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Agriculture (Calf Subsidies)

Volume 888: debated on Wednesday 12 March 1975

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1.3 a.m.

I beg to move,

That the Calf Subsidies (United Kingdom) (Variation) Scheme 1975 a draft of which was laid before this House on 19th February be approved.

This variation scheme removes the £10 increase in the calf subsidy introduced as a temporary measure last July. The increase was approved by the European Economic Community last March when it was decided that the United Kingdom need not adopt the intervention scheme of support for the beef market, and also that the United Kingdom guide price for beef should be increased to a lesser extent than in the other EEC countries. The increase in the calf subsidy was intended to offset the effect of these decisions. Now that new support arrangements for beef have been agreed—my right hon. Friend made a statement to the House to this effect on 17th February—the reasons for the increase no longer exist.

Under the new variable premium system, producers should be assured of average returns of between £22 and £23 per live cwt. for finished animals. There have already been substantial improvements in the prices for calves and store animals since last November when measures were first taken to put a floor in the market. We may expect these increases to continue. In addition, average prices of fat cattle have risen recently by as much as £2 per cwt. We are therefore satisfied that confidence is returning to the market and that the special arrangements justifying the increase in the calf subsidy no longer apply. Accordingly, this variation scheme provides for a return to the former levels of subsidy.

The lower rates will, however, not apply immediately. Only calves born on or after the day on which this variation scheme comes into operation will be affected. All calves born up to the day when the scheme comes into operation will, provided they meet the conditions of eligibility, continue to qualify for the higher rate. For carcases, stage B, the reduction in rates will not begin until 1st April 1976. This will mean that the higher rates will have been payable at both stages A and B for roughly the same period.

Finally, this opportunity is being taken to propose three minor amendments to provisions which are no longer relevant. The first two concern carcases at stage B. The requirement that a carcase must be sold to be eligible is to be deleted. This was a legacy from the old Fatstock Guarantee Scheme and there is no equivalent provision for calves, at stage A. Moreover, it is a requirement that has proved quite impracticable to enforce. Its removal will, therefore, be generally welcomed and should not lead to any abuse of public funds. Secondly, an amendment is proposed to prevent the owner of a brucellosis or tuberculosis reactor or contact from obtaining calf subsidy in addition to compensation when he opts to have such an animal slaughtered by the Ministry under animal health legislation. The subsidy potential of the animal is taken into account when compensation based on market value is assessed and subsidy payment in addition would therefore be inappropriate.

The third and final amendment will mean that horned pedigree bulls and certain horned pedigree female animals already exempted from the Northern Ireland dehorning legislation will in future be eligible for calf subsidy in Northern Ireland if presented live for certification. At present they are ineligible under a provision of the scheme applying only to Northern Ireland designed to reinforce the already compulsory dehorning of cattle offered for sale. The Northern Ireland Breed Societies have represented that as these pedigree animals are exempt from the general dehorning requirement, they should not be prevented from getting calf subsidy. Accordingly, the Government propose to make provision in the Calf Subsidy Scheme for the existing Northern Ireland exemptions to apply.

The estimated saving resulting from the removal of the £10 increase would be £34 million in a full year. But as I have explained—and this is important—the removal of the £10 will be a gradual process and in 1975–76 the total payment of calf subsidy is expected to drop by less than £4 million. Even when the full effect is felt, this should be more than offset by the firmer prices for calves and stores already evident in our markets and the improved returns from the fatstock market as a result of the measures recently taken by the Government.

1.7 a.m.

We are grateful to the Minister for explaining in outline the provisions of the scheme. I begin by declaring an interest —an interest which I have declared many times before in the House—in that I am involved in farming and run a beef operation.

I wish to raise three specific queries about the details of the scheme before I come to its general features. In regard to paragraph 4 of the scheme under "Rates of subsidy" on page 2, will the hon. Gentleman explain why under heading (b) it was necessary to itemise the amount of subsidy to be paid on a calf
" born before the day on which this scheme comes into operation "?
As I understand it, the original scheme which we passed as amended last year permits the payment of calf subsidies of £16·50 for a heifer calf and £18·50 for a bull calf. But why was it necessary to put it into this scheme when, as I understand the situation, up to the date of the order it would be natural for these rates to continue to be paid? It seems odd to have to put in a reaffirmation of what the House has already passed.

What will be the last date for fat cattle to qualify for the old high rate of calf subsidy which is stated to be 1st April 1976? Will the Minister explain what will happen when a number of calves qualify for the calf subsidy just before 1st April 1976 since almost certainly they would be calves born after that date on which the order conies into effect? I believe the Minister did not say on what date the order will come into effect. We shall come to that most important question in a moment, but I am sure hon. Members will wish to ask when the new order will come into effect.

It seems to me that some calves are likely to qualify for the higher rate of subsidy, particularly calves under barley beef arrangements, which in some cases —not in many cases, but in some—come to maturity when they are nine months old. It would seem to me likely that some of them born after the opening date will qualify, which seems strange.

My final detail point relates to Paragraph 4(e) on page 3 of the scheme. I want an assurance of what I suspect is the truth. Anyone reading this sub-paragraph without a great deal of care might be tempted to feel that a calf which, at any time shortly before it had been offered for certification, had been in contact with a cow or any other animal which had brucellosis might conceivably be ineligible for the calf subsidy. As I read this provision, that is not so. At least, I hope I am right. I believe it applies only to animals which have been in contact with other cattle which the Minister has taken into his own hands under the compensation scheme. In the broader aspect, if a person had a cow which was not involved in any of the brucellosis eradication schemes and which had brucellosis, he might feel wrongly that his calf could not become eligible for a calf subsidy under the changes which are proposed.

I should now like to talk about the general effect of the changes which we arc debating. One is bound to feel "Here we go again." Here we have the Government once more altering the calf subsidy rate and proceeding, as they have over the last 12 months, in a series of lurches and stop-goes which have been a feature of the Government's beef programme particularly over the past year. In my view, no section within agriculture has suffered more than the cattle breeding sector in the last 12 months by not knowing what was the Government's policy. We have seen the most extraordinary repetition of policies being announced in one month and then completely rescinded and changed back before long. Indeed, the present Minister in many ways would make the grand old Duke of York look like a fairly stable person.

Since the election in February 1974 when the present Government came to power, we have seen an extraordinary repetition of lurches to and fro in the cattle breeding industry. In March of last year, for instance, the Government refused to increase the United Kingdom target price for beef in the same way that the rest of the Community was doing. They increased it by only 6·3 per cent. Yet by June they had agreed to fall in with the rest of the Community by increasing it by another 10·3 per cent. This all falls in with what we are doing tonight in connection with the calf subsidy U turn.

The Minister of State will remember that in March last year his right hon. Friend came to the House and announced that he was abolishing the intervention system. Yet in October he came to the House again and told us blandly that he was himself an interventionist. He dressed it up in another name, calling it the private beef storage scheme, but it was still a fact that he had suddenly, in the course of about seven months, done away with intervention and then reintroduced it.

Again, the cattle breeding sector found itself in March last year wholly without guarantees, and then, at last, after pressure from this side of the House, we had a guarantee for beef again, albeit at a poor level.

The calf subsidy has suffered a similar fate. In March last year the Minister said that he would put up the subsidy by £10 a head, yet tonight we are asked to preside over the removal of that £10.

The importance of all this lies in the fact that the cattle breeding sector of agriculture is the longest-term of all. One cannot breed and rear cattle anything like as quickly as one can breed and rear in any other sector. Pigs, poultry and sheep are all a much quicker proposition. The Minister must understand that it is useless for him to go on with these alterations in Government policy in relation to the cattle breeding sector.

I come now to the vital matter with which the hon. Gentleman did not deal in his opening remarks, namely, the date on which it is intended that the scheme shall come into effect. In my view, the scheme must not come into effect until after the spring calving season is over. Indeed, it is essential that it does not come into effect until at least the end of May this year. If we are to have the scheme at all, let it come into effect on 1st June, for in that way it will be much easier to administer and, above all, it will be fair to the industry as a whole.

If the scheme were to come into effect at the end of March—or, even worse, sooner than that—any calf born before the end of March would qualify—I think that this is right—for the higher rate of subsidy, with the extra £10, but any calf born from 1st April onwards would not. The change would come right in the middle of the spring calving season, and when the moment came, in eight or 12 months, when farmers applied to have their young cattle certified for the subsidy, there would be a great number of disputes.

Some farmers would be tempted in those circumstances to suggest that their calves had been born in March when, perhaps, they were born in April or even May. It is very difficult for a calf certification officer to be able to say with certainty when a calf was born, and I can envisage a great many disputes arising unless the Minister agrees to put the change-over date at the end of May, when the bulk of the spring calvings will be over.

It is fair to put the date at the end of the spring calving season for another reason. Since the extra £10 came to he available for calves born after 30th October 1973, herds which were predominantly involved in autumn calving have now had two full seasons of calves born and qualifying for the extra £10.

So far we have had only about one and a half seasons of calving in herds where the calves were born in the spring. So if the Minister were to "switch off" the extra £10 at this time of the year it would mean that he would unfairly jeopardise those farmers who very often come from the more difficult areas where the land and climate are not so good. They would find that they did not have the advantage of the extra subsidy over two full seasons, unlike those herds with autumn calving. If the Minister will agree to bring the scheme in on 1st June he will be making the best possible job of a sad and sorry affair.

My principle worry about the impact of this reduction of £10 in the subsidy is the effect it will have in the early years. It will come as a blow in the hill areas. Cattle breeders in the hill areas have had a very difficult time this year. The Minister did not increase the hill cow subsidy, and here he is reducing the calf subsidy by £10 as well. These breeders will therefore have had two blows in one year. Take as an example the man in the hill areas that 1 represent in Cumbria and the North-West—although this situation applies to many other areas. The man who breeds cattle predominantly will see that his neighbour who breeds sheep has had a reasonable increase in the guarantee price for lamb and wool in the price review and an increase in the hill sheep subsidy. He therefore finds himself at a great disadvantage by comparison.

There has been a great deal of concern expressed in the hill areas such as I and the Minister both represent. A delegation came from that area to London to protest to the NFU about the lack of help for the hill areas. I know that the deputation also met the Minister in his constituency over the weekend. I hope that the Minister of State will be able to say something helpful for those who will be hit by the reduction.

May I read a letter from a constituent of mine who was a member of that delegation and who saw the Minister. He says :
"I contend that the Minister has practically seen to it that 1975 will be another disaster year for us. He cannot know that inflation also hits cow enterprises ".
He goes on to make a very potent point.
" Look at the Minister's own hill farm—profit in 1973. £12.000, loss in 1974. £7,000. And this is attributed to the hill cows on a much kinder farm than most of your hill farmers have."
He is refering to my constituents. I hope that this illustrates the way in which the order will hit the people in the hills whom the Minister was most anxious to help.

I turn now to the effect the £10 reduction will have on the industry as a whole. Recently we have had quite disastrous calf slaughtering figures. From the official figures that come from the Ministry I see that during the four weeks un to the end of February—I believe that is the last period for which figures have been published-52,900 calves were slaughtered, when only 19,900 calves were slaughtered in the comparable weeks a year before. That is a serious increase in slaughterings.

As the Minister has rightly said, we are in a situation in which during the past week or two beef prices have increased dramatically. The Minister gave the figure of £2 per hundredweight. I should have thought if he were to make inquiries he would find that that is a good deal less than the price has risen over the past few weeks. That demonstrates that as a result of the Government's policies and as a result of the tremendous calf slaughterings of last year —we repeatedly warned the Government about the figures—we are beginning to see a shortage of first-class quality beef. I ask the Minister to tell us whether he is absolutely sure that it is wise to cut the subsidy in this way. It is inevitable that by cutting the subsidy more calves will go for slaughter than would otherwise have gone. With the shortage of beef which some meat traders are already predicting for the months ahead, and given the rise in beef prices that we have already seen, I am wondering whether the Minister is wise in the course that he is taking.

I now turn briefly to the effect that the reduction will have on the milk industry. I understand that the majority of dairy heifers do not qualify for the subsidy. The bull calves which are produced by the milk industry provide around 70 per cent. of beef supplies in this country. The Minister will know that figure well. He also must know that it is the sale of bull calves which provides a very important and vital part of the income of dairy farmers. The reduction of the subsidy must inevitably mean that calf prices will be lower than they would otherwise have been. The £10 removal of bull calf sales from the income of dairy farmers must, to a fairly large extent, offset the extra 5p a gallon which was added to milk at the recent price review. The milk industry is already seriously depressed. There is a shortage in the supply of milk from our home sources. As the Minister knows, not enough milk is being produced and hardly any butter is being produced. That is a serious matter which has cost us dearly on our balance of payments over the past year.

We are seriously concerned by the effects of this order. We shall listen carefully to what the Minister says. I cannot at this stage advise my hon. Friends to vote against this measure, but we shall be listening extremely carefully to what the Minister says. I hope very much that for once our warnings will be heeded and that he will answer our questions when the time comes for him to speak again.

There is one hour and two minutes left for this debate and many hon. Members have stayed to this late hour to participate. I hope that hon. Members will bear in mind their colleagues when they are called.

12.29 a.m.

Like my hon. Friend the Member for Westmorland (Mr. Jopling), I start by declaring my interest. As someone whose calves are produced almost entirely from an autumn calf herd I support strongly what has been said about the importance of the current scheme continuing until 1st June to safeguard the position of the spring calf herd. It is often the case that there is a right time and a wrong time to take action. By increasing the calf subsidy last year it struck me then and it strikes me now that the Minister did the wrong thing at the wrong time.

After a great deal of nagging and pressure from the Opposition, the Minister realised that the beef situation was becoming serious. Instead of worrying about the low end price that the farmer received for beef at that time, the Minister intervened at a much earlier stage in the production chain. In doing so he forgot that it is the end price which determines prices further back in the production chain. Consequently, the increase in the calf subsidy was no help to the fattener, which was proved by the fact that the Minister had to take further action later in the year to support beef, but again only after a great deal more damage had been done to production potential and to farmers' incomes. The increase in the subsidy was of only the smallest assistance to the calf producer, whose return is affected above all by the end price received by the fattener.

The consequence of the Minister's ineptitude last year was, first, the hardship felt by all beef producers and, secondly, the high rate of calf slaughterings, which is still continuing. My hon. Friend the Member for Westmorland (Mr. Jopling) quoted the figures for the last four weeks. I will quote the figures from the beginning of the year up to 22nd February. This year just under 99,000 calves have been slaughtered, compared with just under 36,500 in the same period last year. In the year since January 1974 calf slaughterings are up by 300 per cent. Yet, in the face of those figures, the Minister now proposes to reduce the subsidy. Again, it strikes me that he could be acting at the wrong time, albeit doing what in the longer term may be the right thing.

Is the Minister convinced that the confidence of farmers will not take another knock in the face of the subsidy reduction? One wonders whether the Government are serious about the expansion of agricultural production. Has the Minister studied the December returns? Has he seen, for example, that the number of calves under one year old decreased by 107,000? Has he noticed the fall in the breeding herd and the decrease in the dairy herd? The beef herd has increased, but that by itself provides a relatively small proportion of our beef requirements. Surely the likelihood in the light of the calf subsidy cut is that a still greater reduction in the herd potential will occur.

I presume that the Minister has read the comments of the President of the National Farmers' Union following this year's price review, when he said:
" Unless more is done to restore profitability in the near future, home food production will dwindle at the expense of the whole nation."
If I were the Minister and had read that, I should be most concerned, not just about farmers' returns but about the potential for beef production for the benefit of the consumer next year and thereafter. I should be even more worried as a result of this ill-timed scheme.

1.35 a.m.

I shall speak on the order as it affects the farmers of Northern Ireland. The benches occupied by those representing Northern Ireland in proportion to all other parties are more than full tonight for this important debate. It is to be regretted that this order is not being debated at a time when other hon. Members could be present, because it is a debate of the utmost importance to the farming community. Northern Ireland farmers are especially affected adversely by the order. As the Minister is aware, a large part of the cattle industry in Northern Ireland is in the hill country and, as the previous speaker has said. hill country men are not receiving further benefit at present, although payment is being brought forward from October to March. Now they will be adversely affected by the removal of this subsidy.

I was interested in what the speaker from the Conservative Front Bench said tonight, that constituents were able to meet the Minister concerned. Unfortunately, we in Northern Ireland suffer under some unwritten law that none of our constituents can ever get to the ear of the Minister of Agriculture to put their case for the farming industry in Northern Ireland. Right lion. and hon. Members from Northern Ireland resent this. It seems to us that Members from Northern Ireland here are second-class Members and can never get the ear of the Minister for their constituents so that he can hear what happens there. The situation has been exacerbated by the fact that the Minister of Agriculture paid a flying visit to Northern Ireland and in such a way that one would have thought that he did not want anyone who would have put the situation to him to meet him. I received a brief note of two lines to say that he would be in my constituency, but where. from Portrush to Carrickfergus from the Bann to the North Channel, I was not even informed.

Many farmers in Northern Ireland are outraged by the fact that they cannot put their case to the Minister directly. They feel that that must be remedied.

This calf subsidy order will seriously affect the cattle people of Northern Ireland. If he is to proceed with this, it will be another blow to the farmers and cattle men of the Province. I am afraid that here in Whitehall the serious situation of the farming community is not going home in its proper measure to the Ministers concerned.

It is all very well for the Minister dealing with agriculture in the English context where agriculture is a very small part of the industry of the nation, but in Northern Ireland we have agriculture as our basic industry. It is the first industry in Northern Ireland it employs more people, as do the industries which stem from it, than any other industry so that if agriculture is adversely affected, the whole population and the whole country are affected.

I would make a plea to the Minister to be prepared to hear directly from our constituents on this important matter and to realise that there is deepening resentment building up there. The farming community in Northern Ireland have always been most peaceful members of the community and have gone about their business in a peaceful manner. The farming community have been the life and soul of Ulster. They have been the steadying element in the community in the rural districts. Yet, today, farmers are on the roads. They are blocking roads, stopping traffic and engaging in civil disorders. The reason is that they feel that their case cannot be put to the Minister of Agriculture at Westminster. As their representatives in this House, we feel extremely concerned about it.

I am glad to have this brief opportunity to ventilate the concern of the farming community in Northern Ireland. I do not happen to be the spokesman for our group, and I know that if I speak any longer, he will pull me down into my seat. Rather than have that happen, I bring my remarks to a conclusion. But I trust that the Minister will listen to the voice of the Ulster farming community.

Will the hon. Gentleman tell me whether it is a secret who is the spokesman for his group, because I have never been informed?

With pleasure, Mr. Deputy Speaker. Our spokesman on agriculture is my hon. Friend the Member for Londonderry (Mr. Ross).

1.40 a.m.

I am grateful to the Minister for explaining the scheme, and I have to declare my interest in that at times I rear a few pedigree Welsh black calves.

Many farmers have been through a difficult time over the past year or two. But I felt that we were at last beginning to see the light at the end of the tunnel after this year's price review. However, the drop in the calf subsidy has come as a great disappointment to me and to others, presenting, as it does, another stop-go policy in the livestock sector of our industry. Farmers will think that we are going back to the days when the Minister did away with the intervention support system. That was only a few months ago, and we do not want to see a repetition again this year in the livestock sector of the industry.

In my view, the £10 reduction for each calf is a severe setback to the growing confidence of the industry. It is about time that there was some continuity introduced into the price review award which takes place every year and into the support system.

Let me give the House a few figures to illustrate the inconsistency that there has been over the past 10 years. The bull calf subsidy for 1964 was £9·75. In 1965–66, it went up to £10·25. In 1967–73, it went up to £11·25. In 1973–74, it dropped. This was due to the last administration deciding to reduce it from £11·25 to £8·50. From July 1974, it went up again by £10 per head. But here we are again, within nine months, experiencing a proposed reduction of £10 per head for every calf. To me, that is not good policy. It is bad planning.

It is interesting to compare the slaughtering figures of 1974 with 1973. In January 1974, there was a 67 per cent. increase in calf slaughterings. In February, there was an 81 per cent. increase. The trend was moving upwards all the time. In March 1974, the increase was 115 per cent. In April, it was 123 per cent. In May, it was 157 per cent. In June, it was 267 per cent. In July, it was 255 per cent., when we had the extra £10 per calf. In August, it went up to 310 per cent. In September, to 269 per cent. In October, to 315 per cent. In November, to 287 per cent. In December, to 223 per cent. But worse was to come. In January of this year, the figure went up by another 171 per cent. compared with January 1974, and, in the first few weeks of February, 27,000 head of calves were slaughtered. The level of calf slaughterings during 1974 was two or three times greater than in the previous year. The trend is continuing and getting worse.

Let us consider the returns to the farmers, especially to dairy farmers. In 1973 the sales of calves averaged £50 and over per head. In 1974 the price dropped to £20 per head. In February 1975, only a month ago, it came down marginally to less than £14 per head. I disagree with the Minister, who said that the prices of store cattle and calves were improving in the markets. Last week the average price was only £13·24. No wonder the farmers of Britain are worried about a reduction in the calf subsidy system.

Over past months city dwellers have become aware of the rumblings in the countryside. A normally placid section of the community has been roused to protest. There have been tractors in the streets and blockades at the ports. We have heard true stories of calves being sold for 10p each—in some cases 8p—and of farmers becoming bankrupt. That is a fact. The British housewife has suddenly become aware of the British farmer. In short, agriculture has been on the brink of a real crisis for too long for the well being of Britain as a whole.

I turn now to the dairy farmer and the effect of the prices that I have quoted on the milk producer who will now be selling calves. A drop of £30 on average on a calf is equal to at least 3p per gallon on milk. This is a classic example of robbing Peter to pay Paul. Why does the Minister give with one hand and take away with the other?

Many farmers in Britain breed dairy herds. A Friesian breeder is not entitled to the calf subsidy on a heifer calf. If, after a time, he decides to sell that heifer at the fatstock market, he will not qualify for the calf subsidy, although he will gel the intervention support price. He does not qualify if the animal is alive, but if he sends her deadweight he will get both. I hope that the Minister will look into this matter. Farmers are being penalised. Something should be done to help them in the near future.

I have already quoted figures showing that slaughterings are increasing and that sales are going down. The added disappointment of a decrease in the calf subsidy can only depress the market further, cause consternation among farmers, and lead eventually to a shortage of beef in this country.

Many people may not believe what I am saying, but I am afraid that it will be true in a few years. I believe that the housewife will have to pay a very high price for the Sunday joint within the next five years due to the lack of foresight on the part of the Minister.

We do not propose to divide the House tonight. [An HON. MEMBER: "Why not? "] That is a good question. But there are not many hon. Members here to support us.

I hope that the Minister will reconsider his decision. I am against the reduction of £10 per head. This has happened in 12 months. It is a great pity that the farmers of this country must suffer again due to the stop-go policy of the Government.

1.50 a.m.

The scheme and the changes in the calf subsidy over the years are simply the outward signs of the constantly changing thinking and the constant nonsense that have bedevilled the meat industry in Great Britain over many years.

On page 1 we read that the Minister of Agriculture, Fisheries and Food, the Secretary of State for Scotland and the Secretary of State for Wales may act, but unfortunately, there is no mention of the Secretary of State for Northern Ireland. However, on page 2 we read in paragraph 4 that the reference is to the Minister or the Secretary of State for Scotland. This seems strange. Why is it necessary to have three Ministers in the first instance and only two in the second? Is there any need to mention any Minister other than the Minister of Agriculture,who is the person in charge of agriculture in this country? It is a small issue, but it was raised on the last occasion the calf subsidy was discussed.

Carcases become ineligible because of infection, by TB or brucellosis. Can the Minister confirm that the calf subsidy is taken into account whenever compensation for these carcases is assessed? After all, £18 or £19 is well worth having, and the farming community would like to be assured that full account is taken of the subsidy when paying this compensation.

Paragraph 4(3) mentions horned cattle, especially in relation to Northern Ireland. Until now because of the law in Northern Ireland, since 1965 horned cattle have not qualified for the calf subsidy. The change in the scheme will mean that bulls of all breeds, provided that they have enough blue blood to qualify for the herd book of their breed, will qualify, but why are only Hereford and Charolais heifers included? Have the breed societies of all the horned cattle in Northern Ireland expressed their willingness to accept this limitation on the breeds of horned cattle for show purposes? If so, I find it very strange, because many breeds, including Shorthorns, are sold with horns attached. This may not be important to anyone except breeders of pedigree cattle, but I should like an answer.

The scheme is to come into operation on the day after it is made, which I take to mean 14th March. Why is that? The Ulster Farmers' Union Fatstock Committee recommended at its meeting this week that the date should be 30th May. The reason is to catch the spring calves, especially on upland farms where the suckling herd is the basic unit.

If the Minister decides to go ahead and fix tomorrow or the next day as the qualifying date, he will find that very many calves will have been born in Ulster and the rest of the United Kingdom within the last few days and strangely few will be born in the next fortnight. I am sure from the Ministers expression that he is well aware of that. It is a direct result of taking this strange time, right in the middle of the calving period, to make the change.

The calf subsidy increase of £10 had a starting point in October 1973. That meant that two lots of autumn and winter calves qualified. But now only one lot of spring and summer calves will qualify. The Minister should know that those late spring and early summer calves are the calves which come from the herds whose owners most need this help, namely the small upland herds. That is the sector of the farming community that has been hardest hit during the last 12 months.

It has also been decided to extend, the time during which subsidy will be paid on carcases, but it would appear to me that the length of time allowed is too short. It takes cattle varying periods to grow from one day old on to steak. In the case of carcases there is a period of 154 months during which the extra £10 will be paid, but in the case of calves the period is 164 months. What is the reason for the difference? Steps should be taken to correct the matter.

I want also to ask the Minister how the figure of £4 million has been arrived at. Has the Minister taken into account the fact that we are in the middle of the spring calving, and that at this time of year more calves are being born than at any other time? This is double the average number of calves. That is the only way in which the figure of £4 could have been arrived at.

Everyone has said that we should not vote against this scheme, but I am not so sure. Three grave inequities arise from the scheme. There is the inequity in relation to the different breeds of horned cattle ; the inequity in the period of time allowed, comparing carcases with calves ; and the grave inequity arising from the fact that two crops of winter calves and only one crop of summer calves qualify for the £10. This is a ridiculous time to bring in this scheme.

Last year there was an increase of 60,000 in disposals of cattle in Northern Ireland. That increase was made up entirely of cows and heifers. Anyone who knows anything about farming life will realise that such an increase is a clear indication of a lack of confidence. The fact that calf subsidies have yo-yoed throughout subsidy legislation is no basis for future planning. It may pay only a few pounds per calf, but that is a fairly large sum for a small farmer. If farmers are to have any confidence for future planning it is essential that changes be made slowly, so that farmers know the way ahead. Nowhere is this more important than in meat farming.

The Minister should indicate that he is willing to take this scheme away and bring it back properly constructed and timed.

1.59 a.m.

I think that we are all agreed on the Opposition side that the greatest single requirement of the agriculture industry at present is a restoration of confidence. This can surely best be achieved by pursuing a stabilised programme. Yet, as many speakers have pointed out, the agriculture industry has been subjected to constant change, and within the farming industry the livestock sector is particularly vulnerable.

My first point concerns the effect that the changes in the level of the calf subsidy will have on the hill areas. Various local and regional points have been put, and I want to speak for Cornwall. We have all agreed that the hill farmers have had a difficult 12 months, largely due to the steep fall in the price of beef last year and the increase in feed costs, which was accentuated during the winter months. The hill farmers had to face the additional problem of a shortage of fodder. The hills are the major supplier of young stock for the beef herd, and it is necessary to restore confidence in this sector.

Secondly, there is the effect that the variation will have on the dairy sector. The Minister must remember that 70 per cent. of our beef comes from the dairy herd. Unless we are very careful, within the next few months the dairy farmer will run into financial difficulties. The increase that he is to receive in the price of milk is only 0·8p per gallon. We already have a shortage of milk for manufacture. Our cheese and butter factories are working below capacity. Therefore, there is a need to encourage milk production. We must also bear in mind that the dairy farmer depends upon the sale of his bull calves for an important part of his income.

My third point concerns the need to take into account that, whereas the autumn calf herd will qualify for two goes, calves born in the spring will not. Therefore, it is important to see the matter in the context of a full season, especially in view of the necessity to build up the United Kingdom beef herd. In the past few years many producers have switched to spring and late spring calving. That makes sense. In addition many of those who spring-calve are in the more difficult areas, in the hills.

There is a continued high level of calf slaughterings. In the last week of February 15,400 calves were slaughtered, compared with 5,800 and 3,100 in the corresponding periods of 1974 and 1973. Prompt removal by the Minister of the £10 supplementary calf subsidy, which will reduce the rate for steers to £8.50 and the rate for heifers to £6.50, will hardly encourage a recovery in calf-rearing. Thus numerous potential beef animals born this spring could well be subsequently slaughtered as calves.

I therefore ask the Minister to extend the period of this scheme so that it covers the whole of the spring calving season. This is not a matter of merely an administrative requirement. It is an important requirement, and it is certainly backed by all those who understand farming. All too often decisions have been made by various Ministers not necessarily of the Ministry of Agriculture —on the basis of administrative expediency. Let us hope that on this occasion the real practical needs of the industry can take priority over administrative convenience.

2.5 a.m.

My hon. Friend the Member for Londonderry (Mr. Ross) has dealt with detailed points arising out of the order. I wish to deal only with the generality of it.

I join with other hon. Members in warning the Government that farmers have had enough of political parties saying one thing when in Opposition and another thing when in Government. I warn the Government, too, that farmers will no longer be deceived by devious talk and by a "stop-go" agricultural policy which has brought many farmers, certainly in Northern Ireland, to the verge of disaster. They have taken to the streets and demonstrated in Northern Ireland.

I am sorry that no Minister from the Northern Ireland Office is on the Front Bench to reply to the debate and so emphasise the importance of agriculture to Northern Ireland.

We are in the quite ridiculous position where the Government of the day at one time urge expansion and provide an incentive to the farmer ; and then, when the farmer responds in all good faith with maximum production, the Government reverse their policy, take away a major part of the financial help which encourages that production and leave the farmer with all his plans awry and bearing very heavy losses. That is a strange way to treat those whose industry and efficiency save the importation of too much food from abroad. It has happened in respect of pigs, eggs, milk and beef. Now the farmers who are in beef production and have suckler herds will get another grave blow as a result of the variation of the scheme, which reduces the calf subsidy by £10 on each calf. This is a further hardship for the suckler herd owners. I do not have the spell out their present plight.

I am afraid that this will lead to a cutback in beef. Is that what the Government want to see? If so, they should say so quite clearly. Are the Government interested in maintaining and increasing beef production? It is more than 22 years since the calf subsidy scheme was introduced. Then the subsidy was £5 for steer calves and £2 for heifer calves. Since then, as we all realise, the value of money has been dramatically eroded and the price of feedingstuffs has risen rapidly. As a result, the reduced subsidy proposed by the Government will be less than the value of the original subsidy. So much for progress, and so much for all the promises made to farmers over the past months and years.

All that farmers desire is a reasonable return on their investment and for their work. While all around them they see others clamoring for and obtaining increases in pay, they are expected, seemingly, to produce at a loss. It is in the interests of us all that we should have an expansion in beef production and not have to rely on overseas supplies.

Last year the Government put up the calf subsidy by £10. Now they are removing it at a stroke. Two years ago the then Conservative Government reduced the subsidy for the first time in the life of the scheme because, they said, there was a shortage of beef supplies which had increased market returns and had the effect of making the subsidy less necessary. The then Minister of State accepted that the calf subsidy had been a valuable production grant, improving returns at a key point in the production cycle when returns from end prices were not sufficient to bring about the necessary expansion.

I quote one agriculture spokesman in that debate. He said :
" at a time when we should be encouraging even greater beef production it is illogical to proceed by cutting some of the important production grants which are aimed at achieving an expansion. For this reason the Opposition "—
the Labour opposition—
" deplore the Government's decision to cut calf subsidy."
That was the hon. Member for Edinburgh, East (Mr. Strang) who is now the Parliamentary Secretary at the Ministry of Agriculture. He is not on the Government Front Bench at the moment. He continued, in a slashing attack on the Conservative Government for cutting the subsidy :
" Therefore, I cannot see how the Government can justify a cut in the subsidy at the present time. The Government are under-estimating the effect which this will have upon agriculture. Time and again we have been exhorted to expand, but this attitude seems to have fallen away. We cannot blame the industry for beginning to wonder why the Government say, on the one hand, that we are desperately in need of beef expansion, and yet, on the other, cut the calf subsidy for the first time since it was introduced in 1952."— [Official Report, 4th April 1974 ; Vol. 854, c. 553–4.]
Perhaps I might put similar questions to the Government. Why are the Government reducing the subsidy? Is beef production too profitable? Are producers getting too much out of beef? That is not so. This is a ridiculous position. The farmers have had enough of it—certainly the farmers in Northern Ireland. For that reason I intend to oppose this scheme, and divide the House this morning. It is the only way we can prove our sincerity and determination to get a fair deal for the farmers. The Government are behaving like a drunken man, lurching from one side to the other, not knowing where they are going. The farmers do not want to be dragged along in such an erratic manner. Their livelihood is at stake and we in this House are here to protect them and help them. By doing so we will be helping all the people, especially the housewives.

2.13 a.m.

I will deal first with the technical points raised by hon. Members and then with some of the more general points raised by Members who represent Northern Ireland constituencies and elsewhere. The hon. Member for Westmorland (Mr. Jopling) asked why it was necessary to put the amendment in the scheme. The answer is that the parent legislation under which the scheme was made embodies a subsidy rate and that cannot be reduced retrospectively.

In the past we have been putting the rates up. The significant date of birth was specified in the scheme, but on this occasion the date of operation will determine the significant date of birth so that the rates have been spelled out with reference to the date on which the scheme comes into operation.

I was asked why calves born after the date of operation of the scheme but certified as carcases before 1st April qualify for the higher rates. The answer is that the conditions relating to carcases, stage B, are different from those for live calves for stage A. Calves do not generally meet the conditions of eligibility as regards standards at stage B until they are about 12 months old. Second, the increase became payable at stage B only on 16th December 1974. Terminating the increase in April will mean that the higher rate will have been available to the producer at stages A and B for roughly the same period, about 16 months.

The hon. Member for Westmorland asked about brucellosis in relation to paragraph 4(3) of the scheme. The provision applies only to animals slaughtered under the brucellosis scheme which have attracted compensation since the compensation takes account of the value of the calf subsidy.

The hon. Gentleman also asked about the coming into operation of the scheme. This will be when the scheme is signed. The £10 addition was a temporary measure to which I shall return later.

The hon. Member for Devizes (Mr. Morrison) referred to the figure of calf slaughterings. These are higher partly because of the increased size of the beef herd. They are also higher because in recent years—especially last year—there was an unduly high calf retention. Current levels are not much different from the situation in the 1960s. The figures from 1966 to 1969 were very much higher than they were in the last year. Therefore, the trend during the year reflected some of the problems connected with the industry. The point is that confidence is returning to the industry and I believe that we shall see a downward trend in this respect in future as the market becomes firmer and prices rise.

Several hon. Members asked why the extra subsidy should not be retained longer to cover spring calvings. The £10 addition was a temporary measure agreed by the Council of Ministers in March 1974. When the new beef regime was settled in February this year, an undertaking was given that the increase would be discontinued as soon as the necessary provision could be made. All calves born before the variation scheme comes into operation which are otherwise eligible will continue to receive the higher subsidy. The phasing out period will run from about eight months after the date when the scheme comes into operation.

I am sorry that the Minister has not yet said when the scheme will come into effect. He said that it would come into effect when signed. I very much hope that the scheme will not be signed until, at the earliest, 1st April. Many of us regard that date as totally wrong and believe that it should be extended until 1st June. Will the Minister say whether technically it is possible for the scheme to await signature until 1st June? Will he give an undertaking that it will not be signed before 1st April?

I do not think I am able to give that undertaking. In regard to Government policy it must be pointed out that until 30th June last year the maximum rates of calf subsidy were £8·50 on a male and £6·50 on a female. From July last the maximum rates were increased by £10. This was a dispensation given to us by the EEC Council of Ministers. The council agreed to it in March last and it was linked with the decisions that the United Kingdom guide price of beef should be increased to a lesser extent than in other member States and that the United Kingdom need not apply intervention.

The Commission's regulation implementing the decision ceased to have effect after 31st December last. When introduced it was envisaged that the outlines of the new beef regime would be clear by the beginning of 1975. It was hoped that the United Kingdom commitment to remove the additional £10 could be implemented and the new regime introduced at about the same time. But since the new beef regime was not settled by 31st December, action could not be taken in the United Kingdom to end the entitlement then. In order to extinguish the entitlement in United Kingdom legislation to the extra £10 on the day when the EEC legislation ceased to have effect, it would have been necessary to begin the parliamentary processes at the beginning of November 1974.

Until the new beef regime was settled in February of this year, the calf subsidy was in order, but it is an understanding of the new regime that the higher subsidy shall cease to have effect. The point is not where the subsidy comes from, whether it is a calf subsidy or a variable premium. The point is that the income to the farmer is assured, and this has been undertaken in the announcement by my right hon. Friend in February of this year. There are signs that the market is firming up and that new confidence is returning. The effect of this new assurance which has been felt in the industry is more than amply replacing the calf subsidy.

Hon. Members from Northern Ireland asked why pedigree bulls in Northern Ireland have not been eligible for the calf subsidy until now. All horned calves presented live for certification in Northern Ireland have since 1971 been excluded from receiving the calf subsidy. When hon. Members ask what action they might take, they should realise that these facilities which have been put into this scheme help the Northern Ireland producer considerably. They have been added, in agreement with the Northern Ireland societies, because some of these improvements get rid of the anomalies which have existed for some time and they represent a benefit to the Northern Ireland producer. The object of the exclusion is to enforce the general de-horning requirement introduced in Northern Ireland in 1965 in order to protect the live export trade, since horned animals could damage each other in transit.

Reference has been made to changes which have been made in the variable premium in Northern Ireland. The present Northern Ireland premium is 70p per live cwt. higher than the premium in Great Britain. This did not provide adequate protection to Northern Ireland producers when the market collapsed last autumn. So we have made a separate calculation of the premium for Northern Ireland to make sure that average returns to producers there are at the same level as in Great Britain, after taking into account transport costs which are assessed at El per live cwt. I ask hon. Members to remember that the scheme has the extras put in, besides the changes in the calf subsidy level, in order to right anomalies at the request of their own societies.

A question was asked about the exemption from de-homing being limited to pedigree female Hereford and Charolais breeds only. The object of the exemption is to bring the calf subsidy legislation into line with the exemptions in de-horning requirements of the Northern Ireland horned cattle exemption order of 1967. This is what this provision does. This is another benefit to the Northern Ireland producer.

I have been asked why the increase applied at stage A a month longer than at stage B. The closing date of 1st April 1976 for stage B will mean that the higher rate per carcase which ran from last December will be available for just over 15 months. So we are not bringing the scheme to a sudden end. It will continue for some time yet, and indeed there are signs that the new beef regime is firming up.

In reply to the hon. Member for Londonderry (Mr. Ross), who asked about the exclusion subsidy on carcases of animals slaughtered in the course of tuberculosis and brucellosis eradication, the compensation is payable under animal health legislation on animals affected by tuberculosis or brucellosis where the owner opts to have the animal slaughtered by the Department of Agriculture. In such cases the subsidy potential of the animal is taken into account in assessing the amount of compensation based on the market value. It is not appropriate to pay calf subsidy in addition.

I come now to another matter raised by the hon. Member for Londonderry. In 1967 the Northern Ireland Government made an order under Section 20 of the Agriculture (Miscellaneous Provisions) Act 1965 providing for certain exemptions for pedigree bulls and pedigree females of the Hereford and Charolais breeds, considerd to be the main pedigree beef breeding herds in Northern Ireland, in order that these animals could preserve their traditional appearance. The numbers involved are quite insignificant so that the overall dehorning policy has not been affected. These exemptions have not so far been applied to the calf subsidy mainly because live bulls have only recently been eligible for the subsidy.

I was asked about the references to the Minister, the Secretary of State for Scotland and the Secretary of State for Wales on page 1. These references repeat the provisions of the parent Act, the Agriculture (Calf Subsidies) Act 1952, which enables those Ministers to make a United Kingdom scheme. The references on page 2 to which the hon. Member for Londonderry drew attention omit the Secretary of State for Wales because that Minister has no power to make the actual payments.

Are we to take it that the Secretary of State for Northern Ireland has no power to make them?

That is a technical point of detail—I was asked about the various references to Ministers and Secretaries of State—and I have no information here about the position in Northern Ireland in that respect. I shall write to the hon. Gentleman to clarify the matter.

Under the parent legislation, was it not possible to have different schemes for various parts of the United Kingdom—for Northern Ireland, Scotland, England and Wales?

I do not think that I can answer that question without knowing what the schemes are to which the hon. Gentleman refers. If he will write to me, I shall give him the information.

I was asked about hill farmers in Northern Ireland and elsewhere. The hill cow subsidies have been brought forward this winter, and the hill sheep subsidy, which affects many who also keep cattle, has been increased. Hill farmers will also benefit from the higher calf and store prices which are being made as the new beef arrangements increase confidence.

As regards the increased calf slaughterings and the return to breeders and rearers, we believe that this reduction in subsidy should have little or no impact on the level of slaughterings, and all eligible calves born until the scheme comes into force will qualify for the higher rate of grant.

Moreover, the general policy of the Government as expressed in the last few months, with the action taken from the implementation of the calf subsidy last year, only a few weeks after we came to power—more than doubling the subsidy provided by the Conservative Government —together with the action taken in July, and in November, and the new beef regime, is bringing a new confidence to agriculture, as is shown by the price figures in the last two months. There have been quite substantial increases.

In the case of Friesian cattle, the figure in December was f10461 per head. In January it was £113·17, and in February £.125·06. For beef and dairy cross herds, the figure in December was £121·05, and in February it was £138·50. That is an indication of the growing confidence in the industry.

The Conservative Opposition, who were instrumental in our entering the Common Market, must realise that the Minister has had to do a great deal of negotiating in Brussels in order to bring back the package which he has presented to the House and to the farming community. Hon. Members suggest that farmers are not able to know from time to time what is likely to happen. There is no doubt that my right hon. Friend has been showing an awareness and sensitivity to the needs of the agricultural community. His success in Brussels has meant that we have now given a new confidence to the industry and have made good the ending of the fatstock guarantee scheme by the Conservatives, a move which took away deficiency payments and the confidence which is now being gradually brought back as a result of our policies.

The Minister of State has been round these houses often enough without coming out with this hoary old chestnut once more. He knows perfectly well that when the Government changed just over a year ago we left behind a residual guarantee in the form of the intervention system. It was this miserable Government which took everything away and left the beef industry totally naked, without any form of support.

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)

Division No. 147.]AYES[2.31 a.m.
Bishop, EdwardRoper, JohnUrwin, T. W.
Brown, Hugh D. (Glasgow, Pr)Sheldon, Robert (Ashton-u-Lyne)White, Frank R. (Bury)
Brown, Robert C. (Newcastle)Snape, Peter
Dormand, JackSwain, ThomasTELLERS FOR THE AYES:
Harrison, Walter (Wakefield)Taylor, Mrs Ann (Bolton W)Mr. James A. Dunn and
Loyden, EddieThomas, Ron (Bristol NW)Mr. Joseph Harper.
Noble, Mike

Mr. James Kilfedder and
Mr. David Penhaligon

It appearing on the report of the Division that forty Members were not present, Mr. Deputy Speaker declared that the Question was not decided, and the business under consideration stood over until the next Sitting of the House.

On a point of order, Mr. Deputy Speaker. On an occasion like this there is a precedent for the House to ask the Government what are their intentions. As I see the result of the Division, the Government have failed to get the scheme, and the higher rate of calf subsidy will continue because of the Government Whips' failure to get their supporters here.

The Conservative Party has taken no part in this Vote. I was a Government Whip for some years, and this sort of thing did not happen in our time. It is the Government's business to keep their supporters here. If the Government Whips arc incapable of keeping their supporters in the House to get their own business it is no fault of ours.

Will the Minister tell us what are the consequences of the vote and what the Government intend to do about it?

Further to that point of order, Mr. Deputy Speaker, as I told the House earlier, on 21st January, the Council of Ministers agreed that the United Kingdom should continue the premium until the EEC scheme took effect and the Minister has, in anticipation of satisfactory adjustments to the beef regime, to which I have referred tonight, and to other items, said that he was prepared to discontinue the £10 supplement until the necessary provisions had been made. That was announced by my right hon. Friend on February 17th.

The House divided: Ayes 15, Noes 0.

I have reason to believe that the Government were right in expecting that the Opposition would not take the action they have. This poses problems with the Council of Ministers in Brussels, but I want to assure the hon. Member for Westmorland (Mr. Jobling), who raised the point of order, that it is the Government's intention to get their business through. They will take the necessary action to do that.

Order. May I make it perfectly clear that we are not pursuing that matter any further because there is other business before the House and I am following Mr. Speaker's practise of allowing one question and one reply from the Front Benches. This very week Mr. Speaker followed that practise so I hope that, having had their exercise, hon. Members will not want to pursue it.