will do it because he is a decent chap. Money is a much greater incentive than exhortation. Certainly this will encourage the farmer who installed proper machinery and other facilities, including grain driers. Recently a large co-operative grain drier was installed in my constituency, and the benefit of this will now be increased.

The real subject of this debate is the problem of dumping. I noted that the hon. Member for Orkney and Shetland (Mr. Grimond) was thinking almost nostalgically of the Corn Laws. The farmer is also a consumer as well as a producer, and it is evident that he does not take the position over the dumping of barley too much to heart. He has the advantage of cheap barley for feeding-stuffs and he sells his barley with the subsidy payments. So that the farmer is not as sorry about it as all that.

The whole question of dumping is a worry to my constituents. There is hardly a weekend when I am not approached in some market town or other in my constituency about either the question of Polish eggs or French barley—

Order. The market towns in the hon. Gentleman's constituency are not subject to the rules of order and do not experience difficulty in bringing a reference to Polish eggs into a debate about barley.

I am sorry, Mr. Speaker. I was carried beyond my point by the depth of feeling among my constituents.

Everybody asks why something cannot be done quickly. The Corn Laws, which, as I say, the second party in opposition looked at with such horror some years ago, at least had the effect of initiating action quickly. As soon as the price in any area rose above a certain point imports were stopped. Something done quickly is something that works. Today there is delay. We talk about the dumping of various products, but a protest is made weeks after the glut has finished, as happened in the case of certain imports from Poland not long ago. We require something to be done quickly, and if we are to do anything about the problem of dumping, let it be done quickly.

11.35 a.m.

By leave of the House, I shall try to reply to the not so numerous questions which have arisen on the Orders and then say something about the bigger subject of dumping which, in fact, is rather far from the administrative provisions which I introduced at the beginning of the debate.

I am glad that the House has echoed the welcome to the general proposal to introduce machinery to give some stability to the marketing of the home crop of barley. The hon. Member for Enfield, East (Mr. Mackie) said that this will penalise a man who has to sell early in the season who may be hard-up. I do not think it is possible for us to devise any system of this kind which will meet, or at least be an advantage to, 100 people out of 100. But I am certain that this will be welcomed by the great majority Over the last few years barley has been a profitable crop. There is no evidence to suppose, as was suggested by the hon. Member for Enfield, East, that those who sell early are the small operators with less resources and that later sales are representative of large barley sellers generally. There are many growers who by habit and practice sell part of their crop early and part late in the season. They will probably go on doing so. We hope, however, that as a result of the adjustments which we are proposing, they may feel inclined to sell rather less early and instead rather later in the season.

That makes my point that the people who can afford to do that will be benefited.

If we followed the argument of the hon. Member for Enfield, East to its logical conclusion, we should make the price higher at the beginning of the season in order to meet the man whose resources are limited, and that would aggravate the present difficulty. I think we may rule out that as a serious suggestion without further discussion.

We have consulted all the interests concerned over the question of arrangements. It is not an entirely novel idea. They follow the lines of the administration for the wheat deficiency payments. I do not think that it ought to present any great difficulties, because there is nothing complicated in these proposals. The hon. Member for Enfield, East said something for which I wish to thank him. He said that he was sorry for the Joint Parliamentary Secretary. Bearing in mind that I have to try to reply to the various things which have been said about dumping, I think that the House may well feel sorry for a Joint Parliamentary Secretary who has to do that on a Friday morning. But I will try to do what I can.

It is entirely wrong to suggest that the Government are not vitally interested in this problem. It could not be otherwise. More than one hon. Member has said that the import of low-priced barley in this country includes, as many now believe, a good deal that is dumped, and on the admission of those who have sent it. But we must be clear that everything entering the markets of this country from overseas at a lesser price is not dumped. Nonetheless, it has been suggested that some are selling in the market under such conditions as we technically accept as dumping.

I am sorry in a way that this debate has not taken place a few days later because it is, I think, the intention of my right hon. Friend the President of the Board of Trade to make a statement in the very near future, and I do not mean in a matter of weeks. The House will realise that on this occasion, when we are dealing with the rather narrow administrative provisions introduced by these two Orders, it is not possible for me to carry on with what was one of the main themes of our agricultural debate the other day or with another argument which could possibly prejudice the consultations going on with those concerned at this time. One hon. Member asked me to give an assurance that this was happening.

It was also suggested that even after an interested organisation or party, such as the National Farmers' Union, had made an application it was months, rather than weeks or days, before the Government were able to make a decision. Again, I can say that I hope that there will be a statement from this Box on this matter in a matter of days rather than of weeks.

The House will, I hope, appreciate that I cannot go further on this occasion, when we are really concerned with the detailed provisions of marketing the home crop. We appreciate, bearing in mind that we produce the greater part of our own needs, that the home crop can be thrown into difficulties by unexpected imports at low prices. Nonetheless, I cannot now go into all the major factors concerning this country's trading policy, but I can assure hon. Members that we appreciate that the present system of price support for agriculture does, in fact, depend on fair marketing conditions. With those words, I hope that the House will agree to approve these Orders.

If a farmer sells to another farmer for feed there are neither deductions nor premiums. It is deemed to have been sold during the neutral period when there is a basic deficiency payment current, so there is no complication in this.

Question put and agreed to.

Resolved,

That the Cereals (Deficiency Payments) (Amendment) Order, 1961 (SI, 1961, No. 1072), dated 6th June, 1961, a copy of which was laid before this House on 8th June, be approved.

Cereals (Protection of Guarantees) (Amendment) Order, 1961 (S.I., 1961, No. 1071) dated 5th June, 1961 [copy laid before the House. 8th June], approved.—[ Mr. Vane.]