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Farm Incomes

Volume 22: debated on Wednesday 28 April 1982

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asked the Secretary of State for Scotland if he is satisfied that the level of farm incomes in 1982 will enable an overall reduction in bank lending to farmers; and if he will make a statement.

It is too early to make predictions about the economic situation in farming in 1982. I am, however, encouraged by the fact that the year-on-year increase in the level of bank lending to agriculture, forestry and fishing industries at February 1982 was 8·6 per cent., as compared with 21·7 per cent. a year earlier.

Does my right hon. Friend share my anxiety that ever-rising costs of production in farming must be financed by increased overdrafts? Does he agree that that is especially true of the livestock sector? Does he envisage any chance of a reversal of that trend in 1982?

I entirely share my hon. Friend's anxiety. The increased level of indebtedness has been one of the main problems facing farmers throughout Scotland recently. The current trend of easing interest rates should help. It is interesting to note that although the level of borrowing has increased this year, the amount paid in interest will be about the same because of the fall in interest rates.

Does the right hon. Gentleman recognise that Scottish farmers have suffered a 50 per cent. cut in income in real terms during the past three years? Does he agree that they are not therefore able to service the vast sums that are outstanding? Will the Government therefore pay close attention to the proposals made by the Scottish National Farmers Union to do two practical things? First, will he introduce an agricultural development programme for the Highlands and Islands and, secondly, will he do something to restore the lime subsidy?

I agree that Scottish farmers have experienced three extremely difficult years. Nevertheless, the hon. Gentleman will acknowledge that the Government have moved a great deal to help farmers through large increases in hill livestock compensatory amounts, the introduction of the sheepmeat regime and so on. I agree that the two suggestions that he mentioned are important. We are discussing with the Community the possibility of an ADP, for which the hon. Gentleman asked.

Does the Secretary of State agree the with the statement by John Cameron, president of the Scottish NFU that the level of indebtedness is frightening and that the lack of confidence referred to at Scottish Question Time in February has shown no sign of abatement? Does he agree also that it is therefore incumbent upon the Government to take action now and not just talk about what they might be able to do in the future if they have the chance?

Fortunately, we do not have to talk merely about what we might do in the future. We have an outstanding record of helping farming during those years. The hon. Gentleman might care to recall that the Labour Government many times refused point blank to devalue the green pound, driving the Scottish NFU to desperation. We have put that right.

Does my right hon. Friend agree that in many cases the farm horticultural development scheme persuaded farmers to borrow money that they did not have to buy machinery that they did not need to produce crops that they could not sell? Does he agree that it would be better to move away from a grant system and towards an agricultural development bank with low interest rates?

I appreciate my hon. Friend's point. As he knows, however, our system of support for agriculture must tie in with that used by our partners in the European Community. Nevertheless, I note his point, and it is one of the factors that we can no doubt consider.

Irrespective of the general position described by the Secretary of State, does he agree that in the North-West of Scotland, where the weather conditions have been particularly acute, hill farmers and especially those with cattle now face a crisis?

I certainly agree that the plight of hill farmers has been even more difficult than that of others thoughout the country, and it causes me great worry. However, the high levels of hill livestock compensatory amounts and the increasing development of the sheepmeat regime should be of help to them. I hope that that will at least ease some of the problems.

Is my right hon. Friend aware that many farmers in Scotland are very concerned that there is still no agreement in Europe on the annual price fixing? Is he further aware that this applies expecially to livestock farmers, who have now passed the end of the livestock year and are unlikely to receive any retrospective payment for any increase, for example, in sheep prices?

I appreciate my hon. Friend's point. As he knows, we are negotiating hard in the Community and in the Council of Ministers to secure for our farmers a deal that we can accept. He will appreciate that if we had accepted an unsatisfactory deal too soon we should not have helped the farmers.