Prime Minister
Mr. President, Your Grace, My Lords, Ladies and Gentlemen:
It is a great honour and pleasure to accept the invitation of the National Farmers Union for your dinner this evening.
You have an enviable reputation for the quality of the British produce served at your dinner—good English food described in plain English (applause). At least, that is what I wrote before I saw the menu and saw this Welsh bit that we were having with the trifle (applause). That really put me off. We had to have a little translation, but then someone sent up a bottle and it has disappeared like snow before sunshine on the top table. It is my story that it is to make our Welsh friends sing even better in the songs after the speeches!
You also, Mr. President, have a reputation for your choice of speakers. In recent years, they have included Lord Tonypandy, now happily in much better health and still remembered with affection as Speaker of the House of Commons (applause). And, of course, a few years ago, you invited the Robert RuncieArchbishop of Canterbury. Was that, I wonder, for his expertise in Berkshire pigs or in sorting sheep from goats? And this Union has the great distinction of having Sir Richard Butler as its President (applause). 1986 will see your retirement, Mr. President, after 7 years of service and, [end p1] indeed, many other years of service before that. You have maintained the great traditions of your family in making such a remarkable contribution to our public life and to this great industry. We thank you and wish you well, both as President of COPA and as a farmer (applause).
Mr. President, a good many people forget that agriculture is Britain's basic industry. I do not! (applause) Farmers and other early risers listen to “Farming Today” and so does this Prime Minister (applause). It is virtually the first thing I hear every day. It is one of the ways I keep in touch with you and the problems you face.
Some of those problems are common to all industries, but there are three which above all are special to agriculture: land prices, the weather and food surpluses.
First, a word about each of them, starting with land prices.
When inflation was high—and we forget all too quickly just how high it was and for how many years—financial institutions and others bought land as an investment. Their reasons for these purchases often had little to do with farming. Land was worth far more to them as a protection against inflation than for its agricultural value. Indeed, the prices paid bore no relation to the underlying earning capacity of the farms themselves—as owner-occupiers and tenants soon discovered. Now inflation has fallen, people look much more closely at the agricultural return on their investments. They look too at the growth of food surpluses and the risks they pose, so the high prices of two or more years ago have fallen back, [end p2] particularly for the less good land. In the longer run, of course, more realistic land prices are healthier for your industry than the inflated figures we saw a few years ago, but the adjustment is very painful for working farmers and their families who bought land at the high point and are now finding their collateral diminished and their interest payments burdensome. Indeed, high interest rates add to the problems. You in particular feel their effect. Yes, do clap if you want to. … (applause) You in particular feel their effect, for in this country farming is a capital-intensive industry, where investment is high and the returns are slow to come in.
No-one wants high interest rates—farmers, businessmen, home-owners or the Government—but interest rates cannot responsibly be reduced at the risk of a return to high inflation, for that would undermine the very stability of our economy and the society which you here do so much to support.
After a good year for most farm incomes in 1984, your problems in 1985 were particularly acute because you had to manage your business through the worst summer weather for many years. I saw some of the very serious effects when I visited Scotland and the North of England in September, and I am pleased that we have been able to ease the worst problems for stock farmers in those areas. Nevertheless, largely as a result of appalling weather, farm incomes have declined sharply in the past year.
The background of dairy quotas and the growing surpluses now in store have heightened your worries. [end p3]
These problems are not confined to Europe. Agriculture worldwide has undergone a revolution no less significant or fundamental than the new technological revolution which is now sweeping through manufacturing industry. Improved seeds, better livestock and new techniques have massively increased food production in the United States, in Canada, and even India, China and other areas in the Third World.
Scientific advance, backed by hard work and high investment, are a formidable combination, and the incentives to produce more have been there. In Europe, they have come through the mechanisms of the Common Agricultural Policy. Grain farmers on our best land who ten years ago looked with pride at yields of two tonnes an acre, now seek to improve on four tonnes an acre.
Whereas in 1974 you produced 16 million tonnes of grain, in 1984 you produced nearly 27 million tonnes.
The story is similar in dairy farming. Over ten years, with about the same number of cows, milk production is up by about 2,000 million litres a year (applause). In housewives' parlance, that means you, Sir Stephen, have got to sell 70 more pints every year to every man, woman and child in Britain (applause).
Despite all this, the total amount of land used for agriculture has fallen by about a million acres, partly because labour productivity has increased twice as fast as in the rest of industry (applause).
Mr. President, this is not an industry in decline. The story of agriculture is the story of success. [end p4]
Europe was once haunted by the fear of shortage. As farmers have now given us the confidence of assured supply, the production did not stop at assured supply. There are butter mountains, beef hills and great heaps of powdered milk. Your effort and your innovation have outpaced the ability of ten—now twelve—governments of very different countries to agree on how to make the necessary adaptations to the Common Agricultural Policy. That Policy seeks to feed over 320 million people and involves over 10 million farmers and farmworkers. It operates from the Shetlands to the Island of Rhodes and from Cape St. Vincent to Copenhagen. Its objectives are not in dispute. They are set out in the Treaty of Rome and I think few could quarrel with them, but the application of that Policy must change to meet the problems of plenty.
This Government intends to work constructively, together with our European partners and the Commission, to make the necessary changes in the interests of all of us as consumers and as tax-payers. It is also in your interests as producers, and I was glad to read the statement “The Way Forward” . It has been part of the NFU's very considerable contribution to increasing your industry's understanding of the need for change, a contribution in which you, Mr. President, have played the leading role; and we shall not find the answers unless your great industry and the Government tackle these issues together.
At the heart of the Common Agricultural Policy is the intervention system. It was created, as you know, as a way of smoothing out seasonal changes in supply and demand; a way of [end p5] keeping balance in the market. For so many centuries, the market was where the farmer was most at home, yet since the War, though deficiency payments or through intervention, the industry has been so centred upon production that the business of selling and the demands of the market have lost their former pre-eminence. The silence of the intervention store has taken over from the hubbub of the market place.
Mr. President, the Common Agricultural Policy will continue. Let there be no doubt about that, but it must pay more attention to the requirements of the customer. I give you this assurance:
We do not believe that Europe should cut surpluses by penalising the very efficiency which you have so successfully achieved over the years (applause), nor shall we accept policies which ask the British farmer to bear an unfair proportion of the cost just because so many of our family farms are larger than those on the Continent (applause).
Mr. President, you have recognised the need for change. The Government, in turn, recognises that farmers have to be allowed time to change. Agriculture depends upon forethought and investment, sowing and reaping, breeding and milking, growing and husbandry—all need time. The Community must give its farmers time to adjust.
The message that Michael Jopling will carry into Europe this year is that the Policy must be firm, but it must also be fair.
Yet, Mr. President, we must be concerned not only about the problems, but also about the prospects. Much of the problem [end p6] of surpluses could be solved by relatively small changes in the pattern of production and consumption.
Beef production is an example. The production of beef in the European Community last year was about 4%; higher than in 1981, but the cost of support was about 80%; higher and the stocks in intervention were about 250%; higher. So even small changes in output have massive effects on costs.
Our farmers have already shown their ability to adapt to the market. You have a real opportunity to expand your share of exports. That is why the Government will continue support for the Food from Britain, provided the industry now makes its own contribution.
You have a real opportunity to gain a larger income by satisfying the consumer demand from more natural and higher quality products, and you have a real opportunity to win even more of our home market, for example our bacon and ham producers and our lamb producers are already winning a greater share. And we are enormous importers of timber and forest products.
I know that the NFU and the Ministry are working on woodland as a farm crop, although of course the time scale for production is very different.
These things, of course, are in addition to the central role of farming, which is to feed our people, yet over and above the assurance that agriculture will continue as a major industry, this Government recognises the other importance of farming—the part it plays in the whole life of our nation, and especially its rural life. Farming is the main use of 80%; of [end p7] the land area of the United Kingdom. The countryside we so much enjoy is largely a creation of agriculture. It is a managed countryside and farmers and conservationists alike know that damage to farming as an industry could also damage that landscape which is so much the essence of Britain.
There are of course penalties which farmers pay in sharing their place of work with the rest of us, but I know you are conscious of your responsibilities, for in England and Wales last year you created 2,000 new ponds and planted 7 million new trees. This is not an industry bent on environmental destruction, but one which has made our countryside what it is and which has the greatest stake in handing that countryside on to the next generation (applause).
The Government will continue to support the efforts of farmers and land-owners to adapt and maintain farming practices which are sympathetic to our countryside.
Mr. President, farming is basic to Britain's economy and the foundation of our rural community. Yes, there are uncertainties and in that league, Brussels now ranks with the weather! (applause) But you have a commitment to success. Whatever the challenges, whatever the odds, your role in our country as well as in our countryside lies at the root of our national character. There is an independence and a stability in farming upon which Britain depends and which Britain cannot afford to lose.
Shakespeare knew about the real strength of the farmer and his role in the life of our nation. It was Polonius who, unintentionally, summed up your commitment to freedom. He said: [end p8]
“Let me be no assistant for estate, but keep a farm!”
Agriculture means so much, our farming future must be assured.
May I therefore ask you now to rise to drink the health and prosperity of British agriculture and the National Farmers Union, coupled with the name of our illustrious President, Sir Richard Butler! (applause)