asked the Secretary of State for Scotland what is his current assessment of the profitability of Scottish farming.
The annual review is just beginning, so it is too early to give a firm assessment of the situation in the light of this year's results. There are, however, encouraging signs. Returns, particularly in the livestock sector, have improved and the rate of increase in input costs has declined. Taken together with the increased support that we have provided, these should bring about a reversal of the downward trend in farming net income which we inherited.
Will my right hon. Friend ensure that nothing is done to destroy, by any erosion in the hill livestock compensatory allowances for the coming year, the small degree of confidence that has begun to reappear in the Scottish hill livestock sector?
I am grateful to my hon. Friend, but I am sure that he will not expect me to anticipate our autumn review of the hill livestock compensatory amounts. I agree that some return in confidence is much to be welcomed and that we do not wish to do anything to discourage it.
Will the Secretary of State take into account the heavy liabilities of Scottish farmers to banks and the heavy interest charges from which the farmers suffer, those charges being the most serious handicaps facing them at present?
I entirely agree with the right hon. Gentleman. It is one of the most worrying features of agriculture at the moment. That is another reason why it is important to seek to lower interest rates. During the past year the overall interest rate burden for the year will probably have been less than it was for the previous year. That may be a small help, but I should like to see more help than that.
I accept that my right hon. Friend cannot anticipate the outcome of the review, but will he accept that many of his hon. Friends will be drawing to his attention the serious debts of many farming enterprises? Will he bear in mind that, although this year has been better than last year, last year was positively disastrous for many farmers and that some time will be needed for them to recover from it?
I agree that farmers' incomes have seriously deteriorated over recent years, and we shall recognise that fact in our review.
Will the Secretary of State say what steps he intends to take, in the light of the report last week, which showed that one-third of Scottish dairy farmers are now operating at a loss, to encourage local authorities to increase the take-up of EEC milk subsidies?
I, too, am concerned about the returns to dairy farmers. I hope that the new arrangements that are being made for milk prices and so on will be of some help to them eventually. We shall look into the question of encouraging the consumption of milk and do what we can to help.