Our money and welfare

On the input side, the cost of labour has remained virtually unchanged since pre-war times, chiefly because the unit cost
of labour has risen more than that of any other major cost item. Other increases include machinery costs (now 18 per
cent of the total, compared with 9 per cent before the war) and fertilizer expenditure, which is also relatively more
important than twenty years ago. Expenditure on feeding-stuffs, however, has become relatively less important, and so
have rents, though the latter are now rising sharply and are expected to assume much greater significance before long.
The agricultural industry total purchasing power in 1959 - 60 is estimated at about 600 million, 240 million of which
represents total farm expenses, leaving 356 million as the industry's net income. Mr. Winegarten estimated that the
agricultural industry bought 770 million worth of goods and services from other industries - that is to say, 60 per cent of
expenses on British farms are incurred by purchases outside the industry. Thus the extent to which British farmers can
succeed in lowering their production costs depends largely on price movements beyond their control. Since the
demand made on agriculture on the nation's resources of man-power, plant and machinery, new buildings and works
and petrol is surprisingly small (Mr. Winegarten quoted 5, 2, and 3 per cent respectively), the idea that large benefits
would accrue if agriculture's resources could be employed more profitably elsewhere, is unsound.
Moreover, he said, "the present tendency to play down agriculture's importance from the standpoint of import saving is
dangerous, as it exposes our overseas trading account to the vagaries of the economic climate."
On the production side, grass now provides about 70 per cent of the feed for our grazing animals, compared with 65
per cent before the war, and supports many more animals. Cereal production is still higher to-day than ten years ago
despite a declining acreage under cereal crops, but in discouraging wheat production, said Mr. Winegarten, "the
Government appears to have overlooked the recent strong demand for feed wheat." Present policy for potatoes
provides no safeguard in years when yields are low and sugar beet output is limited by existing factory capacity, so that
we can produce only about one-fifth of our sugar needs. "If only we could have the one new sugar factory for which we
have been pleading now for many years."
Livestock producers have raised their output by 50 per cent on a lower volume of imported feed - a remarkable feat.
But the desired expansion in pigment, beef, mutton and lamb production has been checked recently, partly by a
reduction in guarantees as with pigs and sheep, and partly by the Government's failure, in Mr. Winegarten's opinion, to
realize that at the present level of guarantee beef production is not very profitable. "Indeed," Mr. Winegarten said, "for
most commodities money policy is either to halt any expansion in output or to encourage contraction." How, then, can
the future pattern of production be arranged to avoid lower farming incomes.
Incomes could be increased by five methods: increasing guaranteed prices at existing output levels; reducing costs
relative to guaranteed prices; improving marketing; reducing the number of farmers; or increasing the size of the total
market and the home producers' share of it. Analyzing these in turn Mr. Winegarten concluded that improved marketing
techniques probably offer the most attractive solution. Expenditure on food is expected to rise by 15 per cent in the next
five years, with an increasing share being spent on livestock products and fresh fruit and vegetables. These changes are
going to present farmers with great opportunities to supply an increased proportion of the U. K.'s food supplies. "It is
clearly a mistaken policy to talk of checking food production when about half the produce we consume is imported."
There is ample evidence that farmers are responding to the challenge by taking the initiative in measures to improve their
competitive position. On the national scale the Fat stock Marketing Corporation is a striking example of this, and the
creation of local organizations like the Kentish Bacon Producers' Association is no less enterprising.