I move:
That a supplementary sum not exceeding £9,000,000 be granted to defary the charge which will come in course of payment during the year ending on 31st December, 1975, for the salaries and expenses of the Office of the Minister for Agriculture and Fisheries, including certain services administered by that Office, and for payment of certain subsidies and sundry grants-in-aid.
The main estimate for agriculture for 1975 amounting to £76,927,000 was passed on 19th June. This supplementary estimate provides for the additional expenditure which is expected to be incurred by my Department this year in respect of the subsidies on butter and liquid milk which were proposed by the Minister for Finance in his financial statement presented to the House on 26th June.
The additional money for certain capital and non-capital services of my Department which was also provided in the recent financial statement, as well as certain sums provided for agriculture in the January budget, will be covered by a further supplementary estimate which will be introduced in the ordinary way before the end of the financial year. Of the supplementary provision of £9 million, £2.8 million is in respect of the additional cost to the Exchequer of the consumer subsidy on butter and £6.2 million in respect of the liquid milk subsidy.
As announced by the Minister for Finance the Government have decided to increase the level of consumer subsidy being paid in respect of butter consumed on the home market so as to bring about a price reduction of 10p per lb. at retail level. This has, in fact, already been done. Prior to 1st July, the consumer subsidy on butter was £54.58 per ton ex creamery, the cost being divided equally between the National Exchequer and the EEC's Agricultural Fund (FEOGA).
As from July 1st the level of subsidy was increased to £263 per ton ex creamery. This involved an additional FEOGA contribution of £23.20 per ton and an additional Exchequer element of £185.22 per ton. The new subsidy is equivalent to 9.30p of the creamery price per lb. and this reflects a subsidy of 10p per lb. at retail level —the retailers' gross percentage margin remaining undisturbed. The subsidy will, as heretofore, be paid direct to creameries, monthly in arrears in respect of sales destined for home market consumption.
The subsidy on liquid milk will be payable at the rate of 2p a pint on whole milk, whether pasteurised or unpasteurised, which is sold in bottles or other containers for liquid consumption in the State and in respect of which the price charged to the consumer is reduced by 2p a pint below the price now being charged for such milk. My Department is at present making arrangements for administering a liquid-milk subsidy scheme on this basis.
As we had not an existing subsidy system for liquid-milk, the introduction of the new subsidy for that product has of necessity to take some time. Our national statistics of milk production and use do not include fully authenticated figures of liquid milk consumption. Such figures as we have suggest that about 90 million gallons are bought by consumers from the liquid milk trade. That trade is carried on mainly by licensed pasteurisers, who distribute about 76 million gallons yearly. The remaining 14 million gallons approximately are distributed by bottlers of unpasteurised milk and by sellers of loose milk in some areas.
The operation of the new subsidy will involve:
(1) the making by the Minister for Industry and Commerce of an Order reducing to 6p a pint (instead of the current price of 8p a pint) the maximum retail price of bottled milk, and
(2) the setting up of arrangements to inject a corresponding subsidy of 2p a pint at the first stage of the milk distribution chain, i.e. at the stage of preparation of liquid milk with a view to its distribution for sale to consumers, and to ensure that the benefit of the subsidy is passed on to all subsequent stages, including that of purchase by consumers.
In order to be eligible for subsidy it will be necessary for all milk pasteurisers and other bottlers to keep adequate records of their acquisitions and disposals of milk for liquid consumption, to produce those records for inspection by officers of my Department and to furnish periodical returns of transactions in liquid milk. My Department will also have to be satisfied that the sale prices for all milk concerned have been reduced by 2p a pint.
The lines on which the subsidy might be operated have been discussed in general terms with representatives of the Milk Pasteurisers' Association, and details of the scheme are now being finalised. It is hoped that it will be possible to bring the subsidy into operation during the coming weeks.
The subsidy scheme will apply to licensed pasteurisers (all of whom can be assumed to be already keeping adequate records of their transactions), and to bottlers of unpasteurised milk who can show that they also have satisfactory records. My Department has recently published advertisements asking these latter bottlers to contact the Department so that officers of the Department can call on them as soon as possible to advise on any necessary improvements in their records.
The increased consumer subsidy on butter and the new consumer subsidy on liquid milk will make a significant contribution to reducing the cost of living. they constitute a very positive indication of the Government's commitment to taking effective measures to reduce the rate of inflation and I am confident that the House will readily agree to vote the necessary funds.