(c) crown copyright

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T H I S D O C U M E N T IS T H E P R O P E R T Y O F H E R B R I T A N N I C M A J E S T Y ' S G O V E R N M E N T

C O N F I D E N T I A L

5 2 C P . (56) 73 C O P Y N O .

7 t h M a r c h , 1956

C A B I N E T

F A R M P R I C E R E V I E W 1956

M e m o r a n d u m b y t h e M i n i s t e r of A g r i c u l t u r e , F i s h e r i e s a n d F o o d

I c i r c u l a t e f o r t h e i n f o r m a t i o n of m y c o l l e a g u e s t h e d r a f t of t h e W h i t e F a p e r o n t h e A n n u a l R e v i e w of t h e A g r i c u l t u r a l I n d u s t r y a n d D e t e r ­m i n a t i o n of G u a r a n t e e s , w i t h o u t a p p e n d i c e s .

2 , I m a y , of c o u r s e , f i n d i t n e c e s s a r y to m a k e s o m e m i n o r a l t e r a ­t i o n s b e f o r e t h e p a p e r g o e s to p r i n t .

D . H . A .

M i n i s t r y of A g r i c u l t u r e , F i s h e r i e s a n d F o o d , S . W . 1 .

7 t h M a r c h , 1 9 5 6 .

AGRICULTURE ACT, 1 947

ANNUAL REVIEW AND DETERMINATION OF GUARANTEES, 1 956

I . I n t r o d u c t i o n

1. The 1956 Annual Review of t h e economic c o n d i t i o n and p r o s p e c t s

of t h e a g r i c u l t u r a l i n d u s t r y has now been he ld i n accordance w i t h

S e c t i o n 2 of the A g r i c u l t u r e Act , 1947. In the l i g h t of i t the

Government have determined the g u a r a n t e e s f o r l i v e s t o c k and

l i v e s t o c k products i n t h e y e a r A p r i l , 1956, t o March, 1957, and

f o r crops from the 1 957 h a r v e s t . These are s e t out i n Appendix V.

2. A S p e c i a l Review, on account of changes i n wage c o s t s , has

been he ld c o n c u r r e n t l y w i t h the Annual Review and t h e r e s u l t s

are g i v e n i n Appendix VI. These S p e c i a l Review d e t e r m i n a t i o n s

r e l a t e t o crops of t h e 1956 h a r v e s t , and t o l i v e s t o c k product s

of 1955/56 - i . e . i n each c a s e a y e a r e a r l i e r than t h e p e r i o d

t o which the p r e s e n t Annual Review d e t e r m i n a t i o n s r e l a t e .

I I . Economic Condi t ion of t h e A g r i c u l t u r a l Indus try

P r o d u c t i o n P r o g r e s s

3. A g r i c u l t u r a l n e t output f o r t h e y e a r 1955/56 i s f o r e c a s t a t

55 per c e n t above pre -war . The r e v i s e d index f o r l a s t y e a r , 1954/55,

i s 51 per cent above pre-war . L a s t y e a r ' s outcome was s e r i o u s l y

a f f e c t e d by t h e w e a t h e r . The volume of net output i s now back

t o t h e 1953/54 l e v e l , which was t h e h i g h e s t p r e v i o u s l y recorded .

Th i s r e f l e c t s c r e d i t on the endeavours of t h e i n d u s t r y . The

r e s u l t has been a c h i e v e d d e s p i t e a s u b s t a n t i a l f a l l i n t i l l a g e

a r e a and p i g p r o d u c t i o n . These d e c l i n e s have been o f f s e t by

r e c o r d y i e l d s of c e r e a l c rops , a b e t t e r hay h a r v e s t ( w i t h a

c o n s e q u e n t i a l f a l l i n imports of f e e d i n g s t u f f s ) and a

c o n t i n u i n g upward t r e n d i n t h e output of mi lk and e g g s .

Breed ing f o r p r o d u c t i o n of bee f , mutton and lamb c o n t i n u e s

t o expand.

/

Changes i n C o s i e s ­

4 . S t a t i s t i c s of changes i n c o s t s are shown i n Appendix I I I .

There i s a s u b s t a n t i a l i n c r e a s e a g a i n t h i s y e a r , e s t i m a t e d t o amount

t o about £4 -3 m i l l i o n i n a y e a r f o r a l l commodi t i e s , and about £ 3 5

m i l l i o n f o r r e v i e w commodit ies . D i s r e g a r d i n g t h e r e d u c t i o n s i n t h e

c o s t of f eed f o r p i g s and e g g s , w h i c h are r e f l e c t e d a u t o m a t i c a l l y i n

adjus tments t o t h e guarantees f o r t h o s e commodit ies , t h e f i g u r e s

would be about £ 4 5 m i l l i o n f o r a l l commodit ies and j u s t under £ 3 7

m i l l i o n f o r r e v i e w commodit ies . Apart from f e e d c o s t s , which

cannot be a p p o r t i o n e d , some £ 1 2 m i l l i o n of i n c r e a s e d c o s t s on

r e v i e w commodit ies w i l l have a l r e a d y a f f e c t e d ne t income i n t h e

c u r r e n t y e a r 1 9 5 5 / 5 6 , l e a v i n g about £ 2 4 m i l l i o n on r e v i e w commodit ies

s t i l l t o take e f f e c t on f u t u r e net income.

E f f i c i e n c y

5 . The annual i n c r e a s e i n e f f i c i e n c y , a r i s i n g p r i m a r i l y from

improvements i n husbandry and farm management, can only be e s t i m a t e d

b r o a d l y . The Government a s s e s s e d t h i s a y e a r ago a t something l i k e

£ 3 0 m i l l i o n a y e a r f o r the i n d u s t r y a s a Y v i i o l e and about £ 2 5 m i l l i o n

a. y e a r f o r r e v i e w commodit ies . They have examined a l t e r n a t i v e ways

of a s s e s s i n g t h i s and have conc luded t h a t t h e r e are r e a s o n a b l e

grounds on which t o c r e d i t a g r i c u l t u r e w i t h an i n c r e a s e of some

£ 3 0 m i l l i o n a. y e a r f o r the i n d u s t r y a s a w h o l e , w h i c h i s e q u i v a l e n t

t o about 2 per cent of gros s o u t p u t .

Changes i n Income

6 . The f o r e c a s t of t o t a l ne t income f o r 1 9 5 5 / 5 6 i s £ 2 9 9 ? m i l l i o n ,

and compares w i t h £ 2 8 5 ' g - m i l l i o n i n 1 9 5 4 / 5 5 " When a d j u s t e d f o r normal

wea ther c o n d i t i o n s , t h e net income i s e s t i m a t e d a t ,£292-g- m i l l i o n f o r

1 9 5 5 / 5 6 ; t h e comparable f i g u r e f o r 1 9 5 4 / 5 5 was £ 3 2 0 ? m i l l i o n . The

outcome f o r e c a s t f o r 1 9 5 5 / 5 6 does not f u l l y r e f l e c t t h e r e c o v e r y

t h a t i s t a k i n g p l a c e from the a c t u a l l e v e l of ne t income i n 1 9 5 4 / 5 5

when the weather1 was s o bad. This i s due t o a number of f a c t o r s

apar t from the c o n t i n u i n g e f f e c t o f t h a t y e a r ' s e x c e p t i o n a l w e a t h e r .

For example, i n t h e c a s e of crops l o w e r guaranteed p r i c e s f o r the

1 9 5 5 h a r v e s t had been determined a f t e r the 1 9 5 4 Annual Review,

whereas the h i g h e r p r i c e s determined a f t e r the 1955 Review w i l l not

take e f f e c t u n t i l the 1956 h a r v e s t ; and t h e r e has been an i n c r e a s e ,

compared w i t h 1954/55, i n s t o c k s and- work i n p r o g r e s s a t the end of

the y e a r , on which no p r o f i t i s reckoned u n t i l t h e output i s s o l d .

Economic C o n d i t i o n of t h e I n d u s t r y

7. The Government's a s se s sment of t h e economic c o n d i t i o n of t h e

i n d u s t r y i s a s f o l l o w s . Output has r e c o v e r e d from t h e se tback i n

1954/55, hut t h e i n d u s t r y i s hav ing t o bear a s u b s t a n t i a l burden of

i n c r e a s e d c o s t s . Favourable f a c t o r s a t work are t h e i n c r e a s i n g

e f f i c i e n c y of the i n d u s t r y and the c o n t i n u i n g e f f e c t s of the 1955

Annual Review award, some of which have not so f a r been f e l t .

But on ba lance the i n d u s t r y needs a f u r t h e r i n c r e a s e i n the va lu e

of the g u a r a n t e e s .

I I I . Product ion and Guarantee P o l i c y

8. P r o d u c t i o n and guarantee p o l i c y have been r e v i e w e d and the

p o l i c y of the Government i s s e t out i n t h e immedia te ly f o l l o w i n g

paragraphs .

P r o d u c t i o n P o l i c y

9. The Government have c o n s i d e r e d whether a g r i c u l t u r a l p r o d u c t i o n

p o l i c y as h i t h e r t o s t a t e d r e q u i r e s t o be r e v i s e d i n t h e l i g h t of

the b a l a n c e of payments problems t h a t f a c e the U n i t e d Kingdom.

F a c t o r s t o be c o n s i d e r e d a r e : - the p o s s i b l e s a v i n g of d i r e c t imports

of food by a d d i t i o n a l home p r o d u c t i o n , and the a d d i t i o n a l imports

of animal f e e d i n g s t u f f s tha t might be r e q u i r e d f o r t h i s purpose;

the p o s s i b l e s a v i n g of imported f e e d i n g s t u f f s ; t h e b e n e f i t to the

b a l a n c e of payments and t o the n a t i o n a l income of a f u r t h e r i n c r e a s e

i n home a g r i c u l t u r a l p r o d u c t i o n compared w i t h t h a t which could be

obta ined from o t h e r i n d u s t r i e s u s i n g t h e l a b o u r , m a t e r i a l s and f i n a n c e

which t h e i n c r e a s e i n a g r i c u l t u r a l p r o d u c t i o n might r e q u i r e ; and the

net advantage o f any p o s s i b l e import s a v i n g , h a v i n g regard t o t h e

sources of the imports and t h e i r p l a c e i n our g e n e r a l o v e r s e a s t r a d e .

10. The c o n c l u s i o n i s t h a t n a t i o n a l r e q u i r e m e n t s can b e s t be met

by i n t e n s i f y i n g the p o l i c y d e v e l o p e d s i n c e 1 952. The o b j e c t i v e of

p r o d u c t i o n p o l i c y remains the most t h a t can be produced e c o n o m i c a l l y

and e f f i c i e n t l y i n accordance w i t h market r e q u i r e m e n t s ,

s t e a d i l y i n c r e a s i n g t e c h n i c a l e f f i c i e n c y and d i m i n i s h i n g u n i t

c o s t . But even g r e a t e r emphasis than b e f o r e must be put on the

s u b s t i t u t i o n of home-grown product s (main ly g r a s s and o t h e r

f e e d i n g s t u f f s ) f o r i m p o r t s , and on economies i n the u s e of imported

m a t e r i a l s . I f t h i s i s done i t w i l l i n c r e a s e t h e ne t output of

a g r i c u l t u r e more e c o n o m i c a l l y than would an i n d i s c r i m i n a t e expans ion

of e n d - p r o d u c t s ; and w i l l b r i n g g r e a t e r and more c e r t a i n r e l i e f t o

the b a l a n c e o f p a y n e n t s . The a g r i c u l t u r a l i n d u s t r y w i l l be expandin,

a s i d e of i t s b u s i n e s s - t h a t which i s concerned w i t h i t s raw

m a t e r i a l s u p p l i e s - w h i c h o f f e r s the g r e a t e s t scope f o r development .

11. T h i s ca.n b e s t be done by a v i g o r o u s c o n t i n u a t i o n of t h e

p o l i c y of : ­

( i ) m a i n t a i n i n g a l a r g e arable a r e a w i t h emphas is on f eed

crops t h a t can be used t o r e p l a c e impor t s , on temporary

g r a s s and on improving crop y i e l d s ;

( i i ) improving t h e s tandards of our temporary and permanent

g r a s s and our t e c h n i q u e s f o r c o n s e r v a t i o n , and encouraging

the i n c r e a s e d u s e of g r a s s i n t h e p r o d u c t i o n o f bee f ,

mutton and m i l k ;

( i i i ) u s i n g f e e d t o t h e b e s t advantage by economy and s k i l l

i n our f e e d i n g methods.

Commodity P o l i c y

1 2. The main f e a t u r e s of current p r o d u c t i o n appear t o be a

c o n t i n u i n g l o n g - t e r m e x p a n s i o n i n the p r o d u c t i o n of bee f , mutton

and lamb; a lower l e v e l i n output of pigmeat t h a n the peak of

1954/55; and a c o n t i n u i n g t r e n d of r e l a t i v e l y smal l i n c r e a s e s

i n the outpirt of mi lk and e g g s . Al though t i l l a g e a r e a has b e e n

f a l l i n g , crop p r o d u c t i o n , p a r t i c u l a r l y of g r a i n c r o p s , i s a t

p r e s e n t - f a i r l y s t a b l e because of an i n c r e a s e i n crop y i e l d s .

The i n c r e a s e i n t h e area under g r a s s has o u t s t r i p p e d the i n c r e a s e

i n g r a s s - e a t i n g a n i m a l s .

1 3. The main d i r e c t i o n s i n wh ich t h e Government would w i s h t o see

p r o d u c t i o n deve loped c o n t i n u e t o he a s f o l l o w s : ­

( a ) a l a r g e a r a b l e area should be m a i n t a i n e d ; t h i s w i l l need

t o i n c l u d e a l a r g e t i l l a g e area , but t h e emphasis shou ld

be more on f e e d crops ( b a r l e y and o a t s , o t h e r f e e d c r o p s

and h i g h q u a l i t y l e y s ) , and on improving crop y i e l d s ;

(b ) t h e p r o d u c t i o n of b e e f , mutton and lamb should be

i n c r e a s e d ;

( c ) more of t h e mi lk output should be produced from home-produced

f e e d ;

(d ) f o r p i g s and e g g s , which are l a r g e l y dependent on imported

f e e d s , the major concern c o n t i n u e s t o be t o reduce c o s t s

of p r o d u c t i o n and, i n t h e c a s e of p i g s , t o r e l a t e them

more c l o s e l y t o t h e c o s t s of our o v e r s e a s s u p p l i e r s while­

s t i l l improving q u a l i t y .

Guarantee P o l i c y

14- The l o n g - t e r m o b j e c t i v e c o n t i n u e s t o be t o a c h i e v e a s t e a d y

improvement i n t h e c o m p e t i t i v e p o s i t i o n of t h e i n d u s t r y . To do t h i s

t h e i n d u s t r y must c o n c e n t r a t e on reduc ing u n i t c o s t s of p r o d u c t i o n ,

meet ing consumer c h o i c e , and r a i s i n g q u a l i t y . The t o t a l c o s t

of t h e Exchequer support g i v e n t o a g r i c u l t u r e has been l e s s

dur ing the c u r r e n t f i n a n c i a l y e a r than i t was i n 1954/55. Th i s

i s p a r t l y due t o t h e i n d u s t r y ' s s u c c e s s i n improving q u a l i t y

and re spond ing t o consumer c h o i c e i n ways t h a t have he lped

dur ing t h e r e c e n t p a s t t o improve r e t u r n s from t h e market f o r

some p r o d u c t s . But the c o s t t o the Exchequer i s s t i l l h i g h

and i t i s important t h a t t h e i n d u s t r y should cont inue t o do

a l l tha t i t can t o r e d u c e i t s need f o r suppor t .

I^. . D e t e r m i n a t i o n of Guarantees

15* The f o l l o w i n g are the G o v e r n m e n t s d e t e r m i n a t i o n s of the

guarantees f o r l i v e s t o c k and l i v e s t o c k p r o d u c t s i n the y e a r 1956/57

and f o r c r o p s from the 1957 h a r v e s t . A d d i t i o n a l d e t a i l s are g iven

i n Appendix V.

F a t C a t t l e , Sheep and Lambs

1 6 . There i s s t i l l a need f o r more good q u a l i t y b e e f , mutton

and lamb; though f o r mutton and lamb a t l e a s t t h e l o n g e r term

p r o s p e c t s depend on f u r t h e r r e d u c t i o n i n u n i t c o s t s of p r o d u c t i o n .

The s tandard p r i c e f o r f a t c a t t l e i s be ing i n c r e a s e d t o 151s. Od.

a l i v e cwt. The s t a n d a r d p r i c e f o r f a t sheep and lambs w i l l b e

i n c r e a s e d t o 3s. 2d. a l b . e s t i m a t e d d r e s s e d c a r c a s e w e i g h t .

17* The l a r g e i n c r e a s e i n the s tandard p r i c e f o r f a t c a t t l e has

been made t o g ive f u r t h e r encouragement t o b e e f p r o d u c t i o n . As

l o n g - t e r m p l a n n i n g i s p a r t i c u l a r l y important t o p r o d u c e r s of f a t

c a t t l e , the Government f u r t h e r a s s u r e them t h a t they regard a h i g h

l e v e l of guarantee a s a n e c e s s a r y p a r t of t h e i r l o n g - t e r m p o l i c y

f o r b e e f p r o d u c t i o n .

18 . The c l a s s e s o f c a t t l e e l i g i b l e f o r the guarantee have been

rev iewed . I t has been d e c i d e d t h a t the minimum standard for s t e e r s

and h e i f e r s shou ld be r a i s e d from 50 per c e n t t o 54- per c e n t

k i l l i n g - o u t p e r c e n t a g e . For 1956/57 s p e c i a l young cows w i l l

c o n t i n u e t o be w i t h i n the scope of the guarantee .

F a t P i g s

19* P r o d u c t i o n of p i g m e a t has f a l l e n from the peak l e v e l o f

1954/55? b u t the r a t e of s u b s i d y i s s t i l l h i g h ; i n the c u r r e n t

f i n a n c i a l y e a r the s u b s i d y r e p r e s e n t s about o n e - t h i r d of the

market v a l u e of p i g s c e r t i f i e d under the guarantee arrangements .

I t would no t be d e s i r a b l e t o encourage any renewed expans ion u n t i l

b o t h p r o d u c t i o n c o s t s and t h e u n i t r a t e of s u b s i d y can be reduced .

O v e r r i d i n g importance must c o n t i n u e t o be a t t a c h e d t o

improvement i n q u a l i t y and s u b s t a n t i a l r e d u c t i o n i n c o s t s .

The guarantee a l r e a d y r e f l e c t s changes i n f e e d c o s t s which a c c o u n t

f o r a l a r g e p a r t of the c o s t s o f p r o d u c t i o n . The Government have

a c c o r d i n g l y d e c i d e d t h a t a s m a l l f u r t h e r r e d u c t i o n of 6d .

a s c o r e should be made i n the s tandard p r i c e f o r p i g s .

a20. For the l i v e s t o c k year 1956/57 q u a l i t y premium w i l l be

p a y a b l e , but on a h i g h e r s tandard than h i t h e r t o . Moreover , i n

accordance w i t h t h e i r p o l i c y of e n c o u r a g i n g the p r o d u c t i o n of c a r c a s e s

of the q u a l i t y r e q u i r e d by tne market , the Government i n t e n d t o

i n t r o d u c e a more r i g o r o u s s p e c i f i c a t i o n . A minimum c a r c a s e l e n g t h

measurement w i l l be in troduced w i t h e f f e c t from 25th March, 1957* o r

a t an e a r l i e r d a t e , s u b j e c t to s i x months' n o t i c e , and the o ther

s p e c i f i c a t i o n s may be m o d i f i e d , s u b j e c t t o s i x months' n o t i c e .

F a t s t o o k Guarantee System

21. The Government have d e c i d e d t o d i s c o n t i n u e the i n d i v i d u a l

g u a r a n t e e s for a l l c l a s s e s of f a t s t o c k which were a f e a t u r e of the

guarantee scheme i n t r o d u c e d i n 1954 a f t e r the end of c o n t r o l . These

were i n t e n d e d t o p r o v i d e i n d i v i d u a l p r o d u c e r s w i t h a sa feguard

a g a i n s t any s e r i o u s i m p e r f e c t i o n s in the a u c t i o n markets when

p r i v a t e t r a d i n g was r e s t o r e d . They were n o t in tended t o p r o v i d e

a f l o o r p r i c e f o r the i n d u s t r y as a w h o l e ; t h i s was u n n e c e s s a r y

s i n c e the c o l l e c t i v e guarantee was d e s i g n e d t o make up any d e f i c i e n c y

between the average market p r i c e and the s tandard p r i c e . In f a c t

the a u c t i o n markets are now working r e a s o n a b l y w e l l and the s t a g e has

been reached when the r i s k s which t h e s e arrangements were i n t e n d e d

t o meet no l o n g e r j u s t i f y the e l a b o r a t e machinery i n v o l v e d . The

i n d i v i d u a l guarantee s have had the d i s a d v a n t a g e s of t end ing t o d i s t o r t

the normal market i n f l u e n c e s , of weakening the tone of the market

because they may remove some of the s e l l e r ' s i n c e n t i v e t o g e t the b e s t

p r i c e out of the market , and o f c o m p l i c a t i n g the sy s t em, w i t h

c o n s e q u e n t heavy a d m i n i s t r a t i v e c h a r g e s . The Government have t h e r e f o r e

come t o the c o n c l u s i o n t h a t the system should, now be s i m p l i f i e d by

the w i thdrawal of t h i s p a r t i c u l a r f e a t u r e and the e q u i v a l e n t deadweight

g u a r a n t e e s . T h i s w i l l a l s o mean that i n the c a s e of p i g s the p r e s e n t

complex of t h e i n d i v i d u a l guarantee , the market a d d i t i o n , and i t s

deadweight e q u i v a l e n t w i l l he e l i m i n a t e d .

22. There w i l l be a s i n g l e guarantee payment f o r each group o f

f a t s t o c k ( c a t t l e , sheep and p i g s ) which w i l l be the d i f f e r e n c e

between t h e standard p r i c e and the overage of r e a l i s e d p r i c e s

f o r t h a t group of f a t s t o c k . This s i n g l e guarantee payment w i l l be

a d j u s t e d a s and when n e c e s s a r y t o ensure t h a t t h e average t o t a l

r e t u r n t o producers each week remains vo.th.in t h e f o l l o w i n g ranges

on e i t h e r s i d e of the r e s p e c t i v e s tandard p r i c e s : ­

c a t t l e - 23s. Od. per l i v e c w t . : sheep - 4d. per l b .

d r e s s e d c a r c a s e w e i g h t ; and p i g s - 5s. Od. per score deadweight .

The g u a r a n t e e f o r p i g s w i l l c o n t i n u e t o be l i n k e d t o a s tandard

p r i c e of f e e d .

Eggs(Hen and Duck)

23. P r o d u c t i o n of hen e g g s c o n t i n u e s t o increa . se , but b e t t e r

market p r i c e s have reduced s l i g h t l y t h e u n i t c o s t of s u b s i d y .

This i s s t i l l high, and t h e r e i s room f o r f u r t h e r r e d u c t i o n i n

average c o s t s . No change i s b e i n g made i n t h e l e v e l of t h e

guarantee f o r hen e g g s . The guarantee f o r duck eggs i s b e i n g

reduced t o 2s. Od, per dozen .

Milk

24. The g e n e r a l p r o d u c t i o n o b j e c t i v e remains as s t a t e d i n the

1954 Annual Review v?hite Paper (Cmd.9104). There has been no

s u b s t a n t i a l change i n t h e l i q u i d market d u r i n g the l a s t y e a r ,

p r o d u c t i o n i s s t i l l expanding . I t i s o f g r e a t importance t h a t

more of t h e output should be produced from home-grown f e e d . I t i s

a l s o d e s i r a b l e t h a t t h e r e should be some c h a n g e - o v e r from mi lk t o

bee f s o f a r as p r a c t i c a b l e . Having regard t o the i n c r e a s e i n c o s t s

of p r o d u c t i o n t h e guarantee i s b e i n g i n c r e a s e d by igd. per g a l l o n ,

25. The standard q u a n t i t i e s have been r e v i e w e d and i t has been

dec ided t h a t f o r 1956/57 no change should be made f o r any o f t h e

milk market ing a r e a s .

I I 0

Ytfool

26. There are s p e c i a l arrangements f o r a s t a b i l i s a t i o n fund, but

t h i s i s now n e a r l y e x h a u s t e d . The Government 1 s p o l i c y remains t h a t ,

t a k i n g one y e a r w i t h a n o t h e r , t h e guarantee should not r e q u i r e

c o n t i n u i n g Exchequer payments . The guaranteed p r i c e i s b e i n g brought

down n e a r e r t o the c u r r e n t market l e v e l , by 2d. per l b . As

foreshadowed l a s t y e a r , no f u r t h e r r e q u e s t i s b e i n g made by t h e

Government t o the B r i t i s h Tool Market ing Board i n r e g a r d t o the

s p e c i a l bonus on the wool of c e r t a i n b r e e d s of h i l l s h e e p . This i s

a m a t t e r t h a t should , i n t h e G o v e r n m e n t s v i e w , be l e f t t o the

d i s c r e t i o n of the Board.

C e r e a l s

27. Cerea.1 p r o d u c t i o n w i l l cont inue t o p l a y an important p a r t i n

the maintenance of a l a r g e a r a b l e a c r e a g e based on a r o t a t i o n a l

sys tem of c r o p s and g r a s s . P r o d u c t i o n appears t o be g e n e r a l l y

p r o f i t a b l e and improved y i e l d s w i l l have done more than o f f s e t c o s t

i n c r e a s e s . I t i s important t o encourage a g r e a t e r supply of home­

grown f e e d i n g s t u f f s , but at the same t ime t o b r i n g t h e p r i c e

g u a r a n t e e s f o r the d i f f e r e n t c e r e a l c r o p s more i n t o l i n e w i t h one

a n o t h e r . Wheat i s a t p r e s e n t g e t t i n g a d i s p r o p o r t i o n a t e par t of t h e

s u b s i d y payments on c e r e a l s . At a t i n e v/hen t h e r e are l a r g e wheat

s u r p l u s e s - e s p e c i a l l y i n o ther Common w e a l t h c o u n t r i e s - t h e r e i s no

l o n g e r any s p e c i a l r e a s o n t o j u s t i f y e x c e p t i o n a l encouragement f o r

the p r o d u c t i o n of wheat . The Government have t h e r e f o r e d e c i d e d t o

reduce t h e guaranteed p r i c e s f o r wheat and r y e by 1s . 6d. per cwt.

On the o t h e r hand, t o encourage the growing of b a r l e y and o a t s f o r

f e e d i n g t o l i v e s t o c k and t o a s s i s t a number o f smal l farmers and

t h o s e farming on some marginal l a n d s , t h e guaranteed p r i c e f o r b a r l e y

w i l l be i n c r e a s e d by 6d. per c w t . , and that f o r o a t s by 1 s . 6d.

per cwt.

P o t a t o e s

28 . The g u a r a n t e e i s a support p r i c e which i s in tended t o p r o t e c t

producers a g a i n s t low r e t u r n s i n y e a r s of h i g h y i e l d . The g e n e r a l

p r o d u c t i o n o b j e c t i v e c o n t i n u e s t o be that i n y e a r s of average

y i e l d s s u p p l i e s should be s u f f i c i e n t t o meet demand at r e a s o n a b l e

p r i c e s .

2 9 . The Government have d e c i d e d t h a t the t ime has come t o e x c l u d e

sub-s tandard ware p o t a t o e s from t h e scope of t h e g u a r a n t e e . T h i s

a p p l i e s only t o Great B r i t a i n , s i n c e such p o t a t o e s have never b e e n

i n c l u d e d f o r Northern I r e l a n d . Sub-standard ware p o t a t o e s were

i n c l u d e d d u r i n g t h e war and p o s t w a r y e a r s because of the need t o

ma in ta in the l a r g e s t p o s s i b l e a c r e a g e , u s i n g compuls ion when

n e c e s s a r y . I n the very d i f f e r e n t c i r c u m s t a n c e s of today t h e

a p p l i c a t i o n o f the guarantee t o p o t a t o e s not up t o t h e s tandard

r e q u i r e d f o r s a l e f o r human consumption can no l o n g e r be j u s t i f i e d .

The d e f i n i t i o n of ware p o t a t o e s h a s , howevei", been amended so -as t o

i n c l u d e a l l p o t a t o e s which are f i t f o r s a l e f o r human consumption

i n normal c o n d i t i o n s .

3 0 . Taking account of t h e s e c h a n g e s , and of i n c r e a s i n g c o s t s , the

support p r i c e f o r ware p o t a t o e s i s be ing i n c r e a s e d by 8 s . Od. per- t e n .

Sugar Beet

3 1 . The Government w i s h t o s e e the p r e s e n t sugar b e e t a c r e a g e

m a i n t a i n e d . Account has been t a k e n of c o s t i n c r e a s e s . The p r i c e

determined f o r 1 9 5 7 / 5 8 i s 1 3 0 s . 6d. per t o n .

P r o d u c t i o n Grants

3 2 . The Government have rev iewed the e x i s t i n g p r o d u c t i o n g r a n t s which

now amount t o about £60 m i l l i o n a y e a r . They have dec ided t h a t

f u r t h e r encouragement should be g i v e n t o the use of f e r t i l i s e r s , s o

f a r as supply and t e c h n i c a l c o n s i d e r a t i o n s a l l o w . From 1 s t J u l y

n e x t i n c r e a s e d r a t e s of s u b s i d y w i l l be f i x e d f o r n i t r o g e n and

p h o s p h a t e s i n v o l v i n g (on the r a t e o f consumption i n the c u r r e n t y e a r )

a d d i t i o n a l payments of ,B3 m i l l i o n i n a g g r e g a t e . The maximum r a t e of

grant under t h e marginal p r o d u c t i o n schemes w i l l a l s o be i n c r e a s e d so

f a r as work on margina l farms i s concerned and t h i s i s e x p e c t e d t o l e a d

t o a d d i t i o n a l e x p e n d i t u r e of about £1 m i l l i o n i n a f u l l year - .

I 4 *s l i t

33. The making of more good q u a l i t y s i l a g e , a l o n g s i d e o ther

methods of making improved use of our g r a s s l a n d r e s o u r c e s , would

c o n t r i b u t e most u s e f u l l y t o g r e a t e r r e l i a n c e on home-grown f e e d .

Thi s w i l l c o n t i n u e t o be encouraged by t e c h n i c a l a d v i c e and

demonstra t ion . Any form of d i r e c t f i n a n c i a l encouragement f o r s i l a g e ­

making p r e s e n t s c o n s i d e r a b l e d i f f i c u l t i e s and would r e q u i r e

l e g i s l a t i o n . While t h i s would, not i n any c a s e t h e r e f o r e be

p r a c t i c a b l e f o r t h e 1956 s e a s o n , t h e p o s s i b i l i t i e s f o r the f u t u r e

w i l l be c o n s i d e r e d f u r t h e r i n c o n s u l t a t i o n with, the i n d u s t r y .

V. E f f e c t of D e t e r m i n a t i o n s

34-. As was s t a t e d i n l a s t y e a r ' s Annual Review White Paper

(Cmd.9406) t h e e f f e c t of any p a r t i c u l a r d e t e r m i n a t i o n s on the n e t

income of t h e i n d u s t r y cannot be p r e c i s e l y f o r e c a s t i n c o n d i t i o n s

of a f r e e economy. In any e v e n t n e t income i s bound t o f l u c t u a t e

apprec iab ly from y e a r t o y e a r . !?he d e t e r m i n a t i o n s now made i n c r e a s e

the v a l u e of the g u a r a n t e e s by £24 m i l l i o n , and should a s s i s t t h e

i n d u s t r y t o s ecure a s a t i s f a c t o r y l e v e l o f remunerat ion .

35- A g r i c u l t u r e i s s t i l l i n r e c e i p t of l a r g e s u b s i d i e s and t h e

guarantees now determined i n c r e a s e s t i l l f u r t h e r the c o n t i n g e n t

Exchequer l i a b i l i t y . The a c t u a l c o s t t o the Exchequer w i l l depend

on t h e f u t u r e t rend of market p r i c e s and on t h e volume and kind

of output . The Government expec t t h a t w i t h the a s surance of

c o n t i n u i n g support the i n d u s t r y w i l l be a b l e t o m a i n t a i n a sound

p o s i t i o n i n the- n a t i o n a l economy w i t h d i m i n i s h i n g c a l l s on t h e

Exchequer i n f u t u r e y e a r s .