House of Assembly: Vol11 - WEDNESDAY 3 JUNE 1964
The following Bills were withdrawn:
Copyright Bill,
Sundays River Irrigation District Adjustment (Hybrid) Bill.
First Order read: Second reading,—Banking Amendment Bill.
The MINISTER OF FINANCE: I move—
Mr. Speaker, this Bill seeks to achieve two things: (1) to adapt the provisions of the Banking Act to the changed conditions obtaining to-day in the field of banking as a result of the developments of the recent past, and (2) to effect amendments which the administration of the Act has shown to be necessary or desirable. As regards the former, important structural changes have occurred in monetary and banking conditions in South Africa since the Second World War. Several new kinds of banking institutions, such as merchant banks, discount houses and hire-purchase banks, have been established while many of the existing institutions have changed or added to their functions.
The Bill now before the House, together with the Building Societies Amendment Bill, which appears next on the Order Paper, is the product of the labours of a committee consisting of representatives of the Financial Institutions Office and the Reserve Bank, which I charged some three years ago with the review of the two principal Acts concerned, viz. the Banking Act of 1942 and the Building Societies Act of 1934. Their report I have accepted and that report is the basis of the present two amending Bills.
I propose to deal now with matters of principle concerning the whole private banking sector. Thereafter I shall refer to certain specific amendments proposed to the Banking Act. The problem as posed a moment ago can be particularized in three sets of questions: (1) Can the Reserve Bank under the present legislation, which largely confines its immediate sphere of influence to the commercial banks, perform its function of controlling money and credit in the interests of economic stability as effectively and equitably as it should? If not, how should the legislation be altered to increase the effectiveness of monetary policy and to render its impact more equitable? (2) Is the banking and building society legislation still equitable as between the several classes of institutions and does it promote efficient allocation of resources and steady economic growth? If not, how should it be amended in order to attain these very desirable objectives? (3) Are the savings of the public as adequately protected by legal safeguards over the capital provision and liquidity of the various kinds of deposit-taking institutions as can be expected? If not, how can the position be improved?
A basic assumption of our existing banking legislation is that commercial banks occupy a unique position among banking institutions in that they alone, apart from the central bank, can create “money”. By contrast, other deposit-receiving institutions, including building societies, tend to be viewed as relatively passive savings intermediaries. Until about a decade ago this assumption, which was of course always a simplification, fitted the facts well in South Africa. This assumption would now seem to be no longer fully valid. In the first place, banking statistics for recent years show that the commercial banks, on their part, have come to compete more actively and successfully for fixed and savings deposits; in other words, their “savings intermediary” function has grown in relation to their “money-creating” function.
A second and far more important recent development has been the growth of other deposit-taking institutions, in the form of extension to the functions of existing institutions and the establishment of new kinds of institutions. Among the latter the National Finance Corporation, established by Act of Parliament in 1949, was the forerunner of five merchant banks and two discount houses, which came into being during the period 1955 to 1963 and now form with it a fully fledged money market.
As far as changes and extensions of their functions by existing deposit-taking institutions are concerned, the main example is that of building societies, some of whose activities have come to resemble those of ordinary money-creating or of near-money-creating banks. I shall revert to this at the second-reading stage of the Building Societies Amendment Bill. In addition, certain hire-purchase finance companies, which operated traditionally with their own resources and bank credit, have been taking deposits on an increasing scale. The deposit-taking activities of what one may term the “near-banks” to-day differ in the following respects from those of the relatively “pure” savings institutions of former years: (1) They work on a large scale with funds deposited with them at call, short notice, or for relatively short periods, rather than with relatively longterm fixed deposits and genuine savings accounts; (2) The deposits held with these institutions, including “fixed” deposits and funds held on savings account, have in practice come to be looked upon as withdrawable either on demand or at short notice, and in some instances have velocities of circulation which are considerably higher than might be expected in the case of genuine savings held in deposit form; (3) While virtually all the deposits formerly held with deposit-receiving institutions other than commercial banks belonged to private individuals, statistics collected by the Reserve Bank show that a significant portion of the deposits with these institutions are to-day held by companies and other forms of business enterprises; (4) Unlike savings institutions formerly, many of the near-banks of to-day have direct or indirect access to Reserve Bank credit.
These changes in the deposit-taking activities of institutions outside the commercial banking system must be deemed to have had considerable monetary significance. There can be little doubt that a substantial proportion of the funds held with these institutions are not only looked upon by their holders as money substitutes but can in fact, be monetized conveniently, speedily, without significant loss and en masse. In monetary policy, more particularly in legislation such as the Bills now under consideration, the emphasis will have to be shifted from the old narrow concept of money to the wider concept of “liquid assets in the hands of the private sector” or “money plus near-money”. On the basis of this concept of near-money, commercial banks can no longer be deemed to differ as fundamentally from all other deposit-receiving institutions as they did 20 years ago. Like the commercial banks, some of these other institutions now finance themselves by accepting short-term deposits and thereby putting into the hands of the public highly liquid assets which either serve as money themselves or as near-money. To some extent these institutions taken together may even be able to “create” new near-money deposits. In other words, the near-banks can no longer be considered as passive intermediaries, but must be viewed as institutions whose activities have appreciable monetary significance. As a result of their activities the supply of loanable funds can be increased quite independently of saving by the public, and this could facilitate inflationary overspending in the economy.
It is true, of course, that in the competition for funds the commercial banks as a group are in a special position, since most large payments are made by cheque. Thus, if deposits are shifted from commercial banks to other deposit-receiving institutions, a large proportion of these funds flow back to them almost immediately, since these other institutions as well as most of the people to whom they disburse funds bank with the commercial banks. The banks’ cash reserves and thus their money-creating capacity can therefore normally only be reduced if such shifts of deposits are accompanied by a deterioration in the balance of payments or a net reduction in Reserve Bank credit.
Nonetheless, had it not been for the rapid growth of near-banks in the past decade, the “money supply” in the traditional sense would have proved insufficient to support the rapidly rising gross national product. A probable result would have been that the Reserve Bank would have had to create more new money than it has actually been called upon to do. This would have increased the cash reserves and, therefore, the credit-creating capacity of the commercial banks. Their assets and liabilities, as well as their share of total lending in the economy, would then have been substantially higher than they are to-day. The conclusion seems reasonable that the commercial banks have been adversely affected by the growth of the near-banks.
The situation calls for a modified approach (apart from monetary policy) in regard to the statutes governing banks and building societies. The amendments now before the House are calculated to achieve: (1) Greater efficiency of monetary stabilization policy. May I say, Sir, that one of the main purposes is to have fuller control, in regard to these new developments, over the monetary policy and to see that it is carried out effectively. I consider that as one of the most important reasons for the introduction of this legislation. The second very important reason is greater equity in the competition between the various classes of banking institutions and, (3), more protection for the depositor in the case of those institutions which have extended their activities beyond the scope existing at the time when the presently applicable financial provisions of the Acts concerned were devised, and those classes of institutions which came into being subsequently.
The key to the new approach, which finds expression in the draft legislation before the House, is the employment of the concept of “money plus near-money” rather than “money” alone, and as a consequence the recognition of certain deposit-taking institutions as “near-money-creating” banks and the introduction of certain provisions calculated to diminish the “moneyness” of certain deposits and shares.
The main problem in effecting the amendments to the Banking and Building Societies Act which would be appropriate in the light of the foregoing, is the fact that the majority of our deposit-taking institutions cannot readily be fitted into specialized moulds. Their activities have in general shown a tendency towards diversification; in fact the position is one of continual change. It would seem to be the part of wisdom to accept the constantly changing verdict of the market as regards the degree of diversification and specialization in the financial structure and to adjust the legislation to the changed conditions, rather than the other way round. (I refer hon. members in passing to Clause 26 of the Bill which would make a periodic review of the principal Act obligatory.)
The approach in the drafting of the main provisions of the Bill before the House has therefore been a functional rather than an institutional one. Provision is still made for separate categories of institutions—for the implementation of monetary policy, as also in the interests of the public and the institutions themselves, but instead of laying down a different set of requirements in respect of capital, minimum balances with the Reserve Bank, liquidity ratios, etc. for each of these categories, the Bill provides for one main set of requirements, applied functionally, for all of them, with the exception of discount houses.
I now propose dealing with the main financial features of the Bill before the House: Capital and unimpaired reserve funds: Draft Section 14 (under Clause 10 of the Bill) proposes as the absolute minimum of capital and reserves which any banking institution other than a discount house may have, the amount of R200,000. This contrasts with the amount of R100,000 prescribed for commercial banks by the present Act and no minimum for the other classes of institutions. This increased minimum is considered necessary for the protection of depositors.
On the other hand, the alternative requirement, which becomes operative when an institution grows beyond a certain size, would represent a concession to some institutions. The present Act calls for capital and reserves of 10 per cent of liabilities to the public after certain deductions, whereas the proposal now is 6 per cent after more restricted deductions have been effected. Experience has shown that the present requirement is unduly onerous for the bigger institutions. At the same time the relief is not as big as the reduction in percentage would seem to indicate, since as stated the new deductions from liabilities will be more modest than the old.
Provision is made to exempt existing small institutions from the absolute minimum of R200,000. They will merely be required to increase their capital and reserves as they themselves grow. Liquid Assets: As far as the liquidity requirements are concerned, the proposal is, firstly, to tighten the definition of liquid assets by restricting it to assets which either are cash or can be turned into cash immediately and without any significant loss. This will bring the definition into closer conformity with banking standards accepted in countries with relatively well-developed financial structures.
Secondly, the Bill proposes that all banking institutions shall, for the purpose of determining the minimum liquid assets they are to hold, classify their liabilities into short-term, medium-term and long-term, and prescribes as ratios to be held against these: 30 per cent on short-term, 20 per cent on medium-term and 5 per cent on long-term. It follows that, for instance, an institution accepting deposits only for periods of six months or longer, or subject to at least six months’ notice of withdrawal, will at any stage by definition have mostly long-term liabilities. It will not therefore be required to maintain liquid assets much in excess of 5 per cent of its total liabilities to the public.
On the other hand the proposed percentages will, as far as institutions other than commercial banks are concerned, affect seriously only those which accept demand and other short-term deposits on a relatively large scale. The choice is left to them; they can still accept those but then they have to provide 30 per cent liquidity ratio to their obligations to the public. It is deemed highly desirable that they should be required to attain to a more liquid position.
Variable liquidity ratios.
Draft Section 17 (3) (under Clause 10 of the Bill) substitutes for the power which the Reserve Bank presently has to impose supplementary reserve requirements on the commercial banks as a weapon of monetary policy, the power to require the holding of supplementary liquid assets, and by any or all classes of banking institutions, and not only commercial banks. With the definition of liquid assets tightened as proposed, such assets will be virtually identical with those which are eligible as supplementary reserves under the present provisions. It simplifies matters therefore if the Reserve Bank is empowered, within limits, to vary the liquidity ratios: 30 per cent can go up as high as 40 per cent, 20 per cent as high as 30 per cent, and for 5 per cent there is no elasticity.
We next come to the minimum reserve balance with the Reserve Bank. The proposed Section 16 (under Clause 10) would change the present legal position in two ways. Firstly, for the reasons I have already mentioned, it is proposed that with the exception of discount houses, banking institutions of all classes, having short-term liabilities in excess of R500,000, maintain reserve balances with the Reserve Bank, whereas at present only commercial banks maintain such balances. As I say, it is a question of choice if they prefer not to have the short-term liabilities, they are not bound by this. Secondly, the minimum now suggested for such balances, namely 8 per cent of short-term liabilities, would mean a concession for commercial banks. At the moment it is 10 per cent on short-term liabilities. This change I consider justified. Given the proposed liquidity provisions, it no longer appears necessary, whether from the point of view of protecting the depositor or of achieving monetary stability, to require the commercial banks to continue maintaining their present large balances with the Reserve Bank.
I come to prescribed investments. Draft Section 18, again under Clause 10, provides for the maintenance by any banking institution of “prescribed investments” of an amount equivalent to no less than 15 per cent of its liabilities to the public. It will be observed from the definition of this term in Clause 1 of the Bill that it corresponds closely with the existing definition of liquid assets. The purpose of this section is not to ensure liquidity, but to ensure that especially those institutions which have mainly long-term liabilities and which accordingly will not be required to maintain much more than 5 per cent of their total liabilities to the public in liquid form, invest a reasonable proportion of their funds in a “safe form”, some kind of gilt-edge security.
Restrictions on deposits: The last financial provision of the Bill which I propose to deal with will be found in Draft Section 21 under Clause 10. In the first place it seeks to impose certain mild restrictions on the acceptance of savings deposits. This is to ensure their “savings” character, on which in turn is based the lenient treatment proposed for these deposits in respect of both liquid assets and minimum balances with the Reserve Bank.
In the second place, this section, subject to certain qualifications, will prohibit all banking institutions from repaying fixed deposits before due date or at shorter notice of withdrawal than that originally agreed upon. These restrictions are a necessary adjunct to the proposed requirements in regard to minimum Liquid assets and balances with the Reserve Bank. Since these requirements vary according to whether the liabilities are “short”, “medium” or “long term”, it is important that it should be clear to everybody concerned into which of these categories the different classes of deposits fall. Else it will simply be a misrepresentation, if you have a long-term that is realizable at call. If it can be called up at short notice it is no longer a long-term investment, and then it should satisfy the requirements of a short-term or a medium-term investment. At the present stage so very often the position is camouflaged. It is in fact a short term but it is called a long term, but it can be called up at a moment’s notice.
I do not propose dealing individually with the remaining clauses of this Bill. I conclude with two observations. The technical committee consulted all the institutions falling within the purview of the Banking Act. In the drafting of the Bill before the House due cognizance was taken of their comment. I think I may say that, generally, the provisions of this Bill are acceptable to them.
I want to say at this stage that I will put on the Order Paper a number of new amendments which will be tabled in response to representations by the banks and building societies, representations which we received at the last moment. They are all matters on which we are conceding what they have asked. They have made out a fair case. The amendments are not substantial, they do not affect matters of principle, but I will be putting them on the Order Paper at the request of the banks and building societies.
Finally, it is my intention to introduce in due course a Bill to consolidate the Banking Act of 1942 and the amendments thereof, after these have now been accepted. I hope that this will be possible next session.
I am glad to be able to mark the hon. Minister’s return to active service by assuring him that we intend supporting his Bill and not detaining him too long over it.
The Bill which the hon. Minister has explained to the House is intended to amend the Banking Act of 1942, and as I understand it, there is nothing very new in the objects of the Bill. The object of the Bill basically is to restore to the Reserve Bank the control over credit and money which was given to it in the 1942 Act, and which as a result of financial developments, particularly in the last ten or 12 years, has been considerably impaired. So I think it is common cause that the 1942 Act was due for substantial revision to meet the new set of circumstances. This Bill therefore endeavours to restore the position and enable the Reserve Bank to perform its proper functions of controlling credit and money, and the Bill attempts to see that that control is equitable in respect not only of the older banks but in respect of the newer institutions which had developed in the building up of what the hon. Minister referred to as an “established money market”, and lastly, in making those provisions to ensure that there is adequate protection for the public. As the hon. Minister has said this Bill is based on the report of a technical committee which laboured for three years to produce its report. It consulted extremely fully with all interests concerned, and I want to say that I consider this report to be an admirable report. I think that it is a first-class piece of work, and I think the committee is to be congratulated on its production. I am sorry the hon. member for Standerton (Dr. Coertze) is not here, because I would like particularly to commend the report to him because the report is everything that the Press Commission’s Report is not. It is precise, it is clear, and above all it is objective, and even I can understand it. I think the proof of that is that the hon. the Minister has found it possible to take over verbatim the draft Bill incorporated in the committee’s report.
The hon. Minister has explained at some length and in technical language what is proposed in this Bill, and there is no need for me to try to follow in his footsteps. Perhaps I might just in a word or two give what I might call a layman’s idea of what it is all about. As I understand the new way of approaching the subject is to provide one main set of requirements for all banking institutions, and whereas for practical purposes only the commercial banks fell under the Banking Act, all banking institutions, with one exception, will now all come under one umbrella. That means that all forms of banking and the new phrase of “near banking” will be covered by this Act, and the Reserve Bank to that extent will find itself back in the position in which it was placed in 1942. Secondly, I think an examination of this Bill will satisfy members that the proposals for extending the control are equitable to all the people who are going to fall under it, and thirdly, I think that the provisions as far as protecting the public’s interest is concerned, are also adequate.
The equitable means of controlling these institutions are quite simple. It is simply done by dividing the liabilities to the public of the institutions into three classes: Short term, medium term and long term, and by fixing various percentages of liquid assets, liabilities to the public which must be held for each category. The Minister has detailed those percentages. The effect is that all banking institutions will now operate under similar conditions and they will be free to compete with one another in the various forms of banking activities, but the proportion of assets which has got to be kept liquid, or else has to be deposited with the Reserve Bank under certain circumstances will vary according to the type of business that they are doing. But they will all be free to do that type of business which suits them best. The hon. Minister has explained the measures in the Bill designed to safeguard the public interest and I do not think there is any point in my going through them again. As far as we can see the safeguards should prove adequate. But, of course, if the last ten or 12 years is any criterion it is quite likely that conditions may change substantially again in the next five or ten years, and therefore I think the provision in the Bill that the whole position must be re-examined in 1971, and thereafter at regular intervals of ten years, is a sound and proper one.
I only want to make one last observation and that is that this extended control covering a very considerable field of activities, which it did not do in the past is going to impose extra work and extra responsibilities on the Registrar and his department, and I hope that the hon. the Minister is going to see that the department is sufficiently strengthened and made thoroughly efficient in order to carry out these duties and make sure that this Act is administered and that the terms of the Act are observed strictly by all those who fall under its aegis.
I just want to say a few words with regard to this measure, which is one that we welcome. You will recall, Mr. Speaker, that over the last three or more years I have often spoken in this House about this whole question of our various deposit-receiving institutions, commercial banks, trust banks, building societies and other companies of that kind. I pointed out that from time to time there was strong competition between them; that a sort of destructive competition had practically developed between them; that concerns which were not commercial banks were gradually gaining the upper-hand in this sense that at the present time much more money is being deposited with the non-commercial banks than with the commercial banking concerns. I pointed out that this had adversely influenced the entire structure in this sense that while the Reserve Bank and the Treasury exercised proper control over commercial banks and their activities and, while not being able to force the commercial banks to follow their policy, could bring pressure to bear on them and practically force them to follow their lead, the other institutions were able to move in a direction diametrically opposed to the financial policy of the State. Where the Government decided—and the Reserve Bank implemented that decision—that interest rates must be lowered, that money must be made more freely available, some of these institutions simply went their own way and said: “No, we are going to pay higher rates of interest on deposits and we are going to follow just the opposite direction.” That applies to all the various spheres of activity. This led to unsound competition in spheres which were not properly demarcated. In this measure the various spheres are now being properly demarcated. In the first place all the institutions (with the exception of the building societies, which in this Bill and in the other Bill which will still come before the House, are being eliminated from the very short-term market) are being placed under one large umbrella and they are being told: “If you engage in this particular activity, then your obligations to the State will be as follows, and if you engage in another activity then your obligations to the State will be different again,” with the result that everything will be regulated according to the nature of the activities in which the institution concerned decides to engage. It will now be able to decide for itself whether certain activities are less remunerative and others more remunerative and it will be able to concentrate more on activities in connection with which it has specialized knowledge. I think that is extremely sound and I believe that in due course the institutions themselves will find that they have to specialize in their own particular direction. They will all be covered under the same measure and they will all be able to follow the lead which the Treasury and the Reserve Bank want them to follow in the interests of the State as a whole.
I think there is no better time to rectify this matter than the present time. You will recall, Sir, that in dealing with this matter over the years I referred to the intense competition (sometimes to the great detriment of State policy as a whole) between these institutions for the deposits of the public. At the moment we have the fortunate position that that competition is not so keen or need not be so keen because money is plentiful and the liquidity position in the country is very strong, with the result that the necessary steps can now be taken without any of the various institutions having to feel the pinch. They are all in a position to comply much more easily under present-day circumstances, having regard to the flourishing state of our economy, with the requirements of this Bill than they would have been able to do in a period of scarcity of money. That is why I say that this is the opportune moment to rectify these matters.
In conclusion I want to associate myself with one point which the hon. member for Constantia (Mr. Waterson) mentioned; I want to express my appreciation of this report which was drawn up by this technical committee and also of this Bill which is the outcome of that report. This report is probably one of the best-motivated reports on financial matters ever to have been published in South Africa and I want to congratulate the framers of this report on the document which they have submitted to us. I think I speak on behalf of every member of this House in making an appeal to the hon. the Minister to publish this report (excluding the Bills which are suggested in the latter part of the report and which are already before us in the form of legislation). This report is of very great practical value. It motivates every single step which is proposed in the Bill and it does so in clear terms. There are numerous undertakings in this county which will be affected as the result of this report and to whom this legislation will be applicable, and those undertakings and their directors and managers, if they can study this report, will all be in a much better position to understand why these measures are being taken in this legislation. I want to add too that this report is of practical value to the whole financial world, to all those who are interested in South Africa’s finances as a whole, and it is also of great value to the academicians in this country. I predict that if this report is freely available, even our universities will use it to a considerable extent in the study of financial and economic matters. I make this serious appeal and I am convinced that in putting this request to the hon. the Minister I have the support of every member of this House. I hope that the report will soon be printed, and then the world will see that here we have a document which is worth its weight in gold.
I think the Bill is perhaps best described as a measure designed to bring up to date the statutory charter of banks and bankers in South Africa, with the exception of the Land Bank—that institution is being left completely outside the framework of this charter. The Bill is a long-awaited one in respect of which the special Technical Committee to which reference has already been made, carried out investigations extending over three years. I hope that the admirable report of the committee will not simply be pigeonholed in the Department, and I support the plea of the hon. member for Pretoria (Central) (Mr. van den Heever) that the report be made available to the public, by which of course I mean essentially the financial and commercial public and those who like universities may be interested in that particular subject.
The main provisions of (this Bill cover a very specialized field of lawmaking, and the report has certainly been most helpful in studying those provisions. Banking is pre-eminently not a technical but a practical matter. The provisions relating to revised standards of liquidity ratios, capital and reserve requirements and monetary safeguards are therefore best left to the judgment of bankers. They are the people who have the practical knowledge of the subjects and they are the people who will have to translate into action what is here being set out in legal phraseology. I believe it would have strengthened the conclusions of the committee if the practical side of banking had had greater representation on the committee, but I accept that banking interests generally were fully canvassed by the committee. The hon. Minister has given us the assurance that the practical men are satisfied with the proposed changes in banking standards and banking practice as set out in the Bill, and I naturally accept that assurance. There are, however, certain debateable details in the Bill which I believe demand attention on the part of the lawmaker, and for that reason I will comment on the principle of certain of the changes which are involved. When I say that, I would remind the House that there was a time when Parliament had to contend with autocratic monarchs. Now in turn I believe it has to contend with bureaucratic autocrats. In those circumstances it behoves Parliament, in my view, to be careful and to be watchful in conferring arbitrary powers in some of the terms contained in the Bill without some form of adequate safeguards. I take as an example the new paragraph (c) of Clause 1, on page 2. In this new definition, described by the hon. Minister himself as a tightening up process, Parliament itself is being meticulously careful to set out in clear particularity which classes or types of financial or monetary assets shall constitute “liquid assets”. The proposed definition, however, ends with an enabling provision in sub-paragraph (e), on page 5, which reads as follows “any other assets as the Registrar may approve for the purpose of this definition”. I am aware that a somewhat similar provision was included in existing legislation. But I believe it is unwise and wrong to vest in a State official arbitrary powers to add to such a statutory list and to leave the possibility or the impression that he can, if he so wishes, do so in private conclave with one or other institution. Publicity is the essence of parliamentary government, and the safeguard for publicity in this case, e.g. publication in the Gazette, will not only remove all doubts but should also remove every possibility of error or misunderstanding in that regard. An amendment to require the Registrar to publish in the Gazette whatever further assets he may deem fit to add to this statutory enumeration of liquid assets will be moved from this side of the House during the Committee Stage.
Publicity in the Gazette is an essential feature of legislation in some other instances, I refer, e.g., to the new Section 17 (2), where it is provided that when the Reserve Bank sees fit to change the liquidity ratio or to impose supplementary liquidity requirements in respect of banking institutions there must be notice in the Gazette. That safeguard, I suggest, is eminently sound in principle and I believe it should be followed in all these other instances where statutory provisions can be altered or added to under delegated authority granted to the Registrar. I have detailed as an example par. (c) of Clause 1.
There is another salutary feature in the Bill as a safeguard against arbitrary power, and that is to be found in the new sub-section (3) of Clause 1. In that case the Registrar is required to act in conjunction with the auditor of the institution concerned. If the new Section 21 is to stand, then I suggest that a safeguarding provision of that kind should also be incorporated into sub-section (6) (g). In other words, I am suggesting that the discretion to concede the repayment of fixed deposits before due date should not rest solely in the hands of the Registrar, who is a State official, but in the hands of the Registrar acting in conjunction with the auditors of the institution, whose knowledge and independent approach in the matter will be of assistance to the Registrar in coming to a fair and just decision.
That brings me to the provisions of the proposed new Section 21 itself. The hon. the Minister made some brief reference to this provision. Speaking for myself, I find this new statutory invasion into the liberty of the customer and the bank to negotiate with each other in respect of any investment on deposit account both unreasonable and alarming. It is an entirely new principle. As far as I know, never before has there been a statutory injunction on a banker “to repay a fixed deposit on due date and not earlier”. I personally fail to see any justification for this new statutory intervention into what I call the normal customer-banker relations which have always worked very well. As far as I am able to find out, neither the Radcliffe Report in Great Britain nor the more recent Porter Report in Canada found it necessary to go as far as this, and I hope that in spite of the Minister’s brief reference to the matter he will give us more clarity as to why it is necessary to go as far as that here. I am concerned particularly with the man or woman of modest means who, for reasons of security, invests money in a deposit account in the bank and who then in an emergency is obliged to negotiate for the withdrawal or the repayment of part or the whole of the sum on fixed deposit. Thus far there has only been a contractual restriction on repayment before due date, and that has been a matter which has usually been settled on equitable terms and in a good spirit of customer-banker relations which have always existed. The Minister has described this restriction as a mild one, but I think he must bear in mind that there is a contractual restriction which in the new circumstances and in the new charter will itself tighten up matters in that regard. But here we are now superimposing over that contractual restriction this new statutory restriction which will be operative regardless of whether the sum invested on fixed deposit is 50,000c or R50,000. I say I am concerned particularly with a man of modest means who has a few thousand rand on fixed deposit and which in changed circumstances he has to make use of immediately. But in any case I do not believe that the whole of the monetary control apparatus which is being set up under this Bill will collapse like a house of cards if this restrictive provision is removed. As I say, it is a new invasion into the liberty of the subject to negotiate on equitable terms with his banker. I am fully aware that two escape routes, as I will call them, have been provided in sub-sections (5) and (6) of the new Section 21.
The first escape route concedes to the customer the privilege, not the right, to reborrow his own money from the bank, provided he agrees to pay what is in effect a penalty of no less than 1 per cent more than the bank’s borrowing rates. Again, speaking for myself, I personally would deprecate any statutory power which permits Peter to be robbed in order to pay Paul, but this provision seems to go somewhat further, because it now permits Peter to be robbed to repay Peter.
The second concession is also a privilege, so long as the customer remains solvent and does not die. He may at the sole discretion of the Registrar, get his money back if, presumably, he can make out a good case to convince that official or to soften his heart. My main comment on this requirement is that it makes the position quite ridiculous. I can find no justification for placing such a burden on a State official unless he is to become an official inquisitor, which Heaven forbid. But to make the repayment of private money virtually the gift of a State official in the circumstances set out in this Bill is, I believe, to reduce legislation to an absurdity.
The Bill, as I have said, is a banking charter which is very commendable. On the whole, it is well designed and well equipped with institutional safeguards. But I still feel that the inclusion of Section 21 in its present form can best be described as a legislative super erogation. I believe it goes much further than legislative duty requires to ensure institutional discipline which the Bill is designed to achieve, and which I think will be brought about without this clause. I therefore hope that the Minister will reconsider the proposed section and either drop it or else modify it suitably, because as I say, my main concern is the person of modest means who is affected by it. I do not believe that a modification of it will bring about a state of collapse in the structure of this well-designed monetary control measure.
Finally, I wish to raise with the Minister two matters of importance to some of the smaller institutions such as savings banks. Some of these institutions feel that the period of 12 months prescribed in the new Section 17 (2) may not be quite adequate enough to enable them to meet the new liquidity requirements without having to redeem existing securities at a possible discount. Everyone will know that some of these institutions will have to change their form of security holding, and they feel that they might in the circumstances possibly have to do so at a discount. They are fully aware that the proposed section will make it possible to apply for an extension of that period up to 24 months, but they nevertheless consider that the initial period might well be altered from 12 to 18 months. This added period, they consider, will afford them time within which to comply with the new liquidity requirements without possible conversion at a loss. I think this request is a modest one, and I hope the Minister will give it serious consideration.
Secondly, some of these institutions are also concerned about the provision of the new Section 21 and its possible interpretation. Although the definition of “savings account” seems clear enough and will permit repayment of savings deposits at short notice, subject only to the consent of the institution concerned, the matter may of course be complicated by the provisions of sub-section (2). If the Minister will look at the new Section 21, he will find that in sub-section (1) the provision relates to a fixed deposit with a due date of payment. On the other hand, sub-section (2) omits the word “fixed” and speaks of a deposit payable after an agreed period of notice, and then it goes on to say: “The institution shall not repay the deposit or any portion thereof at shorter notice.” I personally believe that sub-sec. (2) has no reference to savings deposits on savings account, but my attention having been drawn to the wording of sub-section (2) I must say that confusion may arise from the wording which I have paraphrased here. If that is the case, then savings deposits will also be affected by the new Section 21. I shall be glad, therefore, if the Minister, should he agree with me that savings deposits are not included in the term “deposits”, would say so quite categorically in the interests of the persons concerned. But my own feeling is that a better solution to the problem might well be to amend sub-section (2) to make it quite clear that deposits there means deposits not being savings deposits. I would particularly like the Minister to give consideration to that. But generally the Bill is a commendable one and has the support of this side of the House.
I think it is quite clear from what has already been said that this Bill is not only regarded as necessary, but as essential, and the hon. the Minister and his committee have had no easy task to strike a balance between the different types of deposit-receiving institutions, the building societies and the public. I hope that as the result of this legislation it will not be the public which will suffer the most, which is something I will come back to in a moment. In addition, they had to strike a balance between the percentage return and the security to the depositor. We like the flexibility of thought behind this Bill, which will not deny any type of institution room to manoeuvre and to expand, and yet at the same time imposes the restrictions which the bankers and the Government think are necessary. It is quite true that these new type of deposit-taking institutions should now correctly be called banks and perhaps the only rigidity in the Bill is in regard to the description of the banks. Perhaps the Minister will tell us what the position is where a bank falls into one or more categories mentioned in the definition. How will it be classified then? It may do commercial banking and hire purchase banking or a variety of other things, and it may fall into one or more of these definitions.
By making the deposit-receiving institutions provide part of their funds to the Reserve Bank at no interest, there is little doubt that the rate of interest on short-term deposits must drop. At present, as the Minister knows, there are available in South Africa sound institutions which often give a rate of 2½ per cent to 4 per cent on daily balance. The reason why they are able to do that is quite clear. As opposed to the commercial banks, they do not have to deposit a proportion of their deposits with the Reserve Bank. In other words, they can afford to pay interest, whereas the commercial banks receive the deposit free of interest and hand them over to the Reserve Bank free of interest. At the present moment the finance houses are not required to make a deposit free of interest, and therefore they can pay interest to their depositors. There is little doubt that the effect of this legislation will be to reduce the short-term interest rate in so far as the small man is concerned. The provision that there must now be a minimum period for fixed deposits will have the same effect. Here I want to support the hon. member for Port Elizabeth (South) (Mr. Plewman). I think it is a very dangerous thing to interfere with the contractual relations of any two people. One understands that there may be times when the contractual relationship between the bank and the depositor may have to be controlled to fit in with the general monetary policy, but here we are doing more than that. We are laying down as law that irrespective of the financial position of the country and the strength of its reserves and its liquidity, as from the date of promulgation of this Bill, fixed deposits shall not be redeemable unless on due date. I think the hon. member for Port Elizabeth (South) is quite correct when he says that the rather ingenious methods devised to allow a person to get the money back at a premium of 1 per cent is one which should be frowned upon.
The other question is whether this achieves What the authorities are trying to do? Because if you have fixed deposits which you are not allowed to reclaim and you have a dire need for that money, and you have the right to borrow even at 1 per cent extra, you are going to borrow, and it is no answer to say that the banks will not allow you to borrow, because at present they can say: You shall not take back your fixed deposit. So really you are not changing the position and you are imposing a 1 per cent penalty on the borrower, who borrows his own money.
I think the classification into short term, medium term and long term are welcome, but I would like to hear from the Minister whether he is satisfied that 31 days is a sufficiently long period for medium-term loans. In other words, will the change from 30 days to 31 days, from short term to medium term, give him the protection he requires? Should it be 30 days or 45 days or 60 days? Is 31 days long enough as the minimum for a medium-term loan for which no securities are required?
I also want to agree with the hon. member for Port Elizabeth (South) in regard to the publication of securities which will be permitted by the Registrar of Banks. We had an unfortunate incident last year in regard to certain arbitrage matters, where it was said that the information could have been obtained, provided anyone went to obtain it. In the meantime we know that certain interests, quite rightly, took advantage of the legal position and made an awful lot of money and the general public, or even the profession, knew nothing about it. I think it would be correct that if a new heading—if one can call it that—is agreed on, it should be published in the Gazette so that everyone will know about it.
There is one other matter. It seems to me that in terms of this Bill the commercial banks will be put in a far better position than they are in to-day, and perhaps rightly so. But I hope the Minister will see to it that no advantage is taken of the new position by the commercial banks, and that we will not have things happening like the additional charge on the deposit of cheques, and that the Minister will now be able to say to the banks: I am giving you all these advantages; perhaps you can give a little back to the public.
There is one last matter. The last speaker also mentioned the Land Bank. I think it will be welcomed if the Government institutions which are in effect deposit-receiving institutions are also examined and if necessary that legislation should be introduced to bring them also within the orbit of the whole monetary system. I refer to the I.D.C., the Land Bank, the National Finance Corporation and a few others who are receiving money. It is true that they are Government institutions and can be forced into the general picture, but I think it would be better if they are controlled by legislation. It has been said, and I think rightly, that the Land Bank is to-day borrowing short and lending long. I think the Minister said that the Banking Act would be consolidated next year, and perhaps on that occasion these matters may be dealt with, too.
I want to begin by paying a tribute to the authors of this report. To me it was very interesting and I had occasion to look at it when I was free from other cares, and I must confess that it was a very good rival to James Bond. It was written in a style which, although technical, was yet easy to understand, and I am very glad of the tributes paid by hon. members to this report. The speech I had to make in the second reading was largely technical. I appreciate that the hon. member for Constantia (Mr. Waterson) was talking as a layman and I was really tempted to do that, too, but I thought that would be a very poor tribute to the gentlemen who produced this report if I were to deprive them of the pleasure of listening to the speech they prepared for me to read in the second reading. So I think hon. members will see that I had to forego the pleasure of talking more in layman’s terms out of respect to the gentlemen who are the authors of this report.
It is quite clear that conventional banking has been undergoing in the last decades, not only in South Africa but everywhere, tremendous changes, almost revolutionary changes brought about by evolution. We are seeking here to bend the law to the new trends and directions in banking all over the world. I think that is preferable to the reverse process of trying to make practice conform to the existing Taws and having in that sense a kind of stagnation instead of the natural development which one welcomes also in the field of banking.
*The hon. member for Pretoria (Central) (Mr. van den Heever) has asked whether I am not prepared to have this important report published. His request is supported by speakers on the other side. I very much welcome this request. It is not customary to publish the reports of departmental committees but exceptions can be made. The fact that this request has come from both sides of the House will strengthen my position when I go to the Cabinet to ask that this report be published. I think this report is one which is of interest also to people outside parliamentary circles and outside the ranks of those people who are directly concerned in this matter and to whom I was able to give a few of the available copies. I know, for example, of how much interest the Canadian report is to us in this country, and I assume that our report will also be of interest to other countries which frequently have to contend with the same problems that we have to face here. I hope that the Treasury will not object to this expenditure; it might perhaps also be a bestseller. I quite agree with the hon. member for Pretoria (Central) that this is the opportune moment for the adjustments which are contemplated here. We are not experiencing a depression in which all sorts of difficulties might arise; we are experiencing almost boom conditions, and it will be easier for the institutions which are now being expected to adapt themselves to the new position to do so. I must say that when this problem came to my notice originally I also felt that a solution might possibly be found along the lines of a demarcation, into water-tight compartments, of the various institutions; that institutions such as commercial banks which have more to do with short-term funds should have the sole right to receive short-term funds, and that the banks should not be allowed to enter upon the terrain of other institutions which deal in medium and long-term funds. But I feel that the solution suggested by this committee is a much better solution than merely to classify the various institutions and then to lay down that no institution may operate outside its own sphere of business. I think the solution lies in this functional division. Any institution is at liberty to do business in any one of these spheres but in that case it must comply with the requirements which are laid down by the Act in respect of institutions dealing with funds in that particular form. I think this solution is a much more sensible solution, although in the first place I myself did not think along those lines.
The criticisms which have been directed against the Bill are concerned largely with details, and I do not propose to discuss all the criticisms which have been put forward here at this stage. The hon. member for Port Elizabeth (South) (Mr. Plewman) has indicated that he proposes to move certain amendments. I will study them as soon as they have been put on the Order Paper, but I can say at once that I think he is quite right in saying as far as paragraph (1) is concerned, which reads “such other assets as the Registrar may approve for the purposes of this definition”, that there must be publication. It should not be a hole-in-the-corner affair, and where the Registrar has made a decision, that fact should be made public. We can consider the form which the amendment should take, but as far as the principle is concerned I concede it at once.
There is one other point on which I can give the hon. member an immediate reply, and that is with regard to this main objection and also that of the hon. member for Parktown (Mr. Emdin) in regard to Clause 21 where it is laid down that where a deposit is made for a fixed period it cannot be paid back before the expiry of that period, or that where it is subject to repayment after 30 days’ notice or after three months’ notice it cannot be paid back at shorter notice. I can deal with that at once because it is really vital to the whole Bill; it is one of the most essential parts of the Bill. We have these provisions in the Bill in regard to short-term, medium-term and long-term deposits, and the liability of the particular banking institution depends on whether the deposit is a short-term, a medium-term or a long-term deposit. When we come to the proposed requirements in regard to the minimum liquid assets, the proposed requirements with regard to balances to be kept with the Reserve Bank, then it depends on the category within which it is classified. I agree with the hon. member for Parktown that it is an arbitrary division. Thirty days was considered a very useful period by the people who have knowledge of these matters, but there is no scientific reason for it. If we were now to say, where money has been deposited for, say, two years or on the contractual basis that it will be repaid upon giving a month’s notice or three months’ notice, that it can be withdrawn at any time, then it simply means that we will be converting a long-term investment into a short-term investment. The hon. member said that we must not interfere with the contractual basis, but what is the contractual basis? The contractual basis is that this money which I deposit will be repaid to me after two years—not at call. That would be a different contract. If I have an agreement with a deposit-receiving institution that they will repay my deposit on 30 days’ notice, then that is my agreement; that is the contractual basis. The contractual basis is not that I can withdraw it on 24 hours’ notice. If people want to be able to withdraw their money at call, then they must make their contract in those terms, and if they make it in those terms that institution will know that they will now have to have 30 per cent in liquid assets and not 5 per cent; they will know that they will now have to deposit 8 per cent with the Reserve Bank. I cannot agree that you can now come along and alter the very basis of the division into short-, medium-or long-term and all its implications, on the ground that you want to meet the depositor. If the depositor wants to deposit his money on that basis, there is nothing to prevent him from contracting on the basis that he can withdraw his money at call. But that is not what is wanted here.
There are also other important considerations. Once business enterprises and other depositors come to take it for granted that fixed deposits are in fact withdrawable on demand and they accordingly keep a considerable part of their liquid assets in this form, then serious problems would arise if banking institutions were suddenly to stop paying back such deposits before maturity. The public would then discover that their liquidity was considerably less than they had thought, and in the resultant scramble for liquidity some institutions might be seriously affected. In such circumstances the Reserve Bank would probably be forced to create a substantial amount of credit for banking institutions in order to enable them to continue paying out their deposits. This might not be in accordance with the official monetary policy which is the desirable policy at any particular point of time. Both from the point of view of protecting the depositor and that of preserving monetary stability, it is therefore important that all three parties concerned, namely the public, the banking institutions and the monetary authorities, should know which deposits are in fact short term, which are medium term and which are long term. Banking institutions will be free to accept any class of deposit and the public will, of course, be free to deposit their money in any form they desire, but there must be no misunderstanding as to which deposits are truly liquid and which are not. It is wrong to regard money deposited for three years as a liquid asset. Of course it is not a liquid asset, and it is wrong to think that this existing practice which has grown up is one that should be encouraged. I think it is not in the interests of the depositor. We say, “Very well, if you want to have your money before the expiry of the period for which you bave contracted to deposit it, you can borrow against it but then you have to pay 1 per cent more”. The ordinary rate of interest on a deposit at call is much lower than the rate on a fixed deposit, and you cannot have it both ways. There are many further arguments that I could use, but I can say that this is the very basis of the whole Bill, and I regret very much that I will not be able to accept such an amendment.
In regard to the other point which has been raised here, I want to say that Clause 21 (2) is not intended to refer to savings deposits. If the wording is not clear we can go into it in the Committee Stage but it is not intended to apply to savings deposits.
The hon. member for Parktown also asked me how banks would be classified in the various categories. They will be classified according to their major operations. That is the usual basis on which it is done.
The hon. member for Port Elizabeth (South), in dealing with another clause, said that the question of the auditor may also come into it. It does not seem to me as though that is the proper function of an auditor, but if the hon. member puts his amendment on the Order Paper I will have a look at it. At first sight, however, it does not look as though that is the proper function of an auditor, that is to say, to assist the Registrar in a matter of this nature.
I thank hon. members for their support of this Bill. I think we are taking a very great forward step here as far as banking legislation is concerned, and I am glad that we are taking it with the full support of both sides of the House.
Motion put and agreed to.
Bill read a second time.
Second Order read: Second reading,—Building Societies Amendment Bill.
*The MINISTER OF FINANCE: I move—
Mr. Speaker, in moving the second reading of the Banking Amendment Bill I briefly outlined the basic reasons and the circumstances which necessitated an amendment of our existing legislation in the sphere of banking, that is to say, the Banking Act and the Building Societies Act. I do not propose therefore to cover the whole field again but merely to indicate how the building societies fit into the picture and then go on to deal with the most important provisions of the Bill now before the House.
To refresh the memories of hon. members I just want to mention again that in the main this whole matter turns on the question of effective monetary control, fair competition between the various types of deposit-receiving institutions and adequate protection of the deposits of the public by laying down legal requirements in respect of the solvency and liquidity of the institutions concerned.
I indicated that as the result of changes over recent years in the functions and activities of certain types of deposit-receiving institutions, including building societies, a large portion of the obligations of these institutions could today be regarded as money or near-money in the hands of the holders. These institutions can therefore no longer be regarded as innocent intermediaries who simply canalize genuine savings into investments, they must be regarded as institutions whose activities are of considerable monetary importance. It is no longer feasible therefore to work on the concept of “money” in its former narrow sense of coins, notes and demand deposits of the public with the commercial banks and the Reserve Bank. It has become urgently necessary to shift the emphasis from the narrower concept of “money” to the broader one of “money plus near-money”, that is to say, all the liquid assets in the hands of the public, and to adapt the legislation accordingly so as to make it possible to exercise more effective monetary control and to ensure fair competition between the various types of deposit-receiving institutions.
Since World War II there has been a remarkable growth of building societies; relatively speaking they have grown more rapidly than the commercial banks, the Post Office Savings Bank and certain other types of deposit-receiving institutions. Amongst other things this growth is due to the fact that the building societies in general are very well managed and that they operate within a comprehensive legal framework which in the main is an effective one, a fact which also gives depositors a high degree of protection. In addition to that they have at their disposal an efficient organization for mobilizing savings and for financing housing. Generally speaking this expansion on the part of building societies has unquestionably been of great benefit to the economy generally but the implications of certain aspects of this growth, both from the point of view of monetary control and the sound development of the financial structure as a whole, do give cause for a certain amount of concern.
The building societies have been criticized from time to time by various bodies and persons on all sorts of grounds. There is no doubt that much of this criticism is unfounded and is based on misconceptions in respect of either the financial structure and modus operandi of the societies themselves or the functioning of the credit market generally. The building societies definitely perform very important functions and this country has every reason to be proud of its thriving building society movement.
On the other hand it is true that certain practices have developed which have created problems. The building societies as they operate in the Republic at the present time are obviously no longer the genuine savings institutions of former days who perform the sole function of canalizing savings into housing and Government stock, municipal stock, etc.
Some of their present activities manifestly correspond with those of ordinary banks. For example—
- (a) To a certain extent they work with money invested with them for short periods. Indeed a large portion of their obligations are treated in practice as being repayable on demand. In any event that is how the depositors and shareholders view the position. The holders of savings accounts in particular are allowed in certain cases to use the accounts practically as current accounts.
- (b) The building societies serve as the custodians of the funds not only of individuals but also of companies and other types of business undertakings as well as local authorities and other public bodies. These organizations are not savers, and since an investment with a building society offers neither an exceptional interest yield nor the possibility of capital appreciation, one can assume that in most cases they deposit these funds in the expectation that they will be able to withdraw them whenever they like.
- (c) The building societies have found ways and means of granting transfer facilities to their depositors and to provide other services which are designed partly to compensate them for the lack of cheque facilities. Thus, for example, cheques are issued for depositors in certain cases for specific amounts to third parties while certain societies allow depositors to draw on their accounts at any branch in the Republic.
To a certain extent therefore building societies, over and above their functions as savings institutions, also perform the typical banking function of serving as the custodian of the money and near-money of the public.
As far as total demand is concerned, the building societies, to the extent that their obligations serve as money or near-money, are able to exercise an influence similar in principle to that of the banks.
Although the building societies, because of all sorts of restrictions imposed on them, compete only in a small measure with commercial banks in the sphere of investments and advances, they compete very actively and strenuously for the funds of the public. There can, of course, be no objection to this competition as such. As a matter of fact there is no doubt that these services to the community are valuable and that they are provided by the building societies in a very efficient way.
The trouble is that the basis on which this competition takes place is unfair.
In the first place it is unfair inasmuch as the buildings societies are not required to keep a reserve balance with the Reserve Bank. Secondly, the liquidity requirements which the building societies have to comply with are much less onerous than those with which banking institutions have to comply in terms of the existing Act or will have to comply in terms of the Banking Amendment Bill. Thirdly, building societies are not subject to supplementary reserves and an increase in liquidity ratios while commercial banks are already subject to the former and all banking institutions will be subject to the latter in terms of the Banking Amendment Bill. Fourthly, building societies enjoy an important competitive advantage by virtue of their unique capital structure and the accompanying taxation concessions.
The advantage which building societies enjoy must be weighed against the disadvantages of the restrictions imposed on them as far as their activities in connection with advances, investments and deposits are concerned, but the balance is obviously still in their favour.
The position is further complicated by the fact that building societies, as far as investments are concerned, have also departed from what is regarded as their primary aim, that is to say, to collect personal savings and to use such savings to assist the man in the street by means of a mortgage loan to acquire his own home. They no longer give advances only to ordinary house-owners but to a certain extent also to profit-making undertakings against the security of flats and industrial and commercial buildings. I want to make it clear that in carrying out these divergent activities the building societies have in no way contravened the Building Societies Act since the Act does not limit their activities to the aim to which I have just referred. Apart from that, in engaging in these divergent activities, they have been fulfilling functions which are of great importance to our economy, but what it does mean is that the privileges enjoyed by them benefit not only the small saver and the man in the street who wishes to acquire his own home but also business organizations.
It is clear from what I have said already that it has become necessary to make adjustments to the Building Societies Act.
One of two courses can be followed to rectify the position. One approach would be to accept that the building societies have already moved so far away from their original aim and have become such an integral portion of the liquidity-creating banking sector that they should simply be brought within the scope of the amended Banking Act and that the Building Societies Act should be repealed. Such a step would solve the problem of unfair competition but would at the same time create other intricate problems. I do not want to go into all the difficulties but I just want to mention that in that event the capital structure of building societies would have to be changed radically and that they would have to keep reserve balances with the Reserve Bank amounting to 8 per cent of their short-term obligations. In order to be able to acquire sufficient liquid assets in terms of this new concept, the building societies jointly would then have to throw on to the market an enormous amount of long-term Government and other stocks, a step which might have serious repercussions upon the market as far as these securities are concerned and upon the general pattern of interest rates. Amongst other things, these changes would in all probability result in an increase in the loan rates of building societies since they would have to invest a considerably larger portion of their funds in assets which earn little or no interest. On the other hand the restrictions imposed on them with regard to investments and particularly with regard to advances would fall away. The question arises what sort of loan, discounting and investment activities building societies would then engage in and what the eventual consequences of this step would be, and particularly what effect it would have on the financing of housing and on the existing banking institutions. It is perfectly clear that this course would be too drastic.
The other approach is that building societies must gradually revert to their original aim which can be widened to provide for changed conditions, that is to say, that they should once again become genuine intermediaries which will canalize personal savings into the capital market for the financing of house ownership in the main instead of being a combination of savings institutions and near-money-creating institutions, as they are at present. If that can be brought about, then there is sufficient justification for continuing to mete out special treatment to building societies under their own Act.
I am satisfied that it is in the best interests of the country to follow the latter course. The building societies themselves, generally speaking, also prefer this course. In my opinion this object can be achieved by imposing certain further restrictions upon building societies, in addition to the existing restrictions, while they would still enjoy certain important privileges which are not granted to other deposit-receiving institutions. In this way we would retain a genuine building society movement with all its manifold advantages to our economy.
The Bill now before the House incorporates provisions, which will impose the necessary further restrictions upon building societies in addition to restrictions concerning “liquid assets” and liquidity ratios, as well as minor amendments to the principal Act which have proved to be necessary in the light of experience gained in administering the Act. I proceed now to deal briefly with the restrictions provided for in the Bill.
On the one hand we have the restrictions which will be applied to building societies as well as banking institutions. I dealt with these restrictions when I moved the second reading of the Banking Amendment Bill and I just want to set them out here briefly. Clause 5 of the Bill provides for restrictions on the acceptance of deposits on savings account and prohibits the repayment of fixed deposits before the due date. The new restrictions which will be applicable to building societies only are the following: (1) In terms of Clause 9 (e), advances against the security of commercial and industrial buildings are strictly limited. The reason for not entirely forbidding such advances is to allow building societies a small margin of play in their strictly limited field of investment; (b) building societies are forbidden to issue subscription shares to companies. These shares were specially devised to promote thrift, and since dividends on these shares are free of income-tax the shares should only be issued to ordinary savers; (c) Clause 10 forbids the repayment of shares within 18 months after the date of issue and provides for three months’ notice to be given of repayment, which the building society may in any event still refuse. This provision is designed to bring about a greater measure of permanency in the case of building society shares, and particularly to eliminate cases where the possibility of repayment of shares is misused in order to make the money invested in shares serve as near-money. This requirement is also justified on the ground that no liquid assets need then be kept against indefinite shares. As against these restrictions imposed on building societies they will then enjoy the following privileges: (a) They will not be required to keep reserve balances with the Reserve Bank nor will they be liable to an increase of liquidity ratios; (b) the requirements in respect of both liquid assets and prescribed investments in the case of building societies are considerably less onerous than in the case of banking institutions. The main reason for these concessions is the fact that compulsory monthly repayments have to be made on the vast bulk of the moneys advanced by building societies and as far as prescribed investments are concerned, as well as the fact that in calculating the amount, indefinite shares are included with the total obligations; (c) building societies will still be allowed to enjoy the benefits of their present capital structure.
Apart from the benefits which I have just mentioned, this Bill contains a number of provisions, the effect of which will be to relax to some small extent certain of the existing restrictions. The most important of these are the raising of the dividing line between “ordinary” and “large” advances for the purposes of limiting the latter, the abolition of the requirement that fixed deposits must be repaid in monthly instalments of limited amount, and the simplification of the present complicated capital requirements.
It is proposed, just as in the case of the banking institutions, and for the same reasons, to narrow the concept of “liquid assets” so that it will only include assets which are really liquid, that is to say, cash or assets which can be converted into cash immediately and without appreciable loss.
Before I conclude I want to refer to one further provision of the Bill, a provision which affects a matter of principle, that is to say, the power which is granted to building societies in Clause 4 (c) to establish an insurance company. About 80 per cent of the total funds of building societies are invested in advances against the mortgage of immovable urban property. It is obvious that in order to safeguard this investment in mortgages, the mortgaged buildings must be insured against damage through fire, storm, etc. This insurance is practically just as indispensable in safeguarding the investment as the registration of the mortgage bond, and the provision of insurance cover can therefore be regarded as an integral portion of the main function of building societies. Statistics show that this type of insurance is one of the most profitable types of insurance in this country, and it has been found by some of the large insurance companies which have acted over long periods as agents of insurance companies which provide insurance cover on properties in respect of which advances have been made by building societies against mortgage bonds that the premium income on that insurance business has been more than adequate to cover the claims and the expenses. As a matter of fact the building societies believe that they will possibly be able to give the borrower this insurance cover at a cheaper rate than he has to pay at present. I want to emphasize that this provision in the Bill merely grants a permission power to building societies to establish an insurance company; it does not make it obligatory.
Finally I want to mention that the Technical Committee fully discussed the proposed amendments with representatives of the Association of Building Societies, of which all permanent building societies in the Republic are members, and I think I can say that these provisions, generally speaking, are acceptable to the building societies. (Temporary building societies are not covered by this Bill). I just want to say too that I propose to place certain amendments on the Order Paper as the result of further representations received from the building societies. I want to add that the consolidation of the Building Societies Act and all its amendments is long overdue and that the prospect of such consolidation was held out in this House some years ago already. As soon as the proposed amendments have been accepted, we shall be able to proceed with the preparation of a consolidating measure. I hope it will be possible to place a consolidating measure before the House next year.
As in the case of the previous Bill we support this Bill which is really a corollary of the Banking Amending Bill. We also agree with the minister that in facing the choice of bringing building societies under the purview of the Banking Act or leaving them under their own Act, with certain restrictions, the wiser choice is to let them retain their own Act with the amendment proposed in this Bill. As a result of the discussions and the consultations which have taken place a compromise has been arrived at between the building societies and the authorities which appears to have satisfied both sides. But here again, a certain number of the provisions of this Bill, are more strict in a sense. Whilst one does not want to hamper in any way any important work done by building societies in the way in which things have developed in recent years, spurred on by intense competition amongst one another, they have undoubtedly gone further than they were originally intended to go and gone beyond their original functions. Therefore it is necessary that there should be some attempt, in the words of the committee’s report, to guide them to concentrate on their original function which was to canalize personal savings into the building of homes and houses. This Bill makes it clear that in return for being allowed to have their own Act and not being brought under the Banking Act, the restrictions which are being placed on the building societies are really very mild and certainly not in the least likely in any way to hamper or discourage any general activities for which they were originally established.
Towards the end of his speech the hon. the Minister referred to the provision in this Bill which will enable building societies to undertake insurance which is a new departure. I understand that amendments the Minister will move at a later stage will even go a little further than the Bill itself in regard to insurance work. On the whole I think the building societies have a good Bill. I think they have had a very reasonable deal from the authorities. Providing the building societies realize what their real function is and do not allow the intense competition which exists amongst themselves to lead them in any way trying to get round the provisions of this Bill, as happened in the past, I think this Bill will serve a very useful purpose. Here again we are creating an instrument which, if properly used, will be very valuable, I think, but I also think that it will need to be watched to see how it works and, if necessary, we may have to amend it in future.
The rapid growth of the building society movement in this country has brought about a set of circumstances which has necessitated the introduction of this Bill. I think no greater compliment could be paid to the building society movement, as such, than that accorded to them in the report of the Technical Committee now before us. It would be interesting to see what they say after a very analytical survey of the building society movement in this country. This is what they have to say—
Then they go on to deal with what, I think, is a very important aspect of our discussions here this morning. They say—
I do not think any praise could be more justified than that given by this committee of experts, and I think it is one of which the building societies of this country can be justifiably proud. I believe it is something they well deserve. As the Technical Committee states, the criticism has in many cases been unfounded.
To determine the extent of the public confidence in the building society movement we need only refer to the case of a certain building society which was founded only 12 years ago, in 1952. Within that period of 12 years, the total assets of that building society has increased to R80,000,000. I think that indicates the public’s confidence in a well-established and efficiently-run building society movement such as we have in South Africa.
It is also interesting to note that in the past 25 years, the total assets of building societies have increased from roughly R75,000,000 in 1936 to R1,372,000,000 in 1962, which is the last report in respect of which figures are available. That constitutes an increase of roughly 1,800 per cent over a period of 25 years. As against this progress, what is the tendency amongst commercial banks? Here I think one has to look for the reason why there has been some degree of opposition against building societies from commercial banks. In 1942 the commercial banks held 60 per cent of the total assets of deposit-taking institutions in this country. In 1963 that has dropped to 38 per cent. What do we, however, find as far as the building societies are concerned? In 1942 the building societies held 22 per cent of the total assets of deposit-taking institutions, and in 1963 that had increased to 38 per cent. I think this shows the extent to which commercial banks have lost ground relative to other deposit-taking institutions, particularly the building societies. In this regard the building societies have shown a progressive outlook, and spurred on the commercial banks have adopted a less orthodox and a less rigid approach to commercial activities in this country. I think it can be said that banks have been resting on their laurels for years; they have been too hide-bound in their approach to attracting savings and new business from the public. One only has to visualize what is happening nowadays in building societies and near-money institutions where you have usherettes receiving the depositors—something which would have been looked upon with a frown by orthodox banking circles ten years ago. These innovations are to be welcomed, and I think that is one of the reasons why more money has gone to building societies, and that type of institution, than to banks. It is only recently that banks have gone in for large-scale advertising, e.g. filmlets, etc. That was totally alien to banks many years ago. It is necessary that commercial banks and the like should make their facilities known to the public. We always pictured commercial banks as massive stone buildings with granite facings. That too has fallen away, Sir. As a result of the competition from building societies and similar organizations we now have bank buildings with plate-glass windows which show a more attractive front to the public, thereby inviting customers to come to them. I think it is a healthy state of affairs in a young country such as ours, to have this development of competition spurred on by other organizations and thereby compelling commercial banks to keep up with present tendencies.
There has been criticism of the success of building societies being able to attract money, which in the ordinary way should go into the hands of commercial banks. It is only because of the highly efficient manner in which these building societies conduct their business activities to-day, that they are able to make the progress they do. It is interesting to know the very low margin on which these building societies operate on the average throughout the country. In 1958 the average cost of their funds amounted to 4.7 per cent, while the average interest and receipts amounted to 5.8 per cent, leaving a margin of only 1.1 per cent on which the building societies operated. I know it will be said that because of the vast volume of funds which they handle this 1.1 per cent can be regarded as a sufficiently high profit margin. But it is a very delicate balance indeed, and I feel it is a tribute to the building societies for the capable manner in which they operate. One must also keep in mind that since 1959 the building societies have come in for payment of income-tax and stamp duty; two features of which they were free prior to 1959 and which certainly militate against excessive profits.
When discussing the highly efficient manner in which building societies operate and why I am pleased that the Technical Committee has seen fit to let the building society movement carry on under its own steam under the present Building Societies Act, one must also scrutinize their policy of lending. It is interesting to note that the repossession of properties by building societies throughout the country, is very very small indeed. I think the test of a business undertaking’s efficiency is its loss potential. In the case of building societies this represents the number of properties it has had to repossess as the result of arrear payments by borrowers. We find that in 1962 only R6,174,000 in the form of sold and unsold properties in repossession was in the hands of building societies. Of this amount approximately R2,500,000 was in the form of properties unsold. This represents a percentage of 00.2 per cent of the total assets of all building societies! An excellent record.
Whilst talking about the low percentage of repossessions, I should like to exchange views with the hon. the Minister on the question of increasing the percentage amount which a building society is allowed to lend to a borrower on mortgage. At the moment they are restricted to only 75 per cent of the purchase price of the property. I feel that with the high increases in purchase prices, and the increases in the cost of building, that 75 per is too low. We could with safety amend the Act to bring that up to 85 per cent. Take the case of an average house which costs R8,000. This is a medium-priced house to-day. On that purchase price the borrower will have to put down a minimum of R2,000 plus a percentage of his transfer costs, a certain amount of which, in terms of this amending Bill, can in future be advanced. He has an immediate outlay of possibly R2,500. It is difficult, under present-day conditions, for an average middle-class salaried person to find R2,500 for the purchase of a home. I am quite surprised that this aspect has not been dealt with at all by the Technical Committee. The hon. the Minister did not either refer to it in his remarks. I would like to commend to the hon. the Minister that this suggestion is going to encourage home purchase in this country. I do not think there is undue risk in increasing that percentage to 85 per cent, particularly in view of the fact that, as I have indicated, only 00.2 per cent of the total assets of the building societies constitute unsold repossessions.
I should also like to bring to the attention of the Minister the fact that the period of repayments of loans is to-day very restricted in the hands of building societies. The practice of most building societies is to lend over periods of 18 to 20 years only. With the increased cost of living, it is becoming extremely difficult to be limited to a period of roughly 20 years. In view of the fact that the Minister is considering consolidating the legislation next year I think the period should be extended to 35 years. I am aware the present Act does give increased jurisdiction over and above the 20 years to which I have referred, but it has become the practice of building societies to limit themselves, for safety and precautionary reasons they say, to approximately 20 years. I would like to see official encouragement given by building societies to extend that period considerably in practice and effect. One way we could do so, is to indicate to them that that should be their practice by amending the Building Societies Act and extending the period to 35 years.
I think the hon. the Minister is to be congratulated on accepting a recommendation from the Technical Committee whereby recognition is now given to flats as residential units. There has for many years been prejudice in the building society movement and lending institutions against flats as such, for mortgage purposes. This Bill now provides that where over 50 per cent is for flats the building can truly be regarded as a “residential” building, as far as the Act is concerned. This recognition is going to give an impetus to building, and it is something for which the hon. the Minister is to be congratulated. The Minister and the Technical Committee also have been realistic and correct in giving recognition to the high increase in the cost of building, by increasing the amount of advances from R10,000 to R15,000 on dwellings. They thereby recognize the high increase in the cost of construction of dwellings, and instead of restricting borrowers to loans of R10,000 we now find that R15,000 can be regarded as the maximum beyond which it will be necessary for building societies to restrict themselves to a stated lending percentage.
Sir, whilst the recognition by the Technical Committee of the present day tendencies in the property market is to be welcomed, I am, however, perturbed that the Bill limits the amount of savings that can be accepted by building societies to R6,000 only. The position has been that building societies up to now have been able to accept up to R10,000 maximum from any one depositor, and it has been a satisfactory facility in commercial circles to have this money available on savings account. It would be interesting to hear from the hon. the Minister why R6,000 has now been accepted as a maximum that can be deposited with building societies. Is it an arbitrary amount that the hon. Minister has arrived at, and could he indicate to us why he has seen fit to drop from the R10,000 to R6,000? Another criticism that I have against the Bill as such, is that I feel it makes unnecessary inroads, and cramps the lending style of building societies by legislating that no companies, private or limited, shall be allowed to conduct savings accounts with building societies. At present, roughly R140,000,000 is invested with building societies by public companies, private companies, insurance companies, associations, clubs and the like, and unless these people felt justified to invest this money with building societies, they would have gone elsewhere to get a higher rate of interest and possibly better facilities. The mere fact that these people have seen fit to invest so much money with building societies serves to indicate that they fulfil a justifiable requirement, and now to arbitrarily say that they cannot invest that money with building societies, is in my opinion an unnecessary harsh restriction. We also find that agricultural control boards, for instance, have invested their money with building societies on savings account, and so have a large number of local authorities and public bodies. I would like the hon. Minister to reconsider this matter and not place this unjustified limitation on building societies.
We appreciate that building societies are in a particularly difficult position in that they have to borrow short and lend long, and we must provide—I have my doubts whether the Bill will achieve that—that where you have lean years and fat years, undue ups and downs in building society lending should be eliminated as much as possible. We have experienced in recent years that at one stage there was a surplus of money available and building activity went on unrestricted. Suddenly, within a matter of three or four months, there were heavy withdrawals and a shortage of capital in the building society movement resulted. Building loans were consequently not available with resultant disorganization in the building trade and in commercial circles. In some manner or other this unsatisfactory feature should be eliminated and organized in a better manner, and there should be a more steady flow of lending by building societies throughout the year.
With those comments, I would like to associate myself with the congratulations expressed to the Technical Committee for an excellent report; on a very fine compromise they arrived at in respect of a difficult problem, vis-a-vis building societies and the banks. I think they have indicated to banks and similar institutions that they have to pull up their socks, to be more progressive in the lending field, with the result that as time goes on we are going to have a very much improved and more healthy situation in the financial world.
There is one matter in respect of which I can agree with the hon. member for Springs (Mr. Taurog) and that is that I think that these two Bills are a very fair and equitable solution to the matter which was given to them to decide on. I think they have succeeded—of course it was a question of give and take—in their task. There was a time when I was a little bit impatient. After all they were entrusted with this task in 1961, but I know that they have not wasted time unduly, that they probed this matter very carefully, and they have done their best to find, sometimes by a bit of a laborious process, a suitable basis, a basis which is both fair and equitable to the two sides. Now, Mr. Speaker, I do not propose to deal with the other suggestions that the hon. member for Springs has made. The building society movement is a very important, and if I may say so, a very independent movement. They have a lot of discipline and if they want to make any suggestions through their organization they can put forward such suggestions for an amendment of the Bill at any time and such suggestions will be considered by me.
Motion put and agreed to.
Bill read a second time.
Third Order read: Committee Stage,—Co-operative Societies Amendment Bill.
House in Committee:
On Clause 1,
When we discussed this Bill at the second reading stage, I think we on this side of the House made our position on the Bill very clear, but to obviate any misunderstanding, I would like to move the following amendment on this clause—
I think the reasons for moving this amendment are quite obvious. The hon. Minister’s aim was to legalize the position which according to what he had to say, already existed, namely that certain co-operative societies were already engaged in the manufacture of agricultural machinery and also to repair agricultural machinery and implements in workshops. Now according to the hon. the Minister there was some doubt as to whether in fact they had that right. We also expressed our doubts that this might in future open the door too wide and in the future co-operative societies might become more and more engaged in the manufacturing of farm implements and machinery. For that reason we are prepared to move this amendment. We are prepared to assist the Minister to legalize the present position where rights have already been given to certain cooperative societies to treat and to manufacture farm implements and machinery. In the future, after the promulgation of this Act, if this amendment of ours should be accepted, those who intend to manufacture must come to the hon. Minister and get his specific approval before they can embark on the manufacture of farm implements. We move this amendment because we want to make the position quite clear. We know that there is a commission of inquiry sitting to-day going into the encroachment of co-operative societies on private industry and commerce, and we feel that the responsibility should rest specifically on the hon. Minister before allowing any future co-operative society to manufacture farm implements and machinery. I think by moving this amendment, we on this side of the Committee are making it perfectly clear that we are not against legalizing the present position where co-operative societies have already been allowed to manufacture, but that the utmost care should be taken in the future before allowing further co-operative societies to embark on this sort of industry. I think the farmers outside will know too that we are always prepared to assist them and to help them.
If you do not say so, they will not know.
I think the farmers know, and they know too what private industry and trade outside has done for them, and in many cases where farmers have been in difficulty, private industry and the trade have carried farmers for numbers of years before the State or co-operatives were there to assist them. To assist the farmers and to assist the hon. Minister to legalize the position I move this amendment.
Business suspended at 12.45 p.m. and resumed at 2.20 p.m.
Afternoon Sitting
To a very large extent I can understand the hon. member’s motive in moving this amendment, but in actual fact he will be achieving absolutely nothing with this amendment. The position is that every co-operative society must have its own statute which has to be approved by the Minister. Its existing statute provides that a co-operative society may do certain things, and that provision has always been interpreted by us as meaning that it may also do the things for which we are making provision in this Bill, but some doubt has arisen as to whether that is permissible under the Act. That is why we are amending the Act. In other words, any co-operative society which in the future wishes to continue to manufacture what it is manufacturing at present will be able to do so but a co-operative society that wishes to do so in the future will only be able to do so with the approval of the Minister. Co-operative societies which have not engaged in manufacturing activities in the past and which wish to manufacture in the future will have to amend their statutes, and such amendments will have to be approved by the Minister. If the Minister does not approve, it will not be able to manufacture, and that is precisely what the hon. member asks for in his amendment, namely that no co-operative society should be allowed to manufacture in the future without the written permission of the Minister. That is already the position to-day. The hon. member’s amendment therefore makes no difference to the existing position. I see no reason therefore why this amendment should be accepted. It would only be a double guarantee. The intention underlying the amendment to the Act is certainly not that in the future the Minister must allow every co-operative society to alter its statute so that it may have these powers. Just as the power which we read into the Act in the past was used by different Ministers to grant these powers in exceptional cases, so this power will be used by the Minister in the future to grant this right in those cases where he considers it absolutely necessary to do so. I see no necessity for accepting this amendment therefore.
I should like to ask the hon. the Minister to reconsider this amendment. Let us assume it is a fact that it will be a double certainty, why then not make doubly sure? We are dealing with an industry, and in the amendment now introduced in the Act, industry may construe the matter as if we as farmers now want to enter industry. The hon. the Minister has explained that the memorandum of a cooperative society will have to be amended in the cases where they are not already manufacturers. The co-operative society will therefore have to come to the Minister then. The amendment of the hon. member for Port Elizabeth (West) gives the double assurance, and it is worthwhile that we as farmers should give industry that assurance if we can do it. The hon. the Minister sees no harm in the amendment, he merely regards it as a double certainty. A double certainty has never been wrong in my view, and I should like to ask the hon. the Minister to reconsider the matter.
It seems very clear to me that the hon. member for Drakensberg (Mrs. S. M. van Niekerk) is much more concerned about industry than about agriculture now. I cannot understand her argument at all. The hon. the Minister has just explained that what is sought in the amendment already forms part of the law. I am assuming that the hon. member for Drakensberg is familiar with the Co-operative Societies Act. Surely she is a member of a co-operative society! But according to her argument, she is not at all aware of the fact that every co-operative society must have its own memorandum of association before it comes into being, and these memoranda must be approved by the hon. the Minister; that is provided for clearly in the Act. Why should we now insert the same provision in the Act twice? Before the cooperative society to which I personally belong, can proceed to do something of this nature, it will have to come to the Minister for approval. That is the law. Why now give industry a special assurance? The farmers are the greatest supporters of industry in the country. Why should it then be necessary for a special assurance to be given to industry as if there will be bad feeling? We accept the Bill and that is that.
I cannot understand the argument of the hon. member. The whole object of this legislation is to bring about certainty. The amendment also seeks to effect certainty. The hon. the Minister thinks that even this amendment of the Act is not absolutely necessary, but his legal adviser tells him that there is some doubt, and for that reason they are bringing forward this legislation. We also think there is some doubt regarding the point we are putting, and therefore we wish to bring about certainty there also. We are interested in industry, in the same way that we are interested in agriculture, and we should like the two to co-operate, and we do not wish to do anything that will prejudice the good co-operation between the two. If the Minister sees no harm in it, let him then please accept it.
For the sake of clarity I merely want to repeat that the Co-operative Societies Act mentions certain things which can be done by co-operative societies. Co-operative societies are established to do certain things. It cannot do everything provided for in the Act, but only those things which have been incorporated in its memorandum of association. The things which may be incorporated in the memorandum are subject to the approval of the Minister of course. In other words, the Act confers certain powers, but the memorandum must be approved by the Minister as regards every cooperative society. Therefore, what is provided for in the memorandum has to be approved by the Minister. But the Minister cannot approve something not authorized by the Act. If the Act were to authorize a co-operative society to manufacture as we have always construed it, it does not follow that any cooperative society now has the power to manufacture those things. It is what the Minister allowed because he was under the impression that the Act empowered him to do so. As the Act is being amended now, every one of those co-operative societies will now have to insert in their memoranda those words which will authorize them to manufacture, and they can do so only with the approval of the Minister. Even if we were to make this amendment, and I were to refuse to authorize those co-operative societies wishing to manufacture to amend their memoranda so as to include those words, they will not be able to do so either. Any new co-operative society desiring to include these objects in its memorandum, will have to get the Minister’s approval to do so, and if the Minister does not approve, it cannot do so. That is the very thing hon. members are asking for here, that any new co-operative society should only be able to do so if the Minister approves, but the Act already provides that it can only do so with the approval of the Minister. Why should we then insert it in this clause again? That is the whole point. The Act provides for the very thing the hon. members are asking for. The Act clearly states that co-operative societies cannot alter their memoranda of association without the approval of the Minister. But even if we were to accept this amendment, and the interpretation is correct that in the past it did not have the power to do so and I were to refuse to permit a co-operative society already manufacturing to amend their memorandum, they could not do so either. In other words, this amendment is part of the law already, and I see no sense in repeating it in the Act. That is the whole point and I hope hon. members follow it now.
Amendment put and negatived.
Clause, as amended, put and agreed to.
Remaining Clauses and Title of the Bill put and agreed to.
House Resumed:
Bill reported without amendment.
Bill read a third time.
Fourth Order read: Committee Stage,—Agricultural Produce Export Amendment Bill.
House in Committee:
Clauses and Title of the Bill put and agreed to.
House Resumed:
Bill reported without amendment.
Fifth Order read: Committee Stage,—Fruit Export Amendment Bill.
House in Committee:
Clauses and Title of the Bill put and agreed to.
Sixth Order read: Committee Stage,—Marketing Amendment Bill.
House in Committee:
Clauses and Title of the Bill put and agreed to.
House Resumed:
Bill reported without amendment.
Bill read a third time.
Seventh Order read: Resumption of Committee of Supply.
House in Committee:
[Progress reported on 2 June, when Votes Nos 1 to 36 had been agreed to, and Revenue Vote No. 37,—“Agricultural Economics and Marketing (Administration)”, R1,696,000, was under consideration.]
The hon. member for Somerset East (Mr. Vosloo) in an attempt to use his full five minutes before the adjournment last night, drew all kinds of strange inferences from my ten-minute speech. The hon. member suggests that we are proposing that all agricultural products should be subsidized now. The hon. member, of course, is quite entitled to draw his inferences, but on condition they are intelligent and have a bearing on the matter under discussion. But the hon. member launched a tremendous attack on the system of subsidies. I now expect the hon. member for Somerset East to propose—one cannot propose any increase in funds in the Committee, but one may propose a reduction—under Vote 38 that all forms of subsidy granted by the Government be deleted. When we refer to Item A on page 233, there is a subsidy in respect of dairy products to an amount of more than R4, 000,000 and in respect of wheat to an amount of more than R13,000,000 and in respect of fertilizer to an amount of more than R3,000,000. If the hon. member really is so convinced that the principle of subsidies is wrong, he ought to move that these items be deleted from the Estimates. I think only an absolute fool will move that subsidies are to be paid for products not requiring it, or to increase it in the case of products where there are no economic difficulties. The hon. member was correct in only one respect, and that was when he said that subsidies frequently are necessary in a transition stage, and that is precisely what is happening in South Africa at the present time. That is the difficulty in which the dairy farmers, and the grain farmers such as the mealie farmers are to-day, because there has been a tremendous increase in production of their product, and no corresponding increase in consumption of their products. For that reason those people are in difficulties at the present time, and the only way out the Government has thus far always had (thanks to the change of heart the Minister has undergone during the last month or two), was to reduce prices. But you can only try to keep those people on the land if you regard surpluses as a temporary phenomenon. Sooner or later we shall require more producers in South Africa, for the whole world is moving in the direction of a population explosion, and more and more food will be needed to keep the people alive. Now, in consequence of the policy we are pursuing, we are causing more and more people to leave the land, while within 15 or 20 years we shall need more farmers to feed all the mouths in South Africa. Because surpluses are a temporary phenomenon, the State has throughout the years decided that the best way to keep people on the land is to subsidize the consumer, and all we are doing is to ask whether the hon. the Minister is doing enough in that respect. Take cream. When there was a fantastic production, and everybody was encouraged to stock better milk herds, a surplus developed and the price was reduced immediately. Now there is a shortage again, and the price is pushed up again. But in the meantime thousands of rands have to be spent on the importation of cheese and butter. The hon. member for Somerset East, who is so bitterly opposed to subsidies, is willing that the State should assist us by means of subsidies to have enough butter. Now we ask the Minister: Why not look after the South African producer so that we can see to it that there will always be enough butter, and that the milk producers will not always be in difficulties Now their prices have also been improved, but in the meantime many of them have gone out of production because they have to be satisfied with low prices.
Is that the only reason?
No, there are other reasons, but that is one of the principal reasons. In view of the downward tendency in prices, we find that the production of many products has become quite uneconomic to the producer, and they are discontinuing production thereof. At the present time there is a shortage again, and for that reason there is an increase of prices, and in addition imports which involve greater losses to the State, and there is an increased price for the consumer. I should like to ask the hon. members opposite whether they think this is an ideal position? Should we not assist the people to ensure that there will be stability in their industry? That is all a subsidy system will bring about. No, the difficulty is that the Government knows it is the only solution, but they are busy counting the teeth of the Opposition. They want to see what our reaction is and what we will propose, and because we have been proposing this during the last few years, we are now conditioning the public. I shall not be surprised, as the Opposition are now giving the lead, if in the next Budget we shall have a considerable increase in subsidies because that is the only way in the transition stage. As soon as there is an increase in consumption, the position will rectify itself, and we hope the time will come when the consumers in South Africa will be in such a position, and will have such a tremendous purchasing power that they will be able to provide the farmer with a decent standard of living.
The hon. member for Port Elizabeth (West) (Mr. Streicher) is running away from the submission he started with yesterday. Yesterday he said our agriculture should be changed in such a way that all the farmers, irrespective of what they produce, should receive sufficient compensation and a secured price for their products, and that the Government should then subsidize the difference which exists as a result of the fact that the consumer cannot buy it, or as a result of over-production. That is the only submission made by the hon. member yesterday, and now I should like to ask him at once: Does the United Party want to get away from the Marketing Act? Let them tell the Committee that they want to repeal the Marketing Act, the Act which provides that for all the controlled products—and 76 per cent of the products in South Africa are controlled—there shall be a proper cost survey, and that the farmer is assured of receiving his costs plus his entrepreneur’s wage. If the hon. members wish to run away from that Act, they must realize there will be chaos. Then every man will be able to produce as much as he likes and he will receive for it what he believes is the proper price, regardless of what he paid for his land, and whether it is judicious or injudicious or economic or uneconomic. Then the people will produce without control and the taxpayer will have to pay the difference by way of subsidy. The hon. member should not run away from that submission of his. He says if we disagree, we should delete Vote 38, which provides for a total subsidy of R38,000,000. But does the hon. member not know that dairy produce, wheat, fertilizer and maize already receive a subsidy which makes it easy for the consumer to buy, and that it is not a subsidy to the producer? In other words, under the Marketing Act it is provided already that the producer should receive his expenses plus his entrepreneur’s wage, and because one knows that the consumer will be unable to buy some of these things, this subsidy is being paid. Now he wants to delete it, and he wants the producer to go to the Government every year and ask for a subsidy as charity. He must not have a properly organized marketing system. No, he must be dependent on charity every year, the subsidy to be paid by the taxpayers. He must be dependent upon the Minister of Finance, without the Minister of Agriculture, who has a proper system, having any say.
He says the only way out this Government had was to reduce prices when there was overproduction. Let him tell us when the Government reduced the prices of wheat or maize? And those are two of the principal products. Yes, the prices were reduced under the regime of the United Party when the Marketing Board recommended that it should be increased, but under this Government it has always been maintained properly.
Now the hon. member mentions butter as an example, while his own Press, the Sondagstem of last Sunday, comes along with bold type: “The scandal about butter”, because butter is imported and the price has been increased for the consumer, and he cannot buy margarine. They cannot always sit upon two chairs.
But I have really risen to congratulate the Minister and his Department with this new brochure “Boer Winsgewend” (Farm Profitably). I think it is one of the finest things produced in recent times, because it deals with economic research and reads easily. It mentions the various choices facing the farmer, with photographs. The one choice a farmer has, e.g. is between Sannie and Helen and Catherine and Molly, and now he has to decide which one he should take, and he must determine: This one will make a henchman of me. This one will educate my labourers to such an extent that they will be unwilling to clean my stable, for they will consider it beneath them; and the other one will be jealous because I shall have taken too much notice of the other, and the fourth will possibly allow me to starve, but in a genuinely scientific manner she will try to convince me that I should purchase a milking machine in order to milk one cow. I am mentioning this booklet because it is a splendid example of how information can be imparted to a farmer in an interesting manner, something he can read easily, because many farmers will rather build a dam than read.
But I should like to mention another matter. In this booklet it says that when a farmer has to produce, he must ascertain how profitable it is going to be to him to produce maize. Then it says that if you get 19 bags per morgen or 10 bags per morgen, the soil building crops for the first is 24 per cent and for the second 17 per cent, and the fertilizer you used when you had 19 bags was 440 lbs., but when you had only 10 bags it was 302 lbs. Then it mentions the operating cost, and then it calculates the net income. If you used 440 lbs. of fertilizer, and your operating costs amounted to R11.60, and the cost of seed was R2.10, you will get 9.2 per cent interest on your capital. But if you used 302 lbs. of fertilizer, and had less operating expenses, and sowed a poorer quality seed, namely R1.50 a morgen, then the interest on your capital is only 4.6 per cent. In other words, here is information in an attractive form, so that the farmer can see it pays him better to use more fertilizer and to hoe more, and it does not pay him to economize injudiciously. In this booklet there also are several examples of farming with silo feed and dry land. It is such an attractive booklet, costing only 25c, that every farmer ought to buy it. Honeyball’s mouth will water if he were to see this booklet and if Fanus were to see the contents of this booklet every morning he could provide a national information service for the farmers. [Time limit.]
May I have the privilege of the half-hour? The hon. member for Wakkerstroom (Mr. Martins) distorted the language of the hon. member for Port Elizabeth (West) (Mr. Streicher) in the customary manner.
Order! The hon. member must withdraw that at once.
I withdraw. He gave a distorted version of what the hon. member had said, and then he read from a little book about Helen and Molly and said nothing original. He asks whether the hon. member for Port Elizabeth (West) and this side are now running away from the Marketing Act and from the cardinal principle that the producer should receive his costs of production plus his entrepreneur’s wages, and whether we wish every person to produce just what he likes and there should be a price for it—I do not know how the price is to be fixed—and the Government must subsidize the consumer. I cannot imagine so much nonsense after this party has time and again said that we, like hon. members opposite, cannot see how we can create order in agriculture unless we have the Marketing Act. However, I shall revert to the arguments of the hon. member for Wakkerstroom later on when I discuss the Marketing Act, and on boards which have been appointed under the Marketing Act, and on the question of price determination, etc. At the outset I should like to say that we have now reached the Vote, namely Agriculture, from which a large percentage of members opposite and their dependants, as well as a large percentage of the members on this side of the House, make a living. Here we are dealing with an industry in which the people engaged in the industry are not enjoying a proper share of the present prosperity of the country. I should like to see us conducting this debate here this afternoon in the way that debates are conducted in other councils of the country; let us discuss the merits of the matter and let us see whether everything is in order in agriculture. Let us see whether we can do more for agriculture departmentally; let us ask ourselves whether the fault does not perhaps lie with the farmer himself, and whether there is something wrong in respect of the costs of production or consumers’ prices or in respect of the margins of profit? Why do the agriculturists in South Africa unlike agriculturists in other countries of the world, not get their proper share of the prosperity of this country? We should ask ourselves where the fault lies. I should like to analyze the matter for a while, and after my analysis of the position I shall try to state the prerequisites for a sound agricultural industry. I do not think there is substantial disagreement between hon. members opposite and members on this side in this regard. In the first place it must be possible to produce economically. The second prerequisite is that the agriculturist should be encouraged to produce to the maximum, because if he can produce economically and can achieve maximum production, he must later on reach a basis on which he can make a good living. The third prerequisite is that one should do everything in one’s power to see to it that there are markets for the products one produces. The fourth is that the agriculturist must get the maximum protection, for he is carrying on industry involving the greatest risk, not only in this country but in any country throughout the world. We are dealing here with an industry in which 65 per cent of the population participated 30 years ago. To-day the percentage is a mere 17 per cent, but these 17 per cent have to produce food for the population of more than 80 per cent of the White occupied land of this country. That is the responsible task resting on their shoulders, and in addition they are running greater risks than entrepreneurs in other industries. Agriculture from the nature of things is an industry involving great risks. This may also be said of all countries in the world, but in this country with its uncertain climatic circumstances and its periodic droughts agriculture involves even greater risks. I am not suggesting that the risks in South Africa are greater than those in Australia or other countries which have equally large desert areas and arid parts, where they sometimes have a high rainfall and sometimes a low rainfall. However, it remains a fact that the risk involved in the agricultural industry in South Africa is greater than that in many other countries. On a previous occasion I stated here that this Government has not done everything in its power to develop the internal market to the fullest possible extent, and this Government has still less done everything in its power to develop overseas markets for us. Thus far this Government has not yet found any permanent solution or a solution of lengthy duration for combating droughts in this country.
Do you have a solution?
I shall come to that later on. The fourth point I wish to make is that this Government has always been probing around to get a positive and dynamic agricultural policy. I should like to start with No. 1, and say a few words on the domestic market and the development thereof.
I should like to have the recipe for combating droughts.
The hon. member for Port Elizabeth (West) (Mr. Streicher) began his speech here yesterday by admitting there is a Marketing Act, that there is a Marketing Board and that the prices of agricultural products have throughout the years been determined on the basis of cost of production plus a reasonable entrepreneur’s wage. That is the basis in fact, but nobody will deny that it was not possible always to confine ourselves to that basis, that norm. There have been times when it was difficult for the hon. the Minister to justify the prices recommended by the boards, based on that norm. But let us concede that that is the method by which the prices of agricultural products have been fixed whether for maize, whether for dairy produce or any other agricultural product. If that price is higher than the world price, you of course have to resort to subsidies to enable you to export your surpluses. This is done, on the one hand, by the industry itself through its stabilization fund or by levies or what have you.
Tell us something new.
The hon. members for Ladybrand (Mr. Keyter) and Christiana (Mr. Wentzel) took me to task in a previous debate because I referred to the possibility of the subsidization of surplus products exported overseas by means of levy funds collected by the farmers themselves. They asked whether the Wool Board could be expected to use the levy funds collected by them in order to subsidize the export products of the agricultural industry? Well, I do not wish to tell them they should use it. In the case of the Wool Board you are concerned with a stabilization fund which has been established to intervene and buy in wool when the price of wool drops on the world market, and then to sell it at a later stage again when the market conditions are more favourable. In the case of other industries it is a horse of a different colour. There we are concerned with funds which are intended to be used to subsidize exports. We may argue as we wish that we are not subsidizing consumers in Japan or in Mexico or elsewhere, but the fact remains as plain as a pikestaff that if the South African product is made available to the consumer overseas at a price which is lower than the price the domestic consumer has to pay …
A product such as what?
Such as maize.
… then it should not be said the farmer is being subsidized; the consumers in this country are being subsidized. [Interjection.] Mr. Chairman, all these members who are putting questions to me here now, will be given an opportunity to speak themselves. Then we come to the point made by the hon. member for Port Elizabeth (West) here, when he said that if the price which is determined according to the norm I referred to here, is too high for the foreign markets to absorb that product, and one is then obliged to subsidize that product in order to be able to export the surplus, why not then also subsidize the price internally, because by doing so you will push up the domestic consumption, and if you do so, you are doing exactly what we on this side have been advocating. Sir, nobody will deny that the consumption of maize has remained almost static during the past two or three years while the production, with the exception of last year, went sky high. Why did the consumption remain static? I am putting this to the hon. Minister categorically: If the price to the consumer could have been reduced, surely he would then have consumed more and then there would have remained less for export, and if less had been exported, less money should have been taken from the stabilization fund of the Maize Board for the purposes of subsidization. Surely that is sound economics; in fact it is elementary economics.
Having said that this Government has not done everything in its power to encourage the domestic consumption, I now wish to deal with external consumption. How can the hon. the Minister justify this, at this stage of our history where we already have had and still have large agricultural surpluses, and where we may easily have great surpluses in future again, that he and the Minister of Economic Affairs have thus far not been able to do better than to appoint two agricultural attachés overseas? How can he justify that in a country like South Africa which from time to time has large surpluses to export—surpluses of maize and surpluses of dairy products or whatever we wish to export, and which may also have large surpluses of meat, but I shall come to that later one. South Africa has two agricultural attachés in England and in Washington alone, but we have no agricultural attaches in Italy and Germany. Is that the best effort we can make to find export markets for out products? Why can we not appoint agricultural attachés in the Western countries to exhibit our products there? Mr. Chairman, that is not all either. Hon. members opposite who have had the privilege to travel overseas, will have seen that the other producing countries such as Canada, Australia and New Zealand maintain show windows in countries like England, Italy and France to advertise their agricultural products. In the case of Australia you find that the six separate states each have their own large show windows overseas, with the necessary staff to explain to people overseas what Australia produces, and what they can export and in what quantities. Apart from the fact that everyone of the six states maintains such show windows, the federal government of Australia also has further show windows overseas. Do you know in how many countries we have such show windows? I shall give the hon. the Minister an opportunity to tell the committee, in how many countries do we have show windows indicating that this country also wants to export certain products? This is the reason why I am saying that the Government has dismally failed to give our products publicity overseas. Let us admit that had it not been for Cuba, as regards our sugar, and had it not been for Japan which has bought 8,000, 000 bags of mealies from us, we would have been stuck with the problem of finding overseas markets for these products.
While I am dealing with products, I cannot omit to refer at this stage to the failure of the Government in connection with one product in particular, namely meat, and here I should like to revert to the argument of the hon. member for Wakkerstroom in connection with the Meat Control Board. I said the Minister is the pinnacle of the pyramid and that under him there is a Marketing Council consisting of a few members, a Marketing Council established, not in collaboration with the agriculture, but by the Minister. The task of this Marketing Council is to advise him in connection with the correlation of prices and in connection with price determinations. How many times has it not happened already that members of the Marketing Council attend the meetings of control boards and not only listen to the discussions but frequently participate in the debates and influence the control boards in connection with the prices they propose? Then we come to the constitution of the control boards themselves. Are they still producers’ boards? The Marketing Act provides that these boards should be producers’ boards, consisting of producers for the greater part. That is no longer so at the present time. I am thinking of the Meat Board for instance, and the constitution of the Meat Board, and the difficult that board has to make a recommendation in regard to almost any matter. Sir, I am not the one saying this; let me read to you what is written in the report of the South African Agricultural Union—
These are representations which have been made to the hon. the Minister—
I must accept that this was the Minister’s reply, or something to this effect, but the fact remains that several of these boards are already so constituted that they have the greatest problem in the world to make recommendations to the Minister not only in regard to price determinations but also in regard to the scheme to be administered under the Marketing Act.
Are the majority not producers?
The majority are producers but their majority sometimes is so small that they are unable to make proper recommendations.
Mr. Chairman, I revert to the meat scheme as such. I know I have the Minister’s sympathy in this connection. As long as we have a meat scheme in this country under which you send an animal into a controlled area where it is slaughtered and auctioned thereafter, we will not be able to build up our animal population. Is the breeder or the producer who wishes to feed and fatten that animal, permitted to go into that great market and to purchase breeding stock? We are in this country even eating up our breeding stock, for the animal is sent to the market, it is slaughtered there, and it is then auctioned on the hook.
Can you tell us what percentage of breeding stock is slaughtered?
I do not know what percentage of breeding stock is slaughtered, but I know that every farmer menaced by drought and who is obliged to sell cattle, also sends his cattle to the market, regardless of whether they are breeding stock or not.
Let that hon. member read the report; all that is dealt with in it.
It is not necessary for that hon. member to point his finger at me; he can rise and speak just now. A large number of our breeding stock are slaughtered at our controlled markets, and as long as we permit an animal to have its throat cut first, it is not possible to buy it for breeding purposes. As regards sheep, is it not a fact that many farmers in the South-Western districts have in recent years begun to practise mixed farming, and begun to practise sheep farming, with their crops? They have done so partly with a view to rotation cropping and partly because it is a cheap form of fertilizing their lands. However, in spite of this the numbers of the sheep population have dwindled. Would we say that this is due only to droughts, or would we say that sheep farming does not pay? Whatever the reason may be, something went wrong somewhere, for the sheep population has been reduced considerably. We have stepped up our maize production to double the previous production; the area under maize stalks and spare feeding therefore is twice as great as before. There is so much more grazing available at the present time; there are so many more lands which could be used to fatten cattle, and yet the cattle population is dwindling. Have we not, as regards our animal husbandry, done something during the last few years which is a disgrace for a country like South Africa?’
What did we do?
What we have not done is to build up our stocks of cattle, and it is no use hon. members opposite being derisive. The numbers of our stock have dwindled. Notwithstanding the fact that over a period of 15 to 20 years we have pushed up the production of wool by nearly 3 lbs. per sheep, the clip is still only a 1,000,000 bales.
Come to the Marketing system now.
Mr. Chairman, if the hon. member for Heilbron wants to dictate to me what I should say about agriculture, I shall tell him just now what he should say about the Bantu. Mr. Chairman, I revert to this point, that as long as the Minister constitutes the Marketing Council in such a way that agriculture has no representation on it, we shall be faced with a problem, and as long as the control boards are constituted the way they are, where the producers have a very scant majority and afterwards become divided among themselves because some are serving on the boards of directors of companies and others on the boards of co-operative societies it is difficult for the Control Board to make recommendations. The hon. the Minister knows as well as I do that the control boards are finding it difficult to make substantial proposals in regard to the amendment of a scheme under the Marketing Act. This meat marketing scheme will never be a success. The people have already become so discouraged that they no longer even make recommendations. In fact, the board no longer even operates as a board ought to operate; it is no longer a marketing council in the true sense of the word. So much then for meat. As regards price determination, and more specifically as regards meat and meat prices, what do we find there? When we come to wheat there is a price for the consumer; when we come to maize, there is a price for the consumer, but when we come to meat, the producer of beef has to be satisfied with a price of 12c or 13c per pound, while the consumer has to pay from 25c to 40c.
Who is making the money then?
The speculator.
Let me read to you what appeared in to-day’s Farmer’s Weekly—
We are concerned with a scheme under the Marketing Act where the consumer enjoys no protection and where the producer continually has to bear the blame that he is pocketing this money while all of us know that the producer is not to blame for the price the consumer has to pay. But I should like to revert to the third point I made, and that is in connection with these continual droughts. All of us know that from year to year there are localized droughts in one part of the country or another, and some years, like this year, drought conditions prevail almost from the South Coast to beyond the Limpopo. It is no good us arguing about it. We served for months on a committee, a committee of which the present Secretary of Agriculture was chairman, to devise a scheme whereby we could combat drought conditions more effectively. As long as the Government continues to do what it is doing at the present time when we are afflicted by droughts, namely to render too little assistance and to render that assistance too late, our farmers will be ruined by droughts. The hon. the Minister asked me the other day, during a debate, whether I wanted the Government to finance people to go and buy the cattle of farmers in drought-stricken areas. What we can do is to finance farmers who do have the grazing, to go and buy animals from farmers whose animals are dying as a result of droughts. What we want is that the Minister should protect those farmers who are compelled to sell their animals under such circumstances, and see to it that they do not have to virtually give away their animals. We want the Government to do everything in its power to save these animals which die in the drought-stricken areas from year to year. In this way we shall then be able to build up our stocks of animals. Sir, my time is running out. It is no good saying, as the Government says, that the fault lies with uneconomic units and the fact that farmers pay uneconomic prices for their land. Oh Lord, Mr. Chairman …
Order! The hon. member may not use the name of the Almighty in that way.
I apologize, but I said “oh goodness” [Interjections.] It does not behove us to blame uneconomic units and high land prices. We constantly hear from hon. members opposite that the farmers are doing so well. They are lauding the Government and are continually thanking the Minister and the Department for what they are doing. But the farmers are not doing so well. It has become time for us to have a dynamic agricultural policy which will give the agriculturist security so that he also may know that when he invests his money in agriculture, he will receive a reasonable entrepreneur’s wage. When we have a Government which brings agriculture to that level, a Government which means so well by the agriculturist that it will give the agriculturist the security which any industrialist is guaranteed to-day in his industry, we shall have a Government which is worth its salt.
The hon. member who has just resumed his seat tried to show that the National Party has no agricultural policy; that no stability is guaranteed to the agriculturist. That definitely is very far from the truth, for we have plenty of evidence that the National Party has throughout the years looked after the stability of the dairy industry, the maize industry, the meat industry and all the other agricultural industries. The hon. member has said that the subsidy paid on maize really benefits the consumer of maize outside South Africa. That also is very far from the truth. The fact of the matter is that the Government pays a subsidy which benefits the South African consumer, not the foreign consumer. It is stated quite clearly here in the report of the Maize Board, and I hope the hon. member will now accept it, and that in future he will not come along and make these misrepresentations here. As regards the meat industry too, the hon. member submitted a distorted picture to the House. I take it amiss of the hon. member, for I think he knows better. The floor prices fixed from time to time are fixed in order to bring about stability. It bothers me, Mr. Chairman, that members opposite some time ago pleaded for a fixed price for meat. Had a fixed price for meat been determined, the producer of meat would have lost several million rand, because had there been a fixed price for every grade, the producer would not have had the benefit of price increases which occurred from time to time in the same way that there has now been an increase in the price of mutton. In other words, on the one hand they are pleading for a fixed price basis, and they begrudge the producer any rise in his price when the supply and demand do justify a price increase.
As regards the dairy industry, the drop in prices a few years ago is attributed to the fact that the Government is supposed to be unsympathetically disposed to the producers. Hon. members opposite will admit that during those periods when we had surpluses we had plenty of rain, with the result that we had maximum production and we had no foreign markets. They must face those facts they say that this National Party Government treated the producer unsympathetically. Now that we are able to market the full production of the dairy farmers, the National Party Government has increased the prices. In the same way the maize prices were increased because we are not saddled with a large surplus, a surplus we are unable to dispose of. This Government is also being charged with not exerting itself to find foreign markets. If hon. members opposite wish to come near the truth, they must admit that one mission after another has been sent overseas to seek markets when we have had products to offer.
This is a wonderful Government.
Of course it is a wonderful Government. The fact that that side of the House has hardly a single representative of the rural areas, is sufficient proof that the electorate of South Africa is satisfied that this side of the House is the party which looks after their interests and not that side over there.
The hon. member for Port Elizabeth (West) (Mr. Streicher) pleaded for the subsidization of certain agricultural products but he omitted to say from what source of revenue those products should be subsidized. Must the urban dweller be taxed to bring about a subsidy so that the agriculturist may have a higher price?
He is doing so now, is he not?
We are doing it in such a way that the consumer benefits by it. The hon. member will admit that the subsidy on dairy products stimulates consumption and that is to the benefit of the consumer. Hon. members opposite must not criticize the prices of dairy products because an increase has been granted now again. Prices were reduced at the time because there was a tremendous surplus and hon. members opposite could not give us any advice on how to dispose of those dairy products. I challenge the hon. member now to tell me what market we could have availed ourselves of at the time to get rid of those surpluses on a profitable basis? The hon. member has no argument.
I think I have wasted enough time in refuting the fallacious arguments of the Opposition. I want to ask the hon. the Minister something. Before doing so, I should like to say to the hon. the Minister, in my capacity as a representative of a farming community and a rural constituency, that we are very grateful to him for the manner in which he handles the problems of agriculture, and for having introduced increases where increases could be instituted. I should like to refer to certain reports and ask the hon. the Minister whether it is possible to introduce an increase in that particular respect. I feel I may take the liberty to ask this because I have just said we are grateful to the Minister and the Government for the sympathetic attitude they have adopted towards agriculture. If you look at the report of the Department of Agricultural Economics and Marketing for June 1963, Mr. Chairman, you will find that we imported oats from Canada at R4.08 per bag; that we imported oats from Australia at R3.99 per bag while the price for the domestic producer was somewhat lower. Because we do not have a surplus, as shown by the fact that according to this report we imported 144,100 bags from Canada and 95,700 bags from Australia, I should like to ask the Minister whether it is not possible to stimulate the production of oats internally by increasing the price still more? Unless I am wrong, the price of that type of grain was increased recently, but if we compare the price we have to pay for the imported article and the price the domestic producer is paid for the same grade, then I have no hesitation in asking the hon. the Minister whether he cannot in that case also bring about an increase. I know that in this case we have to maintain the proportion between the various kinds of grain. We cannot for instance pay a price for wheat which is too low as against that for oats or some other kind of grain. However, I think that in view of the figures I have mentioned here, I may take the liberty to ask the Minister to give his attention to this small matter in order to stimulate greater production.
There is another matter I should like to bring to the attention of the hon. the Minister. In the report of the Wool Board they say they drafted Estimates and submitted it to the Minister for his approval. According to those Estimates I see an amount of R4,000 has been paid to each of the Transvaal and Cape Provincial Councils, for research in connection with the combating of vermin. I am not provincialistic to such an extent that I begrudge the Cape and the Transvaal the payment of such sums for that purpose. However, I should like to refer to the latest report at our disposal on Agriculture and Animal Husbandry, 1959-60 No. R.P. 10/64. The reason why I want to ask the Minister to make available R4,000 for the Orange Free State too, or an amount as near as possible to this amount, for research in that respect, is because the following figures reveal certain facts. According to these tables, vermin in the Harrismith district alone during the years 1959-60 caused the loss of 4,340 head of small stock. [Time limit.]
One of the great disabilities the farmers of the Republic have had to suffer during the last few years has been the unrealistic prices forced on them by this Government, particularly by this hon. Minister of Agricultural Economics and Marketing. This is a disability which the dairy farmer of the Republic has had to suffer from during the last two years in particular. The cost of production has been going up over the years. Organized agriculture has appealed to this hon. Minister year after year to take a realistic view and give the dairy farmer, whether he be a fresh milk producer or an industrial milk producer, a reasonable return for his product. What did they get? Every excuse under the sun.
Last year I pointed out to the hon. the Minister that Durban was 10,000 gallons of fresh milk short daily the previous week. I asked him what he intended doing about it because milk was coming in from unregistered premises which was unfair towards those who had gone to great expense to put up premises which conformed with the regulations. His reply to me was that we had to do away with our quotas. I pointed out to him why quotas were necessary. Anybody who knows the first thing about fresh milk production will know that you have to have quotas.
Over the years the cost of production of industrial milk has gone up. Last year I approached the Minister in this regard and what was his reply? He said there was a surplus of butter, a surplus of cheese so he had to cut the price so that that surplus would be consumed because there was no market on which to sell it. We told the Minister that the surplus was very small and that it would be wiser to pay the producer a reasonable figure because they were already producing at a loss; that herds of dairy cattle were being sold and that many dairy cows and heifers were being slaughtered which was not a good thing for the country. But the Minister’s reply was that if the prices were not reasonable there would not have been a surplus. He said we had to get rid of the surplus. He got rid of it all right, but instead of helping the South African dairy farmer to remain on the land the Minister is not only losing that farmer but he is using foreign exchange to import butter from countries such as the United States of America which is a hard-currency country. Not only are we producers in this country losing out but the consumer is also losing out as well. There was no need to import any dairy products whatsoever. Had this Minister accepted the recommendations made by the Dairy Industry Control Board over the last few years, the producer of butter fat and industrial milk would have received a reasonable return.
Those were the prices of the board.
You have not always accepted the prices of the board. About two years ago when they recommended a higher price the Minister did not accept it. You always have to argue; you always argue from your seat and now you are arguing from over there. This hon. Minister did not refute it two years ago and last year he did not refute it that the producer was not getting a reasonable return on his money. He said there was a surplus and that that surplus must first be disposed of before he could pay a higher price for that product. How right he was. He got rid of that surplus all right and he is also getting rid of the farmers. If he goes on like that we shall reach a stage where we shall be forced to import agricultural products over the years and not only over one year. It astounds me when I listen to hon. members on that side of the House thanking the hon. the Minister for what he has done? Thanking him for what? For getting rid of the farmers? Thanking him for the unrealistic prices? Before this Government came into power in 1948, their policy was cost of production plus. That was the propaganda they put out. They were going to help the producer! He was entitled to cost of production plus! When have we had cost of production plus? This hon. Minister says the price of land is too high and that until the price of land comes down the cost of production will be high. But the farmer who has inherited his land is also going bust to-day, Sir. It is not only the man who has paid a high price for his land. The man who paid a high price for his land is the farmer who is producing wool and selling that wool on the overseas market; he is the sugar farmer who has an overseas market. They are not the farmers who are relying on this Minister of Agricultural Economics and Marketing to find markets for them. It is only the farmer who is selling his products overseas to-day who is really making money to-day. The rest of us have not a hope of covering our costs of production and making a reasonable living. We have all been living on our capital for the last few years. The dairy producers throughout the country over the last few years have been suffering a loss. Several years ago an interdepartmental committee was appointed to go into this matter but the Minister has refused to give us their figures; he says they belong to the Department. He refuses to give us those figures because they prove the figures quoted over the years by organized agriculture to be correct. Even after we are importing butter and cheese when organized industrial milk and butter fat producers have asked the Minister for 20c per 100 lbs. of milk as a reasonable return and just to cover their costs of production, this hon. Minister has only seen his way clear to grant them some 13c as from 1 June. During the last few months they have been producing at a loss. I know the Minister will say this is a seasonal price and that the price will shortly be higher but that is a seasonal price we have always received and it comes out of a subsidy which comes out of the producers’ levy.
What happened when we wanted butter? Those people who went overseas to look for butter went there in jet aircraft at the expense of the producer. They went there to bring in products to compete with our products on this market. [Interjections.] Yes, I asked the hon. the Minister a question and his reply was that the manager of the Dairy Industry Control Board went to Australia to buy butter for the South African market which was short and that his expenses were paid out of the Dairy Industry Control Board Fund. That fund has actually been subscribed to by the producer. But that butter was brought in to compete with our product! I cannot see commerce or industry agreeing to a thing like that. But the dairy farmers have a Minister who brings in a product to compete with our product on our own market and to keep down the price of all the products of the dairy industry to the detriment of the South African farmer. [Time limit.]
I find it strange that hon. members opposite are so concerned now about the prices of products. The hon. member for East London (City) (Dr. Moolman) stood talking tripe for half an hour. He referred to the consumers overseas who are supposed to get our products—he mentioned mealies—cheaper than the consumers in South Africa. I just want to tell him that the consumer in South Africa is subsidized to such an extent by the Government that at the present time mealies are bought by him at 292 cents, whereas the consumer overseas has to pay anything from 420 to 450 cents.
That was 12 years ago.
I am talking about last year. Last year the consumer in South Africa paid 302½ cents for yellow mealies and it was subsidized to the extent of 35 cents by the Government, otherwise he would have had to pay 337½ cents. For the same mealies they paid overseas, after the addition of freight and insurance, from 380 to 420 cents per bag. It is beyond me how the hon. member can say the overseas consumers are paying less for our mealies than the domestic consumer.
The hon. member referred to marketing boards and control boards. It seems to me he does not know the difference between the two. The hon. member for Port Elizabeth (West) (Mr. Streicher) says the farmer of South Africa wants a firm price for his product. When we refer to a firm price, it means I suppose that when there are surpluses which have to be exported, the overseas price will also be affected. You will be able to fix your domestic price within the capacity of the consumer to pay. Then you have to have regard to the quantity of that product you have to export and the two prices together will ultimately determine what the price will be internally. In a country like South Africa with its climatic conditions which vary from year to year, and with a foreign market where the prices also vary from year to year and from day to day, it is very difficult to fix a price for the product internally which will remain more or less stable always. The various control boards try to keep it stable. When we talk about “stable”, it does not mean that it will remain one price only, but that stock circumstances will determine whether the price should be increased or reduced. When it concerns a product of which 40 per cent or 50 per cent or 60 per cent will have to be exported ultimately, the overseas price must have a tremendous influence on the domestic price. For instance, the Maize Board established a stabilization fund so that when the overseas price drops considerably, the losses incurred on the export of that maize, can be compensated, and so that the farmer does not receive R2 for his mealies one year and R3 the next year. There is a variation of 10 cent or 15 cent depending on the size of the crop. The fact that the farmers are getting R3 per bag this year, is attributable to the fact that the crop was so small, because such a small quantity mealies will have to be exported, and consequently the losses on those exports will be so much less and it means a smaller levy on the farmer. Last year the levy was 18 cents and this year it is only 4 cents to cover the loss on the export of mealies. We load the consumer to some extent also in order to assure the farmer of a decent price. However, the consumer can only be loaded, as they say “to what the traffic can bear”. You cannot overload the consumer. We say now that we should make mealies available more cheaply internally than externally, and that if we stimulate domestic consumption there will be less mealies to export. We find that the farmer producing his mealies at R2 per bag, sells those mealies because he says it is more profitable to him to sell those mealies than to use it as cattle fodder and market the cattle. Then hon. members opposite say the maize farmer should get a still higher price. If he were to get still higher prices, it means that the consumers in the consumer areas, particularly here in the Cape, where the consumers are paying anything from R3.50 to R3.75 per bag, will have to pay still more. Whenever the consumer of any product has to pay too much for it, he switches over to a different product. Take the case of meat. When meat becomes as expensive as some people desire, the consumer will switch over to other kinds of food. When snoek is plentiful in Cape Town, the sales of meat drop immediately. The consumer rather buys the snoek which is much cheaper and eats that instead of meat. We must be very careful not to overload the consumer.
Now the hon. member for Port Elizabeth (West) says the Government should subsidize the difference in the price received by the producer and the price paid by the consumer. The Government is already paying R38,000,000 in the form of subsidies to make the price of food in the country not too high for the consumer. If we were to subsidize it more now, and we were to get a few good years, where we may easily get 80,000,000 or 100,000,000 bags of mealies, where you will again have a surplus of cheese and butter, where there will be a surplus of wheat (all this will now be at a higher price; the price which has been increased for the farmer, and the consumer does not have to pay a higher price) it will mean that there will be a great surplus which will have to be exported. That surplus will have been bought at a higher price and this will mean that the Government will have to pay a higher subsidy to subsidize internal consumption and the losses on the products exported will be twice as much. In such a case it could easily happen that this R38,000,000 subsidy the Government is paying to-day, could rise to R138,000,000 or R238,000,000. [Time limit.]
As I was saying we had this absurd position that when this country ran short of butter because of the policy of paying an unrealistic price for butter fat for the manufacture of butter, the producer had to pay, from his funds, for the manager of the Dairy Industry Control Board to go overseas to purchase butter to be imported into this country to compete with his own products.
Who pays the levy, the producer or the consumer?
I put the question to the hon. the Minister and the reply he gave me was that the manager of the Dairy Industry Control Board was going to Australia to buy a supply of butter at the expense of the Dairy Industry Control Board.
Who pays the levy?
The producer of butter fat.
No.
Of course he does. A deduction is made regularly from my butter fat cheque every month. I would be only too happy if the hon. the Minister would refund all the money I have subscribed since I have been producing butter fat and prior to that what I have subscribed on the other dairy products I produced. I hope he is going to go round the country during the recess telling the dairy producer that he does not pay a levy. Then he will see what the farmers will tell him when he tells them that they do not pay towards the levy fund. That is the most amazing statement I have heard for many a long day. I have been in organized agriculture since 1928. I have been on the N.A.U. and the S.A.A.U. for many years and I was chairman of the Dairy Association of Natal and I was chairman of the Fresh Milk Control Board of the Pietermaritzburg area for a year, and this is the first time that I have heard that the milk producer does not pay a levy, and that the butter fat producer does not pay a levy.
Do you buy your own butter?
Of course we buy our own butter, except when the Minister makes us buy imported butter.
The consumer buys your butter and he pays for the levy.
Because the hon. Minister will not pay the producer of butter fat sufficient so that he can afford to feed his stock during this drought and produce butter fat and so that he can even make his cost of production, let alone cost of production plus. If it is necessary to subsidize butter if the price of butter is becoming too high for the consumer why did not the hon. Minister go to the Cabinet and get further money from the huge surplus they had, to subsidize the consumers? Organized agriculture, the producers, have said all along that they do not want subsidies. All they want is the cost of production plus a reasonable return so that a man can make a decent living. And we do not ask the cost of production of a man who does not know how to farm. But this hon. Minister says: No, we will give you loans and we will take a bond on all your assets. Look how much we do to help you! The result is that the farmer to-day is coming to the stage that he is becoming a peasant farmer, with everything bonded. Just before I sat down some ten minutes ago I pointed out that it is not only the man who has paid a high price for his land, but even the man who has inherited his land who is finding great difficulty in making ends meet if the is a dairy producer and has not got some other particular line of farming, such as sheep, or producing timber, or something else which is bringing in something to keep the wolf from the door, so that he can pay his way until he hopes, times will improve. But I pointed out earlier that the producers through organized agriculture have pointed out what the cost of production is, they have submitted the figures. At the time, two or three years ago, the fresh milk producers in Natal put up their audited figures to the hon. Minister through the Fresh Milk Producers Union, and the industrial milk producers put up their figures. Then they were asked if they were prepared to have their farms inspected and their books inspected over a period of some months or a year. Immediately there were a number of people who volunteered and their books and their farms were inspected and a survey made, and the figures taken out proved up to the hilt what the cost of production was and that they were living far below the breadline, to put it that way.
Will it not be better for South Africa if the Minister subsidizes the consumer so that these protective foods can be produced and the farmer given the cost of production plus, so that he himself can be kept on the land and can make a reasonable living without having to bond everything to the Government for loans, having a status in the country and those protective foods being available. A few years ago separated milk and dried separated milk which contained many valuable nutriments for the lower-income groups, the less-privileged people of this country were available. To-day, we have to import those products. It runs into millions of rand in value; to-day that also has to be imported, apart from the butter and cheese. Those products were all earning exchange and instead of that we are to-day cutting down the very valuable protective foods from the very people who need them most, the lower-income groups of this country. There is no section of our people that do not require and need the valuable protective foods of the dairy industry. If there is one thing this hon. Minister ought to see to it is that the dairy industry should be kept on a sound economic footing and that the price of those products is realistic, enabling the dairy farmers to make a decent living. On top of that we have surplus maize and other surplus products. Surely it is better for the farmer in this country to consume those surpluses in the country. It will help our own markets, it will help our farmers if we consume those surpluses in the country and keep that organic matter in the country, to go back into the land and to be utilized to the full in this country, rather than export the wealth and fertility of the country to other lands.
The hon. member who has just sat down again raised the subject of butter. I am not going to reply to him because when I look at him it seems to me that he has really struck oil (in die botter geval).
Very nice!
Sir, if hon. members understood Afrikaans terminology well they would have known that there was nothing funny about it.
If there is one thing for which the farmers are grateful to-day it is the fact that they know they have a sympathetic Government and secondly that they have a sympathetic Minister at the head of affairs. The one reason why the farmers are grateful to-day, in spite of the problems they have to cope with, is because they have this Government and another thing they are grateful for is that the United Party is not in power to-day in these circumstances.
Thank the Minister!
The farmers of South Africa know what they had in the United Party when that party was in power and what they went through under the agricultural policy of the United Party. I shall now take the good advice of the hon. member for Drakensberg (Mrs. S. M. van Niekerk) and thank the Minister. She has asked me to do so and on her behalf and on my own behalf I now say thank you to the Minister for the interest he takes in our agriculture and particularly for what is being done to the farmers in the drought-stricken areas. When we express our gratitude for what is being done and what has been done we also say what we should still like to be done.
An industrial country like South Africa demands a great deal from its agricultural industry and the State will have to play a very important role to see to it that the increasing demands made upon agriculture are met by agriculture. In order to meet those demands we have to have a strong and sound agricultural economy in South Africa. My humble opinion is that if we want to build up a strong and sound agricultural economy in South Africa there will have to be very close liaison between our various agricultural departments, between the Department of Agricultural Economics and Marketing and the Department of Agricultural Technical Services as well as close liaison between the financial institutions of the farmers and the institutions which grant credit to agriculture. I think the one thing we should not concentrate upon is to see where we can score political points but rather to try to bring down the production costs in South Africa. If we can do that and to the extent to which we can do so we shall be rendering the country a valuable service. I should, therefore, like to see technical research and guidance aim at bringing down the cost of production in South Africa. I know that is not easy; I know there are many problems in that regard. I know that if a farmer wants to buy a certain type of tractor he buys that type and if he wants to farm in a certain way he does so. But it nevertheless remains our duty to try to bring down the costs of production by standardizing agricultural implements. I have already on a previous occasion said that it worried me to see expensive agricultural implements standing under the trees on farms not because those implements have become worn out in the service of agriculture but because of the injudicious purchase of those implements.
I want to mention another reason why the costs of production have gone up in this country. That reason is that a farmer is often forced to borrow expensive money in order to expand his agricultural activities or in order to purchase land. I want to give the hon. the Minister an example of what is happening. The owner of 71 morgen of land in the Western Transvaal valued at R8,800 tried to farm on that land. We realize that a person can hardly make a living on 71 morgen where there is not even irrigation and where he runs the risk of no rain falling after he has ploughed. If he gets no rain he is unable to carry the burden. When I give one example I can give the example of many other farmers in South Africa. This person had the opportunity of buying another farm of 495 morgen. He could buy it from somebody who was not a farmer at heart, somebody who had no aptitude for farming, who was much more handy with his hands in another direction. I mention this just to show that he would not have ousted a real farmer from a farm. The owner of the 495 morgen was not a practical farmer. The purchase price of that land was R68 per morgen and the total price of the farm was R33,600. The farm was valued at R41,700. The farmer who wanted to purchase the farm applied to the Land Bank for R22,000 and was granted R15,200. This person could not accept the offer of the Land Bank because he could not raise another bond. The Land Bank was not prepared to go any higher. He then sold his 71 morgen and he raised a loan privately at a high rate of interest. Before he received any of the capital he had to pay R1,000 raising fee. I want to show to the Minister how this person had to borrow expensive money because he wanted to farm. He is a farmer whom I can recommend. He pays 7 per cent interest. He paid a raising fee of R1,000 and his annual obligations are as follows: Capital redemption R2,000, interest R1,040, premium on a policy he was obliged to take out R469 per annum. That immediately brings his obligations to R4,009 per annum. There are numbers of such cases. Right from the outset I have pleaded for closer liaison between Agricultural Economics and Marketing, Agricultural Technical Services and credit institutions. No matter what assistance you give this person he is obliged to produce R4,000 annually to meet his immediate obligations in respect of the loan he had to raise because he could not get a loan from the Land Bank to purchase the land, and his request was not an unreasonable one. The valuation of that land was that of the valuators of the Land Bank. That is one reason why it is impossible for that farmer to farm economically. His obligations in respect of the money he borrowed are too high. If there is closer liaison between the various agricultural departments we shall come closer together and better appreciate the problems. In this case the annual burden on this farmer could have been much lighter.
I want to ask the Minister to deal with two matters in the course of this debate. I mention this particularly because the position is being abused on the platteland in the Transvaal. There are people who go about holding meetings. They apparently do not do this under the aegis of any organization. Pamphlets are issued and a meeting is called. A chairman is elected and somebody gets up and pleads that the Minister and the Maize Board should be requested to pay the maize farmers an “agter-skot” (arrear money) of 25c on last year’s crop. I should be pleased if the Minister would, during the course of this debate, tell us clearly what his attitude is towards those representations which are made to him from time to time. [Time limit.]
It is not often I agree with the hon. member for Wolmaransstad (Mr. G. P. van den Berg) but I do agree with him on one point that he raised here and that was his request to the hon. the Minister to do everything in his power to reduce the production costs of the farmers. But he said that we must not try to make political capital out of this matter. That is not our purpose. We on this side of the House want to put the actual position of the farmers to the Government so that it will know what that position is. The hon. member has said that this Government is sympathetic towards the farmers. I think that the hon. member is rather out of touch with the farmers if he considers that this Government is sympathetically disposed towards the farmers. If he wants practical experience of this he need only ask the hon. the Minister and his colleague to make another trip through the Free State. Then he will see whether they are in touch with the farmers or not.
The Free State trusts them completely.
The hon. member for Ladybrand (Mr. Keyter) is not here now. He said that the price of maize abroad during the last season was considerably higher than previously and that the loss incurred on export maize was not as heavy as in previous years. He went further and said that the price of maize this year has again been increased to R3 because the crop is so much smaller. That is quite correct. But now I come to the point which was also raised by the hon. member. The maize farmers’ price was also reduced as far as the previous crop was concerned because a large crop was expected and because it was anticipated that the overseas price would be lower.
Only the levy was reduced.
The price was far higher than was anticipated and the loss was therefore far less than was anticipated. That is why we on this side say that there is not the slightest doubt that the Government ought to pay the farmers an “agterskot” of 25c. The farmers should be paid this amount because the anticipated losses were not incurred, and also because the farmers are in a very difficult position as a result of drought and for other reasons as well. We on this side of the House demand that justice be done to the maize farmers and that that “agterskot” be paid to them.
From the stabilization fund?
Yes.
And if there is a loss on the export maize, must they carry it?
But we know that no loss was incurred. The prices obtained were far higher than those anticipated and the loss was very much less.
Why make it 25c?
The increase was 25c and it is a reasonable amount. But it does not make very much difference whether the amount is 25c, 22c or 27c.
I want to come now to the wheat farmers. Generally speaking the position of the wheat farmer is just as critical as that of many other farmers. In 1962 their price was reduced by 12c because it was stated that production costs had fallen because the crop was larger. The crop this year will probably be the same and yet the price has been increased. If this is so, there was no justification for lowering the price by 12c. This Government does not have a fixed policy. One year it raises the price and the next year it lowers the price, even though the production costs remain the same. The wheat farmers in our country are convinced that it is uneconomic to produce wheat in our country at present prices. I want to quote here what one of them said at a conference of wheat farmers which was held this year (translation)—
Mr. Myburgh Streicher of Albertinia is a leading wheat farmer. He is the person who won the prize this year for the best-planned farm. He is not an irresponsible person. He is a person who knows what he is doing; he is a person who is farming properly and well, and he cannot come out on the prices that are being paid. Nor is he a person who is favourably disposed towards this party; he may possibly be the candidate for Mossel Bay at the by-election.
Another matter in connection with agriculture which is causing concern is the position of the onion farmers. Their position this year is extremely critical. A few years ago the onion farmers asked to be placed under the Marketing Act. The hon. the Minister introduced a scheme in this regard but after about a year he abolished the scheme again.
Why?
Because representations were made by certain people who were not satisfied with the scheme. He gave way under pressure from those people.
What percentage of the producers did they form?
I do not know what percentage they formed but the mistake that was made was that only a section of the onion farmers were brought under the scheme. The result was that the scheme was not successful. The hon. the Minister should have known this and he should have extended the scheme to include all the onion farmers instead of abolishing the scheme. If he had done so it would have been a success and the onion farmers could have made a living which they cannot do to-day. Their prices fluctuate by as much as 100 per cent from week to week. The farmers cannot go on in this way. Let us consider a few figures in this regard. In 1961-2 the crop amounted to 36,735 tons and it was sold for R2,365,000; in other words, at nearly R65 per ton. In the next year, 1962-3, the crop was 44,317 tons and was sold for only R1,730,000, an average of R39 per ton, just about half the figure for the preceding year. In this regard too we are dealing with farmers on a smaller scale who cannot exist on the prices they are being paid for their onions to-day. That is why I believe that it is necessary that they be placed under a scheme in order to save them from ruin. The small-scale farmers cannot make a living on these prices and so everything must be done to assist them. We must export and this can be done if the proper marketing channels are created. We on this side urge very strongly that something be done to place those farmers under a marketing scheme once again. Sir, why did a number of producers ask that the scheme be abolished? It was because there was a group of them who were not under the scheme and who succeeded in selling their onions at a higher price. They did not consider the question of an “agterskot” and that was why the others objected. [Time limit.]
The hon. member for Gardens (Mr. Connan) will pardon me if I do not discuss what he had to say. I want first to say a few words to the hon. member for Port Elizabeth (West) (Mr. Streicher) and then I want to come to the hon. member for East London (City) (Dr. Moolman). The hon. member for Port Elizabeth (West) put all four of his feet in it last night and, of course, was taken to task this morning. The hon. the Leader of the Opposition probably took him to task in this regard. He tried to extricate himself from his predicament this afternoon. What did he say yesterday evening? He adopted the attitude last night that farmers should be paid a reasonable and profitable price, as he put it, and he said that the consumer should be able to buy cheaply. He used these words: “The consumer must not pay through his neck,” and he said that the difference in price should be made up by way of subsidies. I wrote his words down and I want to quote one specific sentence which he used. He said (translation)—
When I pointed out to him that one cannot establish agricultural economics on a policy of subsidies and that one cannot pay the farmers a profitable price without taking every factor into consideration … (Interjections.] That is the point that I made. It is impossible to do what he suggested and it does not help to come along this afternoon with the childish argument of telling me that I should suggest that all the subsidies should be abolished. That is just so much nonsense. I just want to complete the point that I was making last night. My point is that if there is a certain commodity which is in surplus production, one cannot simply raise the price in order to make the production of that product profitable to the farmer, and then bring down the price to the consumer to such an extent by way of subsidy that anyone can buy that product.
Why not?
Can the hon. member not understand the position? One cannot make the production of a product profitable simply by way of a State subsidy. This would merely be the artificial Inflation of a price under all circumstances in order to make that price profitable, but that was the argument which he advanced last night. The hon. member made this point last night because they were advocating increased dairy prices, as we were. The prices of dairy products have been increased and now the English-medium Press have told them that the cost of living will rise because of this fact. They have now got this new bright idea that the Government should simply pay increased subsidies in order to keep the consumer price as low as possible.
I want to come now to the hon. member for East London (City) (Dr. Moolman). He made the type of speech which we are so used to hearing from him. It is a pity the hon. member is not here; I asked him to be here. He said that the farmer is not enjoying his rightful share of the prosperity in the country at present. The same remark was made by the hon. the Leader of the Opposition at Worcester and other places. I think we would all like to see the farmer enjoying a larger share of the prosperity in the country, but I wonder whether the hon. member actually analysed his statement? I want to refer here to the report of the Secretary for Agricultural Economics and Marketing. He has this to say on page 7 of his report for 1962-3—
In other words, even with the tremendous industrial expansion that we have had, the real national product increased by 82 per cent, as did the product of agriculture, and with fewer farmers. The report continues—
This was probably one of the reasons why the price of the farmers’ product did not keep pace with the increase in other prices—because the population did not increase by 82 per cent. The farmers have farmed well and their production has increased, but the population has not increased to the same extent. This is what the report has to say about the value of the volume of agricultural production—
The figures for this year are not yet available but we know that they will be even higher. It is true that where in 1950, agriculture’s contribution to the national income was 13 per cent, it is now 10 per cent, but we must not forget that we have had tremendous industrial expansion over the same period.
What is your point?
The point is that although agriculture’s contribution to the national income is now only 10 per cent as against 13 per cent previously, the fact remains that if industrial production had not increased to such a great extent, agriculture’s contribution would not have been 10 per cent but far more. We must not forget that. If our industrial production falls, we will be affected in this respect—that we will not have the same markets for our agricultural products. The fact remains, however, that if industrial production was not as high as it is, agriculture’s percentage contribution to the national income, a contribution which rose from R259,900,000 to R537,100,000, would have been far higher than 10 per cent. [Time limit.]
One can forgive the hon. member for Somerset East (Mr. Vosloo) for feeling compelled to make an excuse for the nonsensical things he said here last night. It is easy to rush into a debate but it is not so easy to withdraw statements after those statements have been recorded in Hansard. It is no wonder therefore that he is trying to make these excuses. The hon. member’s argument dealt with the ratio of the contribution of agriculture to the national income. What was he trying to prove? Was he trying to prove that things are going well with the farmers in South Africa? Was he trying to prove that farming is a profitable profession?
Do you farm at a loss?
Can he refute the fact that things are going badly with the farmer and that there is a crisis in the Eastern Cape? Is he trying to cover up the fact that the hon. the Prime Minister, who knew that milk prices were going to fall, sold his farm as quickly as possible? [Interjections.] This is a strange agricultural debate. It is a debate on farming matters in which most of the hon. members opposite have made a ten minute speech and have then left the Chamber. The hon. member for Wolmaranstad (Mr. G. P. van den Berg) made a sensible speech, except that he said that the farmers know the difference between the United Party Government and the Nationalist Government. That is quite true. Under the United Party Government, the Farmers’ Assistance Board paid out about £7,000,000 to the farmers, but that sum has now been quadrupled because it was necessary to assist the farmers to that extent. The hon. member for Ladybrand (Mr. Keyter) made a speech in which he said that the prices of agricultural products cannot remain stable because of the conditions existing in the country. He went on to mention the stabilization fund which he said cannot carry everything. He said that the consumer should pay more—he was very concerned about the consumer—and he said what was also said by the hon. the Minister—that an amount of R38,000,000 is paid to the consumers by way of subsidies. That is, of course, correct and we have nothing against that but we are worried about the consumer in so far as we are paid 12c per lb. for beef but the consumer has to pay 35c per lb. What are the Government and this Minister doing in this regard? We are sorry that the consumer has to pay so much for beef but we are also sorry for the farmer who has to sell his meat at 12c per lb. One gains the impression that those who are not butchers at least have a share in a butchery! The hon. member for Harrismith (Mr. J. J. Rall) asked that the price of oats be increased. The hon. member for Wakkerstroom (Mr. Martins) is the secretary of the farming group on the other side but he made a speech which made a farce of farming. He made a quotation, as he does every year. If he cannot quote the report of the Secretary with all the necessary statistics, he quotes from something else. This year he quoted to us from a booklet. He quoted so movingly from that booklet that I hope it will have influenced him to buy back his farm, the land of his fathers. Once he starts farming again he may be able to tell us something about farming. It is unfortunately necessary to state that the farmers are not sharing in the prosperity which this country is experiencing at the moment. Year after year we on this side say that the farmers are experiencing a crisis. It is a pity that the hon. the Minister has to tell us the same story every year—that there are surpluses throughout the world, that the farmers are leaving the land and that unless the farmer is prepared to have his freedom restricted, to lower the prices of his land and to be told what he should plant and how much he should plant, he (the Minister) can do nothing. Listening to the remarks of the hon. the Minister and the secretary of the farming group on that side, who is not even here now, I can draw only one conclusion and that is that the hon. the Minister and hon. members on that side can be described in only one way and that is that they hate the farmers. [Interjections.] What are the facts? Things are going reasonably well with the wool farmers and also with the sugar farmers but the prosperity of these two bodies of farmers does not depend on anything the hon. the Minister has to do. They are dependent only upon the prices which they receive abroad, not upon the prices which they receive under the Marketing Act which is administered by this Minister. The increase in the price of other products such as dairy produce, maize, are too small and have come too late. In connection with the price of maize the hon. member for Ladybrand said that the price was lowered because a surplus of maize was produced that year. The price was lowered by 25c per bag and this year it has been increased by 13c per bag.
But that is the levy.
The hon. member for Gardens (Mr. Connan) made it quite clear that there was also a change in the price of wheat, the production of which remained stable.
But it did not remain stable. [Time limit.]
It is actually amusing to see how hon. members opposite try to pose as the champions of the farmers. I am convinced of the fact that if they had shown the same enthusiasm 20 years ago, they would have moved mountains, but unfortunately, it is too late now. In fact, it is because of the farmers in South Africa that those hon. members now sit on the other side. It is too late for the hon. members opposite to make out now that they are the champions of the farmers. The hon. member for Port Elizabeth (West) (Mr. Streicher) and others went so far as to say that if we want to do the farmers a favour, all we have to do is to subsidize them. This is the magical solution to our problem. I want to say immediately that in principle I am opposed to over-subsidization. There is the joke about the farmer and the Irishman and the Jew who found themselves on an island and after they had been there a year or two, they decided to do something so as to occupy their time. The Irishman started planting potatoes. The Jew said that he would sell the potatoes but the farmer just remained where he was. A few years afterwards the other two asked him what he was going to do. His answer was that he was waiting for the Land Bank to give him a loan! I tell this as a joke, but it sometimes seems as though this is what happens. We are inclined to cultivate a farming generation which no longer has any pride and which depends upon the State. I do not say that subsidies are evil but I say that they must be a last resort in order to assist the farmers. Let us give them profitable prices and do away with unnecessary levies and taxes which prevent their receiving a reasonable price for their products. Let us make use of subsidies as a last resort in order to save the farmer. I admit that we in South Africa to-day are to some extent compelled as a result of natural disasters to make subsidies available and I agree that it is the right way in which to assist the farmers to overcome their problems at this specific stage. But it is my personal opinion that we must give the farmer back his price and teach him rather to look after himself if it is at all possible for him to do so.
What do you farm with?
I want to say this to the hon. member. I shall market 20 of my oxen to-day and let him market 20 of his. If I do not receive almost twice the price for mine that he receives for his, I shall give my my oxen as a gift!
I want actually to discuss the marketing of our meat and break a lance for our meat-canning factories. We in South West Africa are prone to periodic droughts and we are some distance from the markets in the Republic. From time to time we have to get rid of animals which have become too thin to market. It is a fact that the South West Administration assist certain bodies on a very generous basis to set up meat-canning factories for that specific purpose. There are two of these factories in my constituency alone, and there is another factory in the north. It is true that there are certain choice cuts of beef which it is simply a waste to try to can. Every ox has cuts which can be put to better use than to be canned. The factories in South West simply cannot obtain a concession to export these particular cuts. If they can the entire ox, they can export on any scale but they do not want to can those particular choice cuts.
I want to ask the hon. the Minister now to give particular attention to this matter and to see whether the canning factories cannot be permitted to package and export a percentage of that meat, whether it be 5 per cent or 10 per cent. I do not say that we should do away with all restrictions and export all our meat thus causing a meat shortage here. I am simply asking that those factories be permitted to package and export a certain percentage of that meat. This will enable them to obtain a better price abroad and, secondly, they will then be able to pay the farmers a better price for their animals. They assure us that they will be able to give us a better price if they are allowed to export those particular cuts. I want to ask the hon. the Minister whether he cannot instruct the Meat Control Board to investigate this matter specifically. In any case, they are permitted to can and export all the meat so why should they not be allowed to package and export those particular cuts? One factory packaged 400 tons of excellent meat and had it all ready for export but they were not given permission to export that meat and so they had to can it. This was a waste of a good product which we could otherwise have exported.
Many arguments can of course be advanced in this regard. I do not want to discuss all of them. It is said that there will be a shortage of meat in South Africa after a time but I am not at all advocating the large-scale export of meat. In fact, I think that if we export these particular cuts, we will not only be doing the cattle farmer of South West a favour but we will also be building up a market for ourselves which can be of great assistance to us in connection with the marketing of other agricultural products. We are living at a time when other countries are talking of boycotting us, but at this stage they want the meat from South West. Now is the appointed time to consolidate that market so that this may also lead to the possible expansion of other markets overseas for other agricultural products. I am not asking that every canning factory in South Africa should be given this concession. I am making a special plea for the canning factories of South West which are in a particular position to-day because they are far from the markets and because South West is more prone to periodic droughts than is the Republic. We in South West have had no good rains for the past seven years and a concession of this nature will mean a great deal to the cattle farmers of South West Africa.
The hon. member for Middelland said that the farmers have much to be thankful for as far as this Government is concerned but I think he will find that, generally, farmers will regard this as a joke, because the Government just does not get down to fundamental issues. He also said that subsidies would be regarded as a last resort to save agriculture. Now, when the hon. member speaks of subsidies I hope he refers to subsidies like those on bread where we are subsidizing the consumer. When we speak of subsidies, we do not mean subsidizing the farmer. The farmer must receive a price which is in keeping with the cost of producing his commodity and if this price is too high, then the consumer must be subsidized. This is a practice which has also been followed over the years in other countries with great success.
Coming to the hon. Minister, I should like to ask him to convince us in this reply that he is pulling his weight. Generally the farmers of this country assert that they do not have the sympathy of the Minister, nor do they have his full co-operation in ensuring that our agricultural production will keep ahead of the demands of our rapidly increasing population. Does the Minister realize that agriculture in South Africa, like the hon. member for Drakensberg also said, is in the throes of a crisis? While the rest of the country is enjoying a boom, farmers do not share that prosperity and consequently their sons and daughters are induced to leave the land for brighter prospects elsewhere. This is something very serious that is taking place in this country and it is developing at a greater extent—this drift from the land to the towns. We must remember that if we lose our agricultural population, we lose the most stable section of our population. We know that during the last war Germany put up a lengthy fight on account of its stable agricultural community and if we do not have a stable agricultural community in this country, our future would be a precarious one. We know that when there is a threat to the country the first people to come forward to fight are those from the land. It is the Minister’s responsibility to see that this source of security to the State is not endangered. With our industrial revolution we are rapidly passing through a transition from an agricultural to an industrial economy. What is the Minister doing about it? As I said, we are faced with calamities if the drift from the country is increased.
As regards our agricultural products, in the past we already had to import meat; now we are importing butter and cheese. Will the Minister assure us that in the foreseeable future other agricultural products will not have to be imported and in that way forcing prices down to below the level of the cost of production in this country? The Minister should have an investigation now of the basic price structure of our agricultural commodities. Many of these commodities are, as the Minister knows, at this moment, being produced at a loss. Behind the appeals from this side of the House for the stabilization of our farming community, is the fundamental need for a balanced economy between industry and agriculture. This the Minister should ensure. There are many indications of the serious problems agriculture is being faced with. Land Bank figures alone in respect of arrear interest and redemption on capital are the highest they have ever been, leaving aside other debts which the Government has to write off on assistance to farmers. The small farmer to-day is in a precarious state, even the poultry farmer. In this connection I should like to read an extract from an article in the Farmer’s Weekly of 13 May 1964—
This is something demanding the attention of the Minister. As a matter of fact, it is something which should be discussed at Cabinet level because a fundamental policy statement is called for. If ever there was a time when a White Paper in connection with the farming industry was called for, a White Paper to assure agriculture of the bona fides of this Government, then that time is now. Consequently I appeal to the Minister to take the necessary steps to issue such a White Paper. We do not want a book; we want something that will be understandable to everyone. It should assure farmers that fears Like that expressed by Mr. Celliers, the director of the South African Agricultural Union, are perhaps not as serious as he has indicated. Farmers of course think that a statement from an authority like Mr. Celliers must be regarded as an indication of how serious the future prospects of agriculture are.
I should like the Minister in his reply to state his policy in regard to subsidization. Does he favour subsidizing the consumer and not the farmer? The farmer hates having it thrown in his face that he wants to live on subsidies and that he is always asking for subsidies. Farmers have become so bitter about this that the moment a motion with the word “subsidy” in it is introduced at agricultural meetings they turn it down. The farmers have been misdirected and misinformed. Subsidies should never be regarded as appertaining to the farming community. The farming community has through the Marketing Act been ensured a price for his product on which he can make a reasonable living and the first duty of the Minister is to see that this fundamental principle of the Marketing Act is carried out, and that the farmer does obtain a reasonable price for his products. Can the Minister say now that farmers are receiving a reasonable price for all their commodities to-day? Now, if these prices are too high for the consumer to afford, then, naturally, the consumer must be subsidized. We do not know what the future holds in store for us and it is essential therefore that South Africa should become self-supporting in regard to all its commodities, especially with regard to its food supplies. We should go in for the promotion of surpluses to-day. The Minister should not be afraid of surpluses but should encourage them in view of our growing population and what our needs might be in times of crisis. We regard the threats of boycotts with misgivings because these might hit us hard one day. We are very pleased at the way in which the Government has managed, in a way, to set off the effects of the boycotts we have been subjected to but the threats of boycotts are increasing and therefore we should be prepared to make South Africa self-supporting in as many respects as possible. The Minister of Agricultural Economics and Marketing holds a most important position in this regard. [Time limit.]
Mr.
Chairman, I have heard the most peculiar arguments from that side of the House this afternoon. Hon. members opposite repeatedly stated that agriculture is the only branch of our economy which does not share in the boom South Africa is experiencing at the moment. There the hon. member for Turffontein again says that is true. But in the same breath in which they say that agriculture is the only branch of the economy which does not share in the prosperity, they plead for subsidies for the consumers. But if the consumer shares in this prosperity, Why does he need a food subsidy? [Interjection.] I do not say that they do not need a subsidy. I am just pointing out to hon. members opposite what their own argument is. Their whole attitude is that it is the Minister’s fault that agriculture is not sharing in this prosperity …
Of course.
… and that only agriculture does not share in it. But, as I say, in the same breath they ask that the consumers should be subsidized in regard to food. But have the consumers no share in this prosperity? And if they have a share in it, as hon. members intimate, in comparison with the position of agriculture, why should they be subsidized? I mention these things to show that the allegation that agriculture does not share in the prosperity is valid only for certain sectors of agriculture, just as it is valid for certain other sectors of our economy.
What sectors?
Certain sectors of our agricultural economy have derived as much benefit from the present prosperity as other sectors of our economy. The position is that certain sectors have benefited more than others. [Interjections.]
Order! Hon. members must give the hon. the Minister an opportunity to complete his speech.
I want to ask hon. members whether the small shopkeeper around the corner, or the small baker, or the small butcher, derived as much benefit as the big ones? Have the pensioners and the people who saved for a long time and now have to live on the proceeds derived the same benefits as others?
Surely that is not an industry.
I ask whether, within the industry, the small shop-keeper who makes just enough to maintain himself, has derived the same benefit from this prosperity as larger undertakings? Do not let us try to score minor points now, but let us look at the matter in the right perspective. I allege that a large section of agriculture has derived just as much benefit from this prosperity as was the case in regard to any other section of the population. But at the same time there are many reasons why some farmers—reasons like climatic conditions, the fact that they farm on uneconomic units, etc.—did not share in this prosperity to the same extent. But that applies not only to agriculture but also to many other sectors of our economy. Therefore just to single out agriculture as the part of our economy which derived no benefit from the prosperity is quite wrong.
But I want to come to the hon. member for Port Elizabeth (West). He said that the Minister had betrayed himself because although he said his policy was to reduce prices he nevertheless recently increased prices. But the hon. member surely knows that this statement of his is quite untrue. I have never propounded the policy or adopted the standpoint that there should only be reductions in prices. Let me give the hon. member a few figures with regard to the prices of products whose prices are fixed under the Marketing Act.
You expressed doubt as to whether higher prices were good for the farmers.
In 1958, when I became Minister, the price of wheat was R5.38; to-day it is R5.87. The mealie price was R2.87 and it is now R3. The floor price of kaffircorn was R2.90; now it is R3.50. The prices for first-grade beef were R8.90 as against R11.70 to-day. Butter fat was 34.75c; to-day it is 36.51c. Industrial milk was 162.1c, and to-day it is 178.2c. The price of fresh milk in Cape Town was 27c, and now it is 29c. But now the hon. member simply makes the statement that it has always been my policy to reduce prices, and on that he built his whole attack. But then he goes further and says that I said that it was not in the interests of the producer that prices should be increased. That is also a complete distortion. When I spoke about increasing prices, I referred to the allegation made by hon. members that the platteland was being denuded because prices were not remunerative. It was then that I said that price increases alone would not prevent the depopulation of the platteland. In fact, I said that price increases could assist the depopulation of the platteland. But that had nothing to do with the question of prices as such. I was simply dealing with the argument advanced that the depopulation of the platteland was due to low agricultural prices. But now that hon. member makes the statement …
What did you say at the congress you addressed last year?
I said there that a continual rise in prices would not always be to the benefit of the industry. In fact, it could even ruin the industry. And surely that is true, because if one continually increases prices until they become so high that the consumer cannot pay them and therefore stops using those products, one does not promote that industry but kills it. Surely that is logical.
The hon. member now pleads for subsidies, particularly for the mealie farmers. Last year when we had a surplus, the prices for the producer were not only decreased, but the Government immediately granted the consumer a subsidy of 2½c in order to encourage the consumption of butter. And this was the greatest single factor responsible for the increased consumption since then, and for the shortage which arose as the result of it. The greatest increase was in the consumption of table butter and second-grade butter. By means of the subsidy, the price of this butter was brought within the reach of people who were then using fats, but then they substituted butter for the fats and the consumption of butter immediately increased. If the hon. member now says that we must continue to subsidize, I want to give him a few figures. When first-class butter was 35c a lb., its consumption was 77,000,000 lbs., and when the price fell to 30c a lb., i.e., when the price to the consumer fell by 5c, the consumption remained the same, 77,000,000 lbs. Now what was achieved by the subsidy? Was anybody benefited? The only result was to make it possible for the consumer to buy the higher quality butter. But the subsidy in fact had an effect on the lower-grade butter. The hon. member almost created the impression that there was no subsidy at all. He only referred to it in passing and said that it was just in line with the subsidy on bread and maize, and what does it really amount to? He intimated that it should be much more.
But let me tell the hon. member that I worked out the figures on the basis of a subsidy of 1c per lb. of butter, 1 per lb. of cheese, ½c per pint of fresh milk, 1c per lb. of meat, 1c per dozen eggs, 1c per loaf of bread, 1c per lb. of mealie-meal and 1c per lb. of sugar. I then found that just to pay these subsidies would cost R51,580,000. The subsidy already granted amounts to R31,420,000. But it is so easy to say that food should be subsidized. It is easy to subsidize bread when wheat is handled by one control board. It is also easy to subsidize maize where one control board is able to handle the crop. But on the other hand, it is not so easy to ensure that a subsidy on fresh milk, which in many areas of the country is not controlled, will reach the consumer. It is not easy to ensure this in the case of a product which is not controlled. If one grants a subsidy, it is not yet certain that the consumer as such will benefit.
I want to say at this stage that at the moment we are busy reviewing the whole system of subsidization. We are trying to see whether a system cannot be evolved which will ensure that where subsidies are granted the consumer who really needs it will benefit. On the other hand, the people who do not need it should not receive the benefit of such a subsidy. But just to advocate a subsidy for the consumer in general will not necessarily result in increased consumption. It will increase the consumption of the subsidized article by the lower income groups, but definitely not by the higher income groups.
But it is in fact the lower income groups who do not get enough food.
If the hon. member would just listen, he would perhaps learn something.
Order! The hon. member should not continue interjecting.
That is why I said that we are trying to evolve a method which would ensure that the subsidy would benefit the lower-income groups. Even that is not so easy because it has to be controlled. Steps have to be taken to ensure that the subsidy goes to the people for whom it is intended and not to those for whom it is not intended. It is a complicated matter. In America they tried to do it, inter alia, by means of a coupon system, but then they found that these coupons were being sold by the trade. Then that had to be controlled also. I just mention it in passing.
What the hon. member advocates, the payment of subsidies, is a method which we have always used to assist an industry to overcome its problems in difficult times. The same applies in the case of increasing prices. When the prices of dairy products increased, for example, the Government retained the subsidy. It was not reduced, although the understanding was at the time that if dairy prices were again increased the subsidy would disappear. Also when the price of wheat was increased the Government decided to increase the subsidy in order that the price of bread could remain the same. What hon. members ask for here is therefore already being done to a large extent.
Then the hon. member made the statement that the Minister determines the prices irrespective of what the control boards recommend. But let me state here that when the prices of dairy products were reduced last year, that was not done by the Minister. Because the board concerned is a responsible board, it recommended that prices be reduced because there was a large surplus. I then asked the Cabinet to grant a subsidy to prevent prices from being reduced further, and because the Cabinet realized that this was a basic industry it agreed. Of course, circumstances have now changed. But I want to say that the reduction in the production of butter was not due to the prices only. The prices of course had an effect, but the main reason for the decline in dairy production was the severe drought. If we look at the figures for November last year, we see that production then was actually higher than for the corresponding period the year before. Then, however, a drought set in, particularly in the dairy farming areas, and production rapidly declined. Therefore it is not only due to the prices that production decreased. If we look at the production of dairy products over the past few years, we see that every time there was a drought production fell. However, it immediately rose again as soon as the rains came. The over-production we had in 1960-1 was particularly due to the fact that good rains had fallen in the Transvaal and the Free State.
The hon. member for East London (City) also said that the farmer was not getting his legitimate share. He mentioned four basic matters on which agriculture should be based. I agree with that. He said that it should be possible to produce economically. Now I want to ask him, if he says that, what factors he takes into consideration for economic production. What factors must exist if one wants to ensure an economic production in agriculture? The hon. member just made a statement, but now I want to ask him this question. Should the capital invested be taken into account, and if so, on what basis? Should only capital used for production be taken into consideration, or should just any capital investment be made and prices adjusted accordingly? The hon. member shakes his head, but I should like to know what his standpoint is.
You are mentioning only one of the factors.
The hon. member mentioned it as a factor and I just want to be sure what he means when he mentions it. [Interjections.] I am just putting a question to the hon. member. One of the factors he mentioned is that it should be possible to produce economically. I want to know from him on what basis he thinks economic production can exist? How does he want to calculate the price at which maize, for example, should be produced? How does he want to calculate the prices at which wheat and beef can be produced economically? In fact, what is his basis for the price of any product? What economic factors does he take into consideration? Is the farmer who farms on the most efficient basis to be benefited more than the one who farms less efficiently? I am just asking those hon. members to say what they want. When one talks about producing economically, one uses a nice phrase which one can use throughout the country, but then one should also be prepared to go further and to state the basis on which economic production can take place. I say that the basis laid down in the Marketing Act is the one which comes nearest to the basis on which economic production can take place. That is the basis on which the production price of the average farmer is determined with reference to its production cost and the price of his land. That is the nearest one can get to economic production. I am not saying that it is an ideal basis, but it gives one an indication, more or less, of the average. But if one bases one’s calculations on the results of the least efficient farmer, then agriculture does not rest on an economic basis; nor when one bases it on the results achieved by the most efficient farmer.
I mention these things because it is so easy just to make a statement taken from the air; anyone can do that. If one makes a statement, one should at least be prepared to say what it is based on. On what basic product do you base your standpoint?
Those are factors which this Government should control.
If the hon. member has to fix a price level, on what land values does he want to fix it? Or let me put this question to the hon. member, because he is a woolgrower and perhaps knows more about wool. If he wants to make it possible for the wool farmer to produce economically, on what basis would he fix the value of the land on which those sheep graze? Say, for the sake of argument, the hon. member says he fixes it at R26 for a sheep, and supposing another farmer pays R50 for the land on which to graze that same sheep, must the Government then assist him? That is what I would like to know from the hon. member. Those are the things which hon. members opposite could tell us. It is easy to get up here and to ask questions across the floor of the House; any baboon can do that, but if the hon. member is prepared to tell me on what basis he wants to make the farmer produce economically I shall be prepared to consider it.
Then the hon. member said that the second standpoint should be that the farmer should produce to the maximum; that the policy of the Government should be that farmers should produce to the maximum. But a maximum of what must the farmer produce?
Baboons.
Yes, it looks like that. That is obviously what those hon. members want. The fact remains that any industry should be able to produce the maximum of what is required, but it would be nonsensical if, for example, you have markets for your meat and you also have good markets for your mealies, to say that you must produce the maximum of the one product, even though it is difficult to find a market for it. It is much better to say that there should be a balance in agricultural production. I want to mention a very good example. Take, for example, the citrus industry. I admit that if every farmer can produce the maximum on his farm, he can produce more efficiently and more cheaply, but is one to assist the farmers to continue producing if eventually there will be no market for their product? [Interjections.] The hon. member said that the farmers should be encouraged to produce to the maximum. I want to know what he means. Does he mean that every farmer in a certain branch of agriculture should produce the maximum in order to produce at the lowest price: in other words, that he must have the highest yield per morgen? There I agree with him.
Then the hon. member said that the third basic principle should be that markets should be obtained. Of course markets should be obtained, and that is why we have this whole system that we have to-day. We have our marketing boards. In that system we have organized the various farming activities in this country with the specific object of securing markets. Just have a look at the exports of the various products and it will be seen that exports have increased in all respects. That applies to our deciduous fruit, or citrus, eggs and other export products. We have obtained a large new market for our maize. This year we do not have nearly enough maize to supply the demand of the export market. In regard to our inland market, the marketing boards are continually busy developing the internal market with a Government subsidy and with levy funds they themselves levy.
The fourth point the hon. member made was that agriculture should enjoy maximum protection. But that is precisely what is happening in South Africa. Our agriculture is enjoying the maximum protection. How many agricultural products can be freely imported into this country from abroad? Not a single one. We cannot import wheat or maize freely. We cannot import mutton, whilst we can import it much cheaper. Meat and other products can only be imported when there are temporary shortages here. But normally nobody can import these products to compete with our farmers on the internal market. There the farmer therefore enjoys maximum protection, and he is also protected further by his control boards and by the Marketing Act. Those prices are fixed so that the farmers will not compete and cut each other’s throats at times when there are surpluses. These things for which the hon. member asks are all part of our agricultural policy. We may differ in regard to our standpoint, and therefore I should like the hon. member to tell us what his standpoint is in regard to these few matters I put to him, and particularly in regard to his statement that it should be made possible for the farmer to produce economically. He must tell us under what circumstances he wants to do that.
The hon. member referred to the fact that there are two agricultural attaches abroad. But it is not only the agricultural attaches who promote markets abroad. We have our trade commissioners in all Western countries; from time to time we send trade missions overseas to develop markets; we have our various control boards which have their representatives overseas, and not only their representatives but their own officials, to promote the sale of their products. It is therefore not only the two agricultural attaches of the Department who promote trade overseas. There are many other respects in which this promotion is done with the assistance of the State.
Would you not like to have more agricultural attaches overseas?
Yes, I should like to have them. The hon. member knows that there was only one agricultural attache overseas before I became Minister. It is on my initiative that the other one was appointed, and I should like to have more of them if possible. But the hon. member did not ask for more agricultural attaches; he made the accusation that the Government was not developing its markets because it has only two agricultural attaches overseas. That is my point. I am just pointing out to him that it is not only they who promote markets. Then the hon. member said: “Yes, we are developing markets, but supposing Japan did not buy our maize last year, where would we have sold that maize then?”. Sir, have you ever in your life heard such an argument? Supposing Britain had not bought our fruit, where would we have exported it to? Supposing they had not bought our citrus, where would we have exported it to? In other words, if you have a market to which you can export a product, then the hon. member says, “But supposing you did not have that market, what would you have done?”. But the fact remains that we had that market.
Is it not worth while then to have agricultural attaches overseas?
No, it was worth while. That is why the market in Japan was developed. That market in the East was developed because it was worth while developing. But the hon. member now pretends that it was not worth while doing so because he says: “Supposing you did not have that market, what would have happened then?” Then I can just as well ask him: “Supposing we did not have all the other markets, what would have happened then?”
Then the hon. member spoke about the Marketing Act and the composition of the control boards. The Act provides that the producers will have a majority on every one of these control boards. Those members are appointed by the Minister, but in every case they are appointed on the recommendation of agricultural unions or co-operatives. In other words, if agriculture itself recommends people as members of the boards in whom they have no confidence, surely they can get rid of those people. Surely the Minister cannot be expected to tell the farmers of South Africa: “Because the hon. member for East London (City) has no confidence in certain members of the control boards, you should also have no confidence in them.” If they have confidence in a person, they appoint him as their representative on the board, and the producers are in the majority on that board. It may be that there are people on the boards who have other interests apart from their farming interests and who are nominated by the producers. I do not know; that may be so. I do not know whether there are producers’ representatives who also have other interests, but the producers are always free to get rid of such a man, and they have already done it in the past. Why can they not do so again?
That happened in the case of the Wool Board.
In so far as the Marketing Council is concerned, the hon. member should realize that this is a body which must advise the Minister not only in regard to agricultural prices but also in regard to many other matters. The Marketing Council is often criticized by people who do not know what its functions precisely are. Many people think that the Marketing Counoil is concerned with prices only. Not only members of this House, but many members of the public think that the Marketing Council just comes into the picture when prices have to be fixed, but there are very many other economic investigations which are undertaken by the Marketing Council, and because the Marketing Council always has to put the other side of the question also, factors which the farmer does not always take into consideration, it is often blamed and regarded by farmers as the black sheep. The Marketing Council does very important work, and it is just an advisory council which has to advise the Minister. The Minister need not accept the recommendations of the Marketing Council, just as he does not have to accept the recommendations of the control board, but it is for the Minister to keep himself acquainted and to take into consideration all the factors which come into the picture, and it is the duty of the Marketing Council to bring to the notice of the Minister also the other factors, apart from merely those which the farmers generally see. The object of this is to have co-ordination between the various agricultural prices. I do not think there is a body in South Africa which works harder than the Marketing Council, because all the investigations in regard to proposed schemes and many other economic investigations are done by the Marketing Council, often a great inconvenience to the members of that council. I should like to say this in the House to-day, because the Marketing Council is often unjustly accused of not always looking after the interests of the farmer. I should like the farmers to know that the Marketing Council is not their enemy. It is there, just like the rest of the Department, to promote the interests of the farmer, but its function is also to consider the broad economic interests of the country as a whole.
The hon. member for Harrismith (Mr. J. J. Rall) asked whether the price of oats could not be increased considerably, but I see that he is not here at the moment and therefore I shall not reply to him now.
The hon. member for Pietermaritzburg (District) (Capt. Henwood) spoke about the prices of dairy products. He said that he had repeatedly warned in the past that there would be a shortage of dairy products. There is no control scheme in Durban in regard to dairy prices; there is a maximum price scheme in Durban or in the Durban area, and those prices were recently increased, just like the prices of dairy products in other areas. The hon. member voiced the criticism that the Minister last year or the year before reduced the price of dairy products. Those prices were reduced by me on the recommendation of the Dairy Control Board, and I merely implemented its recommendation. But now the hon. member says that the board’s recommendations are never accepted by the Minister. Well, the recommendation made by them this year has again been accepted by me.
Then the hon. member said that we should use our maize surplus for the production of butter and dairy products. But there is nothing to prevent the hon. member from using maize for dairy production; on the contrary, we assist him; we give him a subsidy of approximately 50 cents a bag on yellow maize, just to help him to use maize for that purpose. The hon. member can always use maize for that purpose if he wants to; it depends on himself.
Then I come to the hon. member for Gardens (Mr. Connan). The hon. member advocated a few things here which really surprised me. The hon. member for Gardens has now heard that somewhere in the Transvaal there is a group of farmers who are asking that the Stabilization Fund of the Mealie Board must be used to be paid out as an “agterskot” for the farmers. I want to ask the hon. member what one would achieve by paying an “agterskot”, even if one wanted to do so; what one would achieve by using the Stabilization Fund to give the farmers a higher price for last year’s crop? In other words, the farmer who last year had a large crop will now receive a large “agterskot”, and the farmer who had a small crop last year will receive nothing. What does one achieve by that? Will that assist the farmer who is really in difficulty? It only assists the man who had a large crop last year. But I also want to point out to the hon. member that although this Stabilization Fund is contributed by the producers, a subsidy of 43 cents and more is paid on every bag of maize sold in the country, and although the Government does not make a direct contribution to the Stabilization Fund, the Government’s subsidy is responsible for the fact that that Stabilization Fund is so strong. In other words, the hon. member now wants us to pay out all the money from the Stabilization Fund which the Government helped to establish by way of a subsidy, to a number of farmers who were fortunate enough last year to have a large crop, while the farmers who have a bad crop this year get nothing out of it. I also want to point out to the hon. member that it is not all the farmers who are asking for this; it is only a small group. The majority of farmers would rather keep their Stabilization Fund strong in case large quantities of maize again have to be exported at a price which may possibly not be as good as this year’s price.
The S.A. Agricultural Union did not want it.
Then the hon. member also referred to the onion growers. Sir, there is one thing in regard to which a United Party supporter always gets tears in his eyes, and that is the onion grower. The hon. member said that the Minister had in fact instituted a scheme, but that as the result of pressure which was exerted on him he withdrew that scheme, and that he should never have done that. But who organized the pressure against that onion scheme? The United Party organizers in Parow organized it among the small farmers. Sir, I know that area much better than the hon. member for Gardens does, and I know the people who went around organizing the small farmers, telling them that this Nationalist Minister just wants to turn them into a lot of onion slaves. The United Party organizers helped to wreck that scheme, particularly among the small farmers. I told the farmers at Caledon that they could again have an onion scheme if they wanted it, but that they would first have to show me that they were unanimous. Do you know what happened when that scheme was instituted? There were some people who could not go to church; they could not have their children christened because they were bad friends with the parson and with the elders and the deacons. They wanted to grasp each other by the throat and hit each other, and the United Party supporters went around saying that it was the Minister’s fault that the people no longer attended church. Just ask the hon. member for Hottentots-Holland (Mr. De Villiers); he knows about it. I just want to say that if the onion growers are convinced that they want a scheme, and if they organize, we will again give them a marketing scheme, but not again on the basis on which they had it last time, where 65 per cent or 75 per cent of them signed petitions for the removal of the scheme. They must remember that if the scheme is ever instituted again, it will remain there, and it will only be instituted if I am convinced that at least 90 per cent of the farmers in that production area want such a scheme.
Then it will never be instituted.
I know that they will never reach that stage until such time as they find things difficult enough. At the moment they are not suffering enough yet. [Interjections.] It is for them to decide. They can have it to-morrow if they want it.
“Boerehater.”
The small farmers must disappear!
Sir, precisely what I told you a moment ago is now happening; I said that if a United Party man hears about onions, tears flow from his eyes, and there they are now weeping immediately they hear about onions! I now come to the hon. member for Drakensberg (Mrs. S. M. van Niekerk). It is a pity that the older one gets the more cynical one becomes.
That is apparent in your case!
The hon. member said something here for which I really blame her. I do not know whether it is really worth while blaming her, but I do. I refer to the fact that she said that the hon. the Prime Minister sold his farm because he knew that milk prices and meat prices would fall.
And maize prices.
Yes, and that maize prices would fall. I do not think it behoves a lady to say something of that nature.
Why not? Surely it is the truth.
It is not the truth.
Then why did he sell? Give us the reason.
Perhaps I should not blame the hon. member for Drakensberg so much for having said it. Well, I shall leave it there.
Give us the reason.
I thought the reason was obvious. In the first place, the hon. member knows that the Prime Minister has much more work than she has. Secondly, she knows that he cannot give his personal attention to his farming operations.
Is there no young Afrikaner whom he could put on his farm?
In the third place, it is a mean insinuation to make against the hon. the Prime Minister that he had a hand in reducing maize and milk prices; that he knew that they would be reduced and that he therefore sold his farm.
The hon. member for Drakensberg did not say much more; she just spoke about meat prices. She spoke about the farmer receiving 12c a lb. for his meat and the consumer having to pay 33c a lb. for it. Well, we all know that there is a high distribution cost in the meat trade, but there are also people in the meat trade who cannot make a living.
Why did you allow overtrading?
The hon. member says they cannot make a living because I allowed over-trading. Let us assume that there is over-trading in the meat trade. Why is there over-trading? Why is there overtrading in the meat trade and not in agriculture? Of course, there are some farmers who cannot make a living either. The man whose turnover is not large enough cannot make a living. To some extent we have the same problem in agriculture. I do not want to have an argument about that now, but the hon. member referred to the 12c received by the producer and the 33c the consumer has to pay. But the producer gets 12c for the whole carcase, and the consumer pays 33c for selected pieces of that carcase and not for the whole carcase. That is not a fair comparison to make. In regard to distribution costs, we know that even the organized producers tried to enter the meat distribution business. The hon. member for East London (City) will know that. He knows that when the producers tried to distribute meat and sold meat at the same price at which the trade sold it, many of them had to close their butcheries. Is that because they were bad businessmen, or what is the reason? Our co-operatives tried to enter the meat trade as distributors, and even those cooperatives which entered the trade could not make a success of their butcheries in every respect. Our co-operatives even entered the vegetable distributive trade, and in spite of the support of the State, in spite of a guarantee by the State, they could not run an economic business charging the same prices as the trade. It is easy to say that there are a lot of middle-men who make a lot of money out of the farmers’ products, but even cooperatives and bodies of producers which entered the trade could not make money out of it. What happens there is what happens in any other business. The person whose turnover is large enough makes money, and the other one whose turnover is not large enough does not make money.
The hon. member for Middelland (Mr. van der Merwe) asked that the meat-canning factories in South West Africa should be allowed to export a certain percentage of the meat they buy in boned form. I can just tell the hon. member that the Meat Board is busy investigating this whole matter in South West. Of course, as the hon. member will realize, it is not such an easy thing to do, because one cannot allow just one or two factories to do it; if one allows it then it must be countrywide. While South West is an integral part of our Republican market, there are problems connected with it. But, as I have said, the Meat Board is investigating the whole matter. I will see them on 12 June and then they will report to me in regard to the whole matter.
Then I should like to welcome my good old friend, the hon. member for Albany (Mr. Bowker), back in this House on this the first opportunity I have of doing so. The hon. member also said a few things which I really do not think he meant, because he said that I had no sympathy with the farmers. The hon. member knows what sympathy I have for him as a farmer. I always thought that he was also a farmer. The hon. member said that there were many children from the rural areas who went to the cities because they could not make a living in agriculture. But surely that does not apply only to the children of the farmers. Surely it is not only the farmer’s child who wants to follow another profession. We have a parson who had a few children, and if I have to tell you, Sir, what professions some of them followed you would be surprised. Not one of them became a parson. I knew a principal who also had a few children and some of them became idlers while others became actors in Hollywood. A teacher’s children do not necessarily become teachers. I even know teachers who became Members of Parliament. I am thinking, for example, of the Chief Whip of the National Party.
No, I was a farmer who taught afterwards.
It is ridiculous to argue that because the children of farmers enter other professions, therefore things are going badly with agriculture. If there are farmers’ sons who can become prominent scientists or medical men, must we keep them on the farm? Aré they not worth much more to the community in other professions? Must we force them to remain on the farm, and how can we force them to do so? I wish the hon. member would tell me how he thinks I can keep them on the farm.
Sir, I think I have now replied to all the questions put to me.
I wonder if the hon. the Minister could tell me whether he agrees with the report of the head of his Department because the Minister gets up and tells us that everything is rosy in the garden as far as farming in South Africa is concerned. But what does his own report say? This will interest the hon. member for Somerset East (Mr. Vosloo): It says in this report that over the past ten years the volume of farming production has increased by 137 per cent; the value of that production has increased by 71 per cent but the cost of production to get that additional 137 per cent volume of production, has increased by 93 per cent. What is more, Sir, it says quite clearly in this report, “that the real net income of the European farmer has risen only slightly since the early fifties”. What else do we find? That the prices received by the farming community has shown a steady decline over a period of eight years, up to the 1959 season. Yet we had to listen this afternoon to a speech by the hon. the Minister, a Minister professing an interest in the farming community of this country, a Minister concerned with the future of the farming community, in which he did not come forward with one single constructive proposal as to how to meet the problems of the farming community, whilst the head of his own Department starts his report off by pointing out the three major difficulties which face the agricultural industry of South Africa. What are those difficulties? I am not going to waste my ten minutes on reading them out but he says one of the major problems is the ever-increasing dependence on overseas markets for the disposal of agricultural products. Have we heard a word from the hon. the Minister in that regard? This report also says that our agricultural exports have increased not because of the basically stable production but because of our ability to enter the markets in certain other fields. We are faced with ever-increasing surpluses but we have not had a single word from the hon. the Minister, who should be concerned with the building up of overseas markets for South African products, to say how he intends to meet those problems in the future or how the farming community should meet them.
We know of the resolutions adopted by congresses such as the Co-operative Congress, the Transvaal Agricultural Union Congress, the South African Agricultural Union Congress. They are all passing resolutions in that regard but we do not get one single constructive thought from the hon. the Minister. I wonder what hon. members on the Government benches are going to say? These are the facts; this is the Minister’s own report; this is what the head of his own Department says. Are hon. members opposite still going to dispute it?
We have listened to what I can only describe as a lot of poppy-cock from hon. members opposite, such as the hon. member for Middelland. When the hon. the Minister talks about the problems of the cattle farmers, let me remind him that under the present meat scheme over 85 per cent of the meat which passes through the abattoirs to-day is in the hands of speculators. There is not one single small producer of cattle in South Africa who can send his meat to the market on a profitable basis. The hon. the Minister knows that but he says everything is rosy in the garden.
Other products are listed here. They refer to the oil seed industry which already represents 4 per cent of our entire volume of exports as far as agricultural produce is concerned. Have we had anything in that regard from the Minister? The report draws attention to the problems which will face the oil-seed extraction industry in the future. This will interest the hon. member for Brits (Mr. J. E. Potgieter) who as the chairman of a very important co-operative society is an agent of the Oil Seed Control Board. What about the other industries, Sir? There is the tobacco industry in which the hon. member for Brits is also interested as well as two other hon. members on that side, in whose areas over 50 per cent of our tobacco production is produced. Why don’t they read the report and see what it says in this regard?
What do they say?
I shall tell you. The Minister has so little sympathy for the small farmer in whose hands mainly lies the production of tobacco in this country that he says they must get out. But what does the report say? The report says that over ten years over 20,000 farmers left the land in South Africa. But the Minister says everything is rosy in the garden.
What page are you reading from?
I hear a voice from the gloom behind me, Sir. The hon. member for Heilbron (Mr. Froneman) should have done his homework before he came to this debate.
You can’t give it to me.
If the hon. member would take the trouble to read page 7 he will find it there.
We are told that everything is rosy in the garden as far as the marketing of South African agricultural products is concerned, but listen to this: The average price paid to producers for flue-cured tobacco is 26.60c per lb. What is it sold at by the agents of the board? It is sold at 42.2c per lb. What does the producer get for his light air-cured type of tobacco? He gets 20.77c per lb. and it is sold at 30.3c per lb. Let me take the lower quality, which is the bulk of our production. Dark air-cured tobacco 11c per lb., but the board sells it for 20.4c per lb., i.e., a nearly 80 per cent increase on the price paid to the producer. The export prices have not gone up. I don’t know whether the hon. member for Brits is aware of what is contained in this report. The difference on dark air-cured tobacco between the price paid to the producer and the price achieved on the export market is only 1.75c per lb.; as far as light air-cured tobacco is concerned it is 4.25c. What is wrong with the whole marketing system? Why these differences in the price to the producer and the price to the consumer whether it be in regard to meat or tobacco or anything else? But the problem goes further than that. How should the small farmer be protected in regard to his production? That brings me to the question of farm-management planning which is part of the Minister’s function. There is a plan in this report in regard to an experiment the Department is presently conducting to produce economically per production unit. I hope the hon. member for Brits and the other two hon. members will join me in this. The hon. the Minister should give some consideration to this class of farmer who is entirely dependent for his subsistence on the production of low-grade quality tobacco. If we have to gain an export market, we should start producing a better quality tobacco. We shall then be able to get the advantage of the better prices paid on the overseas market for a good quality tobacco. [Time limit.]
When an hon. member is completely uninitiated as far as the tobacco industry is concerned, he does not talk about tobacco (tabak) but he talks the most arrant nonsense (twak) possible. The hon. member for Turffontein (Mr. Durrant) spoke about the export market. I want to remind him that there was a time when the farmers in South Africa produced tobacco which was of the wrong type. That was why we could not build up an export market. Then the co-operatives recommended a new type, the Orinoco. The United Party then issued pamphlets in which they said that the farmers should not change over from the old type to the new type. That was why the political fate of the United Party was sealed in the constituencies of Brits and Rustenburg. I remember that we had to burn a great deal of poor quality tobacco. The old type of tobacco had an unpleasant smell. We could not build up an export market with the old type of tobacco. It was only by way of collective action on the part of the tobacco farmers through the medium of their organizations that we changed over to the correct type, the Orinoco type. In this way we built up the export market. That was why I was able to say here a little while ago that last year the tobacco industry earned more foreign currency than the wine industry did. I think that we exported tobacco to the value of R4,800,000. We did not export because we had a poor quality tobacco; it was tobacco of the best type and also of the best quality. But the hon. member for Turffontein knows nothing about tobacco. He spoke about the tobacco which was sold by the Tobacco Control Board and he also mentioned the poor prices that were obtained. The hon. member knows that we have a very good local market. We are paid economic prices on that market. He said that we were paid poor prices overseas. Does he know that the average price to the tobacco farmer, after the export price and the local price had been taken into consideration, was still above the average price obtained by the Southern Rhodesian tobacco farmer last year? That is why I say that the hon. member is not talking about tobacco but is talking nonsense. He knows nothing about the business. There is no question of the tobaccos being sold by anybody else. The tobacco farmers have the best organized industry in the country. The farmers have their co-operatives and the co-operatives consist of the farmers. The farmer brings in his tobacco and is given an advance. The hon. member does not know that an “agterskot” remains after everything has been sold. He draws a comparison between the price at which the co-operative buys the tobacco and the price at which it sells it. It appears to me as though he compares that selling price with the advance given to the farmer. He does not know that the co-operatives came into being as a result of the collective action of the tobacco farmers in South Africa. Those farmers sell through the tobacco co-operatives and that is how they obtain their prices. The hon. member is now trying to pull the wool over the eyes of the tobacco farmer.
We are of course being paid far better prices than we were paid in the old United Party days. Do hon. members know why that hon. member makes this sort of United Party propaganda speech? He does so because he knows the record of the United Party in connection with the tobacco industry. At various elections they have tried to bring the policy followed by the tobacco co-operatives in the country into discredit, a policy intended to place the tobacco industry on a sound basis. They oppose that policy. When we discussed the report of the American inquiry into the possibility that tobacco smoke caused cancer, the hon. member for East London (North) (Mr. Field) made use of the opportunity to say that the tobacco industry in the country should be abolished. This statement had its effect in the rural constituencies. There was a tremendous reaction against the United Party because some of its members acted in such a criminal fashion against the interests of the tobacco farmer in the country. The hon. member for Turffontein has also had to make a political propaganda speech. I want to tell the hon. member that it will not help him to tell this House that I am the chairman of a certain co-operative. He must also tell the House that he is a member of that co-operative. But while he is an extremely bad member, I am an excellent chairman! It will not help him to try to pose as the champion of the farmers there and yet act here in the way in which he has acted. The development of the tobacco industry is inextricably linked with the development of the co-operative movement in South Africa and the hon. member has no right to mention certain prices here and to say that those prices are uneconomic. He should rather be guided by the service organization, by the collective action of the tobacco farmers. But the hon. member is discrediting the tobacco co-operatives in the eyes of the farmers. The hon. member must not draw a comparison between the farmers and the tobacco co-operatives. The action taken by the tobacco farmers is collective action and he has done the farmers a very great disservice by dragging these matters into the discussion. He knows that only a certain quantity of tobacco can be sold both overseas and locally in order to maintain the balance and to ensure that no harm is done to the tobacco industry. It is very wrong of him to tell the House that we produce a poor quality tobacco and that for that reason we cannot build up an export market. We are marketing some of the best leaf tobacco overseas and it is precisely for that reason that the demand for our tobacco is increasing. That is why we have been able to build up our export market beyond expectations. Why does the hon. member seize on this fact and raise it here in this House in order by so doing to create the impression that the tobacco farmers are being paid prices which are completely uneconomic, that we are exporting a poor quality leaf tobacco and that because of this fact we cannot build up an export market? The hon. member knows that that is not true.
On a point of order, may the hon. member say that the hon. member for Turffontein knows that what he has said is not true?
Well, in any case, the hon. member knows nothing about the tobacco industry or about the export market. His whole difficulty is that he knows nothing about the industry, and he has given us figures here which have been taken completely out of context. He has painted a completely lop-sided picture of the position. The tobacco co-operatives in the country have built up the export market because they have exported a new type of tobacco of the right quality. In the past we had large stocks of leaf tobacco which we could not sell but the co-operatives came forward with their storage scheme and we have gradually built up this market. It is completely wrong of the hon. member to talk about a poor quality tobacco. It is generally known to-day that this country is producing leaf tobacco of the best quality to-day. There was a time when we could not be compared with Rhodesia and we had to import most of our leaf tobacco from Rhodesia for blending purposes. But today we are producing what is practically a typical South African cigarette consisting entirely of South African leaf tobacco. Not only do we have the right type of tobacco but we also have the right quality of tobacco.
Did you say that at one stage we imported from Rhodesia?
Yes, in its initial years, our entire cigarette industry was dependent upon leaf tobacco from Rhodesia. But that time has now virtually passed except that under the agreement which we have with Rhodesia a few million lbs. of tobacco is still imported from Rhodesia duty free. But we are completely self-supporting in this regard to-day. We have the right type of tobacco and what is more, we are exporting millions of lbs. of tobacco to other parts of the world because our South African tobacco is of a very good quality and is of the correct type. This tobacco is blended and cut overseas. I do not know what the intention of the hon. member is in raising the question of the export market here. His remarks can only do the greatest harm to the industry. By their actions the United Party have shown the greatest disloyalty to the industry in our country. The hon. member tries to pose as the champion of the farmers but by quoting the statistics as he has done, he has undermined the tobacco industry in this country. That is all his speech has achieved
I cannot understand the hon. member for Brits, who represents an important tobacco-producing district, adopting this attitude. I thought he would understand what I was putting before the Minister. My plea was to improve the standards of tobacco produced by the farmers of South Africa, particularly in the hon. member’s constituency. That is my plea. Is he against that?
We produce the best quality.
Is the hon. member against the tobacco farmers of South Africa producing a better grade of tobacco? I thought the hon. member for Brits would know all about the tobacco industry. I was not surprised that the hon. Minister of Agricultural Technical Services left the Chamber when the hon. member was speaking, because the hon. gentleman knows very well that the hon. Minister addressed a meeting in his constituency in September, where I think the hon. member was present and where he had some very pertinent things to say about the tobacco industry in South Africa and the plight of tobacco farmers in the hon. member’s constituency.
As a result of drought.
Why did he walk out? Because he knew that what the hon. member was saying was in direct opposition to what he said and I have got a copy of the Minister’s speech here in front of me, which he checked himself at my request, and what did he say about the varieties of tobacco? The hon. member for Brits comes here with the old story of years ago about the Orinoco type and the Virginia type of tobacco—the hon. gentleman does not know what he is talking about, he is living in the past. No wonder he is switching to other forms of tobacco. But what did the hon. Minister have to say, and I quote it here for the benefit of the hon. Minister of Agricultural Economics and Marketing—
And why did he say that? Because the Minister recognised that the future of the tobacco industry as such rests entirely on the export market and that we could not hope to compete in the export market unless we produced a type of leaf required by the export market. Why do we still import from Rhodesia, quite apart from the argument used by the hon. member? For his information I might tell him that we imported 4.8 million lb. of tobacco last year, in spite of our total production of something like 67,000,000 lb. Why? Because the quality of tobacco required by the South African manufacturers to suit the taste of the South African smoker makes it necessary to import leaf from Rhodesia for the necessary blending. That is the problem the tobacco industry faces, and I plead with the hon. Minister that he should review the situation of a marketing principle where any old man can throw a few seeds under a tree and deliver it to the co-operative and expect it to be bought. To say that it is a farmer producing in a legalized proper way a product for export, is just nonsense!
You are insulting the tobacco farmers.
I come back to the issue of the Minister’s farming planning, a section in his report which I do not know whether he has read it or not, and I hope that here the hon. member for Rustenburg, and the hon. member for Marico and the hon. member for Brits will join me in the plea that I want to make to the hon. the Minister. It is clear that numbers of farmers in the constituencies of those three hon. gentlemen are leaving the land because the production of low-quality tobacco does not give them a subsistence income, and it is the concern of the hon. Minister’s Department as to what type of farming this class of small farmer can convert to in order to make an adequate living. My plea to the Minister is this: According to the map of farm-planning research undertaken by his Department, the area known as the Middelveld and the Lowveld, surrounding areas from Rustenburg to Swartruggens, Zeerust and other areas, is completely neglected and no research is being conducted in those areas at all, and that includes the hon. member for Brits’s constituency. What I am pleading for is that the Minister should extend this type of research which is based on a voluntary contribution of farmers in the area concerned in cooperation with the Minister’s Department to find other balanced means of a farming economy that can be established in that area. It cannot be done without adequate research.
That does not fall under me.
Now the Minister says that he has got nothing to do with it. He does not know what is in his own report and what his Department says. Why does he not read the report of his Department? I will give him the references to assist him. He will find in the index that there is a section dealing with farm planning and that it is entirely the concern of the hon. Minister’s Department and not that of his colleague. They conduct the necessary research as far as establishing economic farming units is concerned, and that is why I make this plea to the hon. gentleman, because if there is one area and one industry where this type of research is necessary, then it is in the tobacco industry of South Africa. Because it will have this effect that other types of farming units will be established. With the necessary research you will find more balanced farming units being established and you will get away from this subsistence farming, the people in this area existing purely on a tobacco crop as such, where they produce low quality tobacco. The emphasis will be then that farmers will come and produce higher types of leaf and meet the varieties that can be produced by one of the most outstanding tobacco research stations in the world, the one located at Rustenburg. This will mean that adequate varieties of leaf will be produced which will enable us to export the surplus that is being produced in South Africa at the present time at suitable price levels. It is no good the hon. member for Brits coming here and talking vaguely about the prices that are given in the report of the Department. Those are the facts. If there is one industry, one group of farmers in South Africa who need the special attention of the hon. Minister’s Department, then it is surely the tobacco-producer as such, because it is clear on all the evidence that other forms of balanced farming are required in this area, to meet the needs of these farmers on these small areas of land with the limited amount of irrigation that is available in order to produce other kinds of crops or to go in for the animal factor so as to give them a better living standard than they have at the present time. I hope that the hon. member for Brits and these two other hon. gentlemen will support me.
How much tobacco do you produce on your farm?
If the hon. member comes to my farm he will learn what a balanced farm is. The hon. member can afford to fool in this debate because he does not take the interests of his constituents or the farmers’ association in his area into consideration at all, who approached the hon. gentleman to take some action as far as the hon. Minister’s Department is concerned. I hope that in the light of what I have said that at least in regard to one aspect I have opened the door for the hon. Minister to at least come forward and make one constructive proposal, and that he at least will say to his Department that he wants an investigation to be carried out as far as the Middelveld area is concerned, where the largest producers of tobacco in the country are located.
The hon. member for Turffontein has a strange way of arguing. He becomes so hot under the collar and speaks so earnestly that one is inclined to believe what he says. I want to come back for a moment to the figures to which he referred. What actually happened was that it suited the hon. member to quote the figures in regard to exports but it did not suit him to quote the local figures.
I did.
Just wait a moment. We can sing together but we cannot speak together. Do not let us forget our manners. I also want to do some quoting—
Page 35.
I did not interrupt the hon. member; I hope that he will remember his good manners. I quote [translation]—
and this is the point the hon. member wanted to make [translation]—
This is what the report has to say about the position locally, and the hon. member did not read it—
It is very easy to quote this report out of context and to read into it what one wants to read into it. But let me tell the House about a few things which flow from the allegations of the hon. member. The hon. member for Brits (Mr. J. E. Potgieter) has already referred to this matter. I think that there is far more tobacco on my farm than on that of the hon. member for Turffontein. I want to emphasize the fact that the marketing of tobacco in this country is in the hands of the farmers through the medium of the co-operatives. They are some of the best organized agricultural organizations in South Africa and speeches such as that made by the hon. member which seek to belittle the co-operatives and the farmers, do the industry no good at all. It is one of the best organized businesses in the country. The hon. member spoke about imports from Rhodesia. What is the position? We are importing from Rhodesia but we are doing so under an agreement which this Government concluded with the former Government of the Federation. Because Rhodesia is our largest market for industrial products, we have to take something from them in return. [Interjections.] We are importing from Rhodesia in terms of the old agreement which was concluded by the previous Government. The worst accusation that has been made against the hon. the Minister is that South Africa’s exports of agricultural products and her supplies to our internal industries are larger, better and more efficient than has ever been the case before. This has taken place under the guidance of this hon. Minister. Although there are certain branches of agriculture which are in a critical position to-day, I resent the fact that hon. members opposite should try to take advantage of this fact for political profit. The farmers in the Northern Transvaal are in a critical position not as a result of the policy of any Government but as a result of climatic conditions over which no Government has any control. Insinuations have been made about the fact that people are leaving the platteland for the cities. Is this not something that is happening throughout the world? Did the American Congress not vote vast sums two years ago in order to bring a large number of people from rural areas to the cities? It is cheaper to subsidize them in an industry in the city than to subsidize them in the rural areas. Those are facts. People who know nothing about these things must not participate in a debate about which they know nothing. It has been said here that more than 50 per cent of the people were on the platteland under the previous Government. Because that figure has dropped now, this Government has been given the blame. When we consider that the gigantic turnover of the American farmer—he not only feeds America; if he were to dump his surplus on the world market, the world economy would collapse—is produced by 6 per cent of the population, we realize that our figures are not out of proportion and that our farmers have actually not even started farming. Let us consider the true facts about agriculture in South Africa. If I were to discuss the past of that party in the agricultural sphere and if I were to tell the House how my wife had to queue up in order to obtain a little bread, or butter or meat … [Interjections.] That was the position under their Government and now they want to try to tell us what to do. The maize farmer who controls only one phase of agriculture to-day will this year receive R26,000,000 less as a result of drought. Last year the maize farmers produced 67.000.000 bags of maize but this year only 50,000,000 bags are expected. The income of the maize farmer will be cut by R26,000,000. This of course will result in hardship. Nobody can feel for them as much as we who are farmers ourselves. If hon. members could see the conditions there, they would also feel sorry for those farmers. The hon. the Minister was so interested in the matter that he paid a personal visit to the area together with the heads of his Department. I admire him for that. I asked him what conditions were like and he described them to me. The Government immediately made plans to assist those people. It is not the fault of this Government that no rain has fallen. But the Government has taken action and I as a Member of Parliament can state that a large number of farmers in my constituency have been saved from ruin with the assistance of the Government. It is not the policy of the Government to drive the farmers from the platteland. I think that that hon. member is far more afraid of a nomination fight than I am so he should be the last one to mention that matter. The question of the stabilization of certain branches of agriculture has also been raised. No Government in the past has done as much for the stabilization of agriculture as this Government has. So we must be careful what we say lest we damage what has been built up over the years by organized agriculture. The hon. member for Port Elizabeth (West) (Mr. Streicher), who, I am sure, does not know very much about agriculture, must be careful. He represents an urban constituency. We do not want to do anything which will affect the stability of the maize industry, a stability which it has taken us so many hard years to bring about. [Time limit.]
The hon. member who has just sat down accused us of using the difficulties of the farmers for political gain. Is the pot calling the kettle black? Was it not hon. members opposite who, when we were in power, exploited all the troubles of the farmers and to such an extent that somebody said to-day that it was the farmers who brought about the fall of the Government? Everything that went wrong was the fault of the Government. No, we are not trying to exploit the difficulties of the farmers for political gain. We are trying to get the hon. the Minister to do something for the farmers. [Interjections.] The hon. member spoke about queueing for bread and so forth. I wonder whether he has ever heard that there was a war on and that South Africa had to struggle in order to make a living? He can be pleased that he had a queue in which to stand. In other countries they had nothing to queue for.
I do not want to discuss the question of tobacco. If I do, I shall talk just as much nonsense (twak) as hon. members opposite. The hon. member for Turffontein (Mr. Durrant) tried to make two points. He urged the hon. the Minister to ensure that the quality of tobacco cultivated in South Africa was improved. He did not say that it was of poor quality. The second point he made was in regard to the great difference between the price paid to the producer and the selling price of the tobacco. I really do not know why all this fuss has been made.
It has been noticeable in this debate that when an hon. member has stood up on this side and has expressed criticism and has said that the farmers are in difficulty, hon. members opposite have popped up like toadstools to tell us how wrong we are. Instead of their agreeing with us and giving us a true picture of the position in their own constituencies—most of them represent constituencies in which the farmers are struggling—and helping us to tell the hon. the Minister what he should do, they try to defend the hon. the Minister. They devote most of their time to asking the hon. the Minister to do things for them. It is quite clear to me that things are not going well with the farmers. It is an acknowledged fact that the number of farmers and the number of our livestock decrease every year. If things are going so well with the farmers, why do they not stay on the land and why are our herds not increasing? There is no doubt that the farmers are struggling. I ask hon. members opposite to support us and to make a plea for the farmers in their constituencies.
I want to make a plea for a group of farmers who have been struggling now for many years. I am speaking about the poultry farmers. The poultry farmers of South Africa had a large export market for eggs in Britain and on the Continent in the past, but this market has largely disappeared. The Department has discovered other places to which eggs can be exported but we are still saddled with a tremendous surplus, so much so that the prices paid to producers this year are extremely low and the seasonal increase which is usually giyen was not given this year.
Another point about which many of us are also concerned is the fact that there is discrimination against the poultry farmers in the Western Province. Over the years the poultry farmers in the northern provinces have received more for their products than the farmers in the Western Province. This matter is discussed at the poultry congress every year. I have the minutes of the last congress here. The matter was again raised at the last congress and delegates objected to this discrimination. I hope that the hon. the Minister will be able to stand up and tell us that this discrimination is now a thing of the past.
When did the discrimination start?
There is another matter in connection with poultry farming which I would also like to bring to the attention of the hon. the Minister. The small-scale poultry farmer simply cannot make a living to-day. There are financially powerful feed companies which have established large-scale poultry farms and which market eggs and meat on a large scale. The result is that the small-scale farmer is slowly but surely being forced out. I know of one small-scale farmer who was making a good living with table birds but over the last six months he has had to reduce his price by 4c per lb. because the large companies are forcing him off the market completely and this after it has taken him years to build up his poultry farm. This is not an isolated case; one finds these cases throughout the country. This entry of financially powerful companies into the poultry-farming business has had its effect on egg production as well as on meat production. The producer receives a low price for his product but the consumer does not receive the benefit of those reduced prices; the producer still has to pay exactly the same price for eggs and poultry as in the past. The small-scale farmer is being forced out and the depopulation of the platteland, about which we are all so concerned, simply continues. I shall be very pleased if the hon. the Minister will tell us what his plans are in this connection when he rises to speak again.
I just want to say a few words in connection with a remark made by the hon. member for Turffontein (Mr. Durrant). He told us—he also said that we could read this in the report—that during the ten-year period from 1950 to 1960, 20,000 farmers left the land. But he did not read the report correctly. The hon. member should have read the report without his glasses. It was not 20,000 farmers who left the land.
What does that figure represent, then?
It represents farmers and White employees. [Interjections.] A White employee is not always a farmer. The hon. member is now trying to pass it off as a joke; he acts as though he were disinterested. I want to say that the hon. member is trying deliberately to make people aware of that figure. He is trying to accuse the hon. the Minister and his Department of handling agricultural matters so incompetently that all these people are leaving the land. I like it, Sir, when people quote figures in order to support their case, but when we quote figures we must quote them correctly.
You cannot expect it from him.
The figures tell us one thing and the hon. member tells us another.
I want to refer here to the hon. member for North-East Rand (Brig. Bronkhorst) who tried to give the House the impression that the hon. the Minister has administered his Department in such an incompetent way that our herds have been ruined and have remained static. The hon. member for East London (City) (Dr. Moolman) has also begun to harp on this subject since last year. I want this evening to try to put an end to that favourite topic of hon. members opposite. I want to prove that what they have said here is not correct. I want to start with our cattle herds. Without going into detail I can say that our cattle herds have remained more or less static, although not absolutely static, because since 1938 our cattle have increased in number from 11.9 million to 12.3 million, notwithstanding the fact that the number of slaughterings rose from 665,000 in 1938-9 to 1,555,000 in 1963 and the per capita consumption of beef rose from 56 lb. to 64 lb. Our rate of slaughtering has increased by about 300 per cent and yet the strength of our cattle herds has remained practically the same. This proves that the position is not as bad as all that. The hon. member also told us here about the tremendous drought and the number of stock that have died. He cried out: “Is it not a shame?” Those were the words of the hon. member for East London (City). What is the position? The mortality rate amongst live stock reached a peak during the last year in which the United Party was in government. At that time there was a three-year drought, during the second year of which 1,762,000 small stock died. But ten years later, when this Government was in power and when the drought was just as bad, only 882,000 died.
Where do you get that figure from?
The hon. member must not ask me where I get this figure from. I am not in the habit of sucking figures out of my thumb. The hon. member will find that figure in the report of the Drought Commission of 1947-8. Is that how the hon. member does his work? Is that how his memory serves him? The hon. member was a member of that Drought Commission of 1947-8 and the Secretary of the Department of Agricultural Economics and Marketing was the chairman of that Commission.
And to-day’s figures?
I have the figures and they are authentic but I cannot give them to the hon. member now.
I come now to our sheep. How many sheep were there in 1938? I am dealing now with the favourite topic of the hon. member for East London-City, a man who has always had a lot to do with agricultural organizations. How many sheep did we have in 1938? Did we not have 38,000,000 sheep? But what was the figure in August, 1946? Under the United Party Government, our wool-bearing sheep were slaughtered until their numbers stood at 24,000,000, a decrease of 7,000,000 in comparison with the figure for 1938.
Where do you get that from?
The hon. member must not ask me where I get it from; he must do his homework and then he will know where I get these figures from. As I said, the number of wool-bearing sheep fell from 31,000.000 to 24,000. 000. The long drought came to an end in 1947. We can take it, therefore, that the mortality rate was even higher while the United Party was in power. The National Party came into power in 1948. What was the position in 1960? By that stage our herds of wool-bearing sheep had been built up from 24,000.000 to 34,00.000 under the administration of the present Minister of Agricultural Economics and Marketing. Mr. Chairman, for the sake of convenience I only want to mention round figures. The number of white sheep had fallen by 1,000,000. The United Party Government was killing the goose that laid the golden egg but it was this Government which again built up the number of wool-bearing sheep in the country from 24,000,000 to 34,000,000 and which increased the wool cheque from R54,000,000 to R59,000,000. It is not a case of bad administration on the part of the Department and the hon. the Minister, as he hon. member tries to make out. But let us investigate the rate of slaughtering amongst our livestock to-day. The hon. member asks me where I get my figures from. I am quoting these figures from Agricon; The hon. member also had these figures at his disposal. These are departmental figures. I do not want the hon. member to think that I am talking nonsense. How many small stock were slaughtered in 1938? There was 3,541.000 small stock slaughtered in 1938 and 5,354,000 in 1962-3, an increase of 2,000,000 sheep and yet their numbers have remained the same. This is the position as far as our livestock is concerned, a matter about which the United Party has been making such a fuss over the past two years. The position is just the opposite of what they maintain it to be. I am convinced that if climatic conditions change, we will be able to inundate South African markets with mutton. If we were able to increase the number of our livestock by 1,000,000 during seven years of drought, is there any reason why we should not be able to build up their numbers even further in the future under favourable conditions? I see no reason why we cannot and shall not do this.
I hope the hon. member who has just sat down will forgive me if I do not follow him. In fact the hon. member got me so muddled up with figures that I would rather leave that subject alone. He became so excited that I thought the hon. member might develop high blood pressure.
Sir, I want to deal with another matter. We all realize that it is in the interests of the producers generally to endeavour to reduce costs of production. I have always felt that if there was one Minister who was particularly responsible for this aspect it was our present Minister. The subject that I am going to deal with tonight is one with which he is well conversant, and if ever a Minister has tried to side-step an issue it is this Minister, because every time we raise this important matter of jute for the bagging of all our products in this country, then we are told by the Minister that this is a matter which does not fall under his Department. We cannot get away from the fact that there are these Ministers who are concerned with this matter—the Minister of Economic Affairs, the Minister of Agricultural Technical Services and this Minister, the Minister of Agricultural Economics and Marketing. Some years ago the hon. the Minister of Agricultural Technical Services undertook to produce sufficient fibre in this country to be able to provide sufficient material for the manufacture of our requirements, and to-day we find that he only produces 16,000 tons a year, when we know that 50,000 tons is required. Sir, what a hopeless position we are finding ourselves in! For ten or twelve years they have been busy with this particular undertaking, and what progress have they made? I do not know if this Minister realizes what he has cost the farming community in this country over the last ten or twelve years. I want to draw his attention to the latest figures which have been supplied by the Department of Economic Affairs. I estimate that during the years 1962 and 1963 it has cost the country an additional R18,000,000 to supply farmers and end-users and industry with grain bags which are being manufactured in this country. If they had been permitted to import, it would have cost R18,000,000 less.
Business suspended at 7 p.m. and resumed at 8.5 p.m.
Evening Sitting
When business was suspended I was dealing with what I called the very large sum of money which I thought was wasted due to the fact that, instead of importing our jute goods, the Minister had seen it fit to have them manufactured in this country. For the benefit of hon. members opposite who have on a few occasions tried to show some interest in this subject I shall go into a little detail. It is quite obvious to me, Sir, that they do not understand the position. I do not know whether they are scared to give their support to what has become a very serious matter. During the 1962-3 season some 65,000,000 bags were imported. I am giving these figures because I hope to get it into some of the dumb-heads opposite. These bags worked out at 19.50 cent whereas during the same period 118.5 million were manufactured locally at a cost from 35 cent to 37.50 cent each. Do hon. gentlemen opposite understand now why we are concerned about this. We have to protect our producers, Sir. We have to make it possible for our producers, the industrialist in particular, to be able to compete with other countries and to export these goods. We are told by the other side how well-off the farmers are. I think the hon. member for Somerset East (Mr. Vosloo) mentioned the figure of 70,000,000 bags of maize. Has he stopped to think what it costs to bag that maize?
I said earlier that I thought the time had come for the Minister to wake up and to realize his responsibility. We cannot go on like this. Take the question of wool packs. During the 1962-63 season it cost us twice the imported price to manufacture them here. That is the position to-day. We have three mills on our hands which have been subsidized by the producers for 10 to 12 years. In which other country in the world will you find that the farmer is subsidizing industry? But that is being done in this country. I have never heard of anything like it. I think this is nothing but absolute blatant exploitation of the producer and I make bold to say that the producers do not know anything about it. I say that hon. members opposite do not understand it. There is a small crowd who know about it but they say: Well, “solank die mense op die platteland nie daarvan weet nie, laat ons maar aangaan”. That is what is happening to-day. I think the time has come that the people outside must know. We on this side of the House do not want to make a political issue of an agricultural debate. Sir, you have never heard me make a political issue of it, but I think the time has arrived for us to make a political issue of it. I say the Minister has fallen down on his job. This is not the first time; he sidestepped the issue last year. His excuse was that we must keep these mills going just in case sanctions were imposed against us. Just look at this ridiculous position, Sir: For 10 to 12 years we have had to produce a substitute for jute locally. We want 50,000 tons. What did we produce? Just 1,600 tons. If sanctions are going to be imposed against us in regard to jute where are we going to get the jute from? We have three mills which have cost the farmers millions of rand to keep going. Now hon. members ask: Where shall we get supplies from? Where did we get supplies from before? We bought them second-hand but we did not have to pay this enormous price. [Time limit.]
I see that the hon. member who cannot keep his hands off our constituencies has just come into the Chamber. When one has to deal with hon. members like that hon. member one does not actually know when one is on the warpath or not. He is always on the warpath and is always pointing an accusing finger at us. If he had grown up in my part of the world, he would not have a finger left because if anyone points his finger at a person in my part of the world, his finger gets broken. But the hon. member does not want to learn; he points his finger at anyone.
Last week the hon. member attacked the hon. the Minister of Bantu Administration for not having accepted a resolution of an agricultural union. Does he think that an hon. Minister should delegate all his power to an agricultural union? The hon. member then tried to create bad blood between the M.P., the hon. the Minister and the members of the Agricultural Union. Do you know why he tried to do this, Mr. Chairman? He has a small farm nearby. He produced 2¼ tobacco plants; he could not obtain the best price for that tobacco because it was not of good quality. He has not yet been initiated in the matter. Now he is annoyed with the whole world. He is also annoyed with me and with the hon. the Minister.
He tried the same thing here this afternoon. He tried to create bad blood between the tobacco farmer and the hon. the Minister. But the hon. member forgets that the tobacco industry is one of the best organized industries in the country. It is not an industry which will leave its affairs to laymen, like the hon. member and myself. It is an organization which entrusts its affairs to highly qualified people, people who have been trained in the tobacco industry since childhood, people who stand together like one man, people who do not expect their affairs to be bandied across the floor of the House by laymen, people who discuss their affairs with the hon. the Minister every year, people who are satisfied with the way in which the hon. the Minister is handling their affairs. Mr. Chairman, you have never heard me complain about the excise duty on tobacco. I do not complain because I belong to an organized body, a body consisting of experts, not laymen. They can handle their own affairs. The hon. member has complained about the quality of the tobacco cultivated. He says we are doing nothing to improve that quality; we are doing nothing to improve our exports; we are doing nothing to improve the position of the farmers!
I did not say that.
The hon. member often drives past Rustenburg. Has he not yet visited the finest research station in South Africa there? Experts at that research station are doing research to try to improve our tobacco plants. Because the hon. member wants to become a tobacco farmer in that district, I want to ask him to take the trouble to visit that research station and to make himself acquainted with the valuable work that is being done there. Once he has done so he will be ashamed to make statements in this House in the future similar to those which he has made to-day. I do not think that there is one branch of agriculture which puts more into one small piece of land than tobacco farming does. I do not think that there is another branch of agriculture which is as organized and which spends as much money on research as does the tobacco industry. There is no other branch of agriculture in which so much has been done.
Although that research station falls under the Department of Agricultural Technical Services I want to tell the hon. member what the farmers think of that station. He should have been at Makoppa the other day to hear us thank the hon. the Minister in the presence of a few hundred people, this Minister whom he has so insulted, this Minister whom we work with every day. I am a member of the drought committee. I am a person whom the hon. the Minister consults in connection with the position in the Northern Transvaal. I know the feelings of the hon. the Minister; I know what he is doing for the farmers. If the hon. member had been present then and had heard those 200 farmers almost lifting the roof with their applause to show their gratitude to the hon. the Minister, he would have spoken differently. But, Mr. Chairman, you know that the basis of civilization is gratitude. That is the basic principle in life. When gratitude is lacking, there is no civilization. The hon. member for Turffontein does not have a scrap of gratitude in his entire being. He is just a lump of ingratitude, a lump of belligerency who for the sake of political profit has allowed himself to be carried away in regard to a few matters. I will not be told that he is not intelligent enough to know that he is wrong. I will not be told that he is a stupid person. He is a sensible person but does not want to act sensibly. When speaking across the floor of the House, he does not want to use his common sense; indeed, he loses it then. He may find it again to-morrow, but he has lost it to-day.
He will not succeed in trying to stir up the farmers against the hon. the Minister of Bantu Administration and the hon. the Minister of Agricultural Economics and Marketing. At every election we have succeeded in increasing our majority by 1,000 due to the efforts by those two hon. Ministers. I am very pleased that the hon. member has acted in this way because each time he acts in this way he opens the eyes of the United Party supporters in Rustenburg even further and proves to them that if they put that side of the House into office they will be putting their affairs into the hands of laymen, their affairs will be dragged through the mud and their cause will be lost. We who have dealings with the hon. the Minister can tell the voters what is being done. Those farmers are so satisfied that it is not even necessary for their representatives in this House to open their mouths, unless a challenge is issued to them such as that issued by the hon. member for Turffontein. I do not want to pick a quarrel with the hon. member; I do not think he is worth the trouble, but I do want to tell him quietly and courteously please to keep his nose out of our constituencies. I want to assure him that he will not succeed in winning one vote there. He will not win one vote in Marico or in Brits. Let him save himself the trouble. He must not concern himself about the farmers of Rustenburg. The tobacco farmers of Rustenburg will not ask him for anything.
The hon. member for Rustenburg (Mr. Bootha) will forgive me if I do not talk about tobacco. But I had hoped that he would at least have helped the situation by following up the question of packing. I believe they do use a little bit of jute packing in the tobacco industry. It is probably a little but I do not think they know how much they overpay for it. I leave the hon. member there because, as I have said, I am not going to talk about tobacco. My experience in this House has been that members opposite representing farmers’ constituencies never take the trouble to read the reports: they do not know what is taking place; they do not even read the questions which we put from time to time across the floor of this House on the burning question of jute. But they are quick to thank the Minister. I think the hon. member for Brits might be able to help us if he approached the Minister on this question in the same way he approaches the Minister in connection with his problems and gets them settled. Our approaches have not had any response from this Minister. I do not think this Minister knows what is taking place. I do not think this Minister can tell us what the cost of a wool pack is. Does this Minister realize that you can buy an imported wool pack for 80c but that the farmer has to pay R1.77 for the locally manufactured product. But we just go on; the Minister says we must do it. The people who use grain bags are in the same position.
In fairness to all concerned I think I should give more details in this regard: Over two years we could have imported 118,000,000 bags at half the cost it would have cost us to manufacture them here. But they say it is good business; “ons help die boere”; “the farmers don’t require anything”. When I represented the farmers in the commercial field I struggled to save them every cent but under this Government and this Minister it seems that the farmers can hardly live. I tell hon. members opposite who always talk on behalf of the farmers it is time they woke up to the position; it is time they looked after their constituencies; it is time they looked after the interests of the farmers. Never over the past two to three years when this particular subject has been raised has there been a bleat from them; they are always just thanking the Minister. And the Minister passes the buck; you would swear you were dealing with a rugby team. This year the Minister thinks he is Santa Claus. He does not know what is coming to him. Once the farmers know what he has been doing over the last few years, he will have to fight for his nomination. Never before have the farmers been exploited to the extent to which they have been exploited over the last ten to 12 years with regard to the manufacture and the importation of jute goods. I believe industry would be shocked if they knew that the farmers were subsidizing industry. This is pure and concise: The farmers are to-day subsidizing industry. If the Government wishes to maintain the present position of manufacturing bags and packs at this tremendous cost, it is up to the Government to find the ways and means of subsidizing those bags and packs and not call upon the producer to do so. Over the last two years it has cost the farmers just on R1,000,000 for the manufacture of packs. If you won’t believe me—these are facts—I can prove them.
Mr. Chairman, the lion is lying in the bush: he is lying next to his kill and he is feeding his cubs. It is the Government and the hon. the Minister who are looking after the farmers. The hon. the Minister looks after all the branches of the farming industry to the best of his ability and according to the demands of the time and circumstances.
I want to make use of this opportunity to reply to the hon. member for Turffontein (Mr. Durrant) who said that I have no contact with my farmers’ unions—I have five district farmers’ union in my constituency—and with my National Party branch organizations of which there are 67 in my constituency. Every decision taken by the Government on the recommendation of the two Ministers of Agriculture and every important request which is made to the Department along the official channels are sent by me with the replies thereto to the associations, and they accept these with thanks. The farmers in my constituency are very much more informed in regard to matters than the few United Party chairmen of smaller farmers’ associations with whom the hon. member for Turffontein is apparently in contact and who have inspired his spiteful attack upon me. Let the jackals and the wolves howl; the kill lies near the forepaws of the lion and the lion is snarling. The hon. member for Port Elizabeth (City) (Mr. Dodds) said that the hon. the Minister would lose his nomination if the rural voters found out how he was treating the farmers. The hon. the Minister has travelled through the North-Western Transvaal. He travelled through my constituency for 240 miles. He addressed a meeting of about 100 farmers in the heart of the drought-stricken area and not one note of discord was heard. He travelled to the Tabazimbi/Rustenburg Bosveld and met 250 farmers at a meeting at Makoppa. No discordant notes were heard there either. Where is the seething discontent mentioned by the hon. member for Turfontein? Before dealing with the hon. member in connection with his contentions regarding tobacco, I want to express my gratitude to the hon. the Minister. [Interjections.] He deserves thanks and appreciation. He was thanked at both meetings in my constituency. He went along there as an observer; he went there to view the critical position himself in order to be able to do more for the farmers in those drought-stricken areas. This Government will not leave them in the lurch. The farmers are satisfied because the hon. the Minister has told them about the steps that will still be taken to assist them.
If I have time to make a further request to the hon. the Minister, I want to emphasize the fact that he use his influence with the hon. the Minister of Water Affairs to have the new regulations in terms of which payments are made for dry boreholes, reviewed. The present tariffs in this regard cause a great deal of hardship. If he can succeed in doing this, he will be doing the cattle farmers particularly a great service. If the sound plan of supplying the farmers with water by way of pipelines from State dams is accelerated, it will solve many problems. An ox can make do on poor grazing as long as he has an adequate supply of water. If provision is made during years of good rainfall for the dry periods which will come again, it will solve a large number of the problems of the many farmers in the vast, dry cattle areas.
I also want to quote a few figures from the annual report of the Department of Agricultural Economics and Marketing. I want to quote from the same page as that from which the hon. member for Turffontein quoted, in order to refute his arguments. It is easy to play with figures. He tried to give the impression that there was a great difference between the price paid to the producer and that received by the Tobacco Board. These figures appear on page 35 of the report. He deliberately did not point out that there is a levy of .15c on every pound of tobacco. He did not point out that the cost of storing the surpluses of the co-operative are as follows: for flue-cured tobacco, 3.85c per lb.; for light air-cured and light Burley, 2.60c per lb.; for dark air-cured tobacco, 1.85c per lb.; and for dark Turkish tobacco, 1.35c per lb. The hon. member did not point out that there is a tremendous difference between the export prices obtained for these same varieties of tobacco. From 40 per cent to 50 per cent of flue-cured and light air-cured tobacco is exported, and I think that this is a real achievement. Last year we exported 20,250,000 lbs. of tobacco, and it is estimated that we will export a further 20,000,000 lbs. this year. But prices are low. This is where the difference comes in, because the losses on that tobacco have to be made good somehow. The result is that the producer eventually receives a lower price. Listen to this, Mr. Chairman: Export prices, 1963: Flue-cured, 22.52c per lb.; air-cured, light, 15.17c per lb.; dark, 9.25c per lb. The expenditure of the Tobacco Board for 1962-3 amounted to R1,708,539; funds for stabilization purposes, R5,295,290. It is this expenditure which makes the gap so wide. The directors of the tobacco co-operatives are people who know the tobacco industry, people who work and strive in and for the best interests of the tobacco industry. The chairman and general managers come down to meet us every year. We make joint decisions—the tobacco group and themselves—in regard to the problems submitted to the hon. the Minister. The hon. member for Turffontein knows nothing about this, and yet he accuses us as the representatives of Marico, Rustenburg and Brits of having no interest in the tobacco farmer. We know the tobacco farmer and his problems. We know the man who early and late, from January to January, carries on his profession on his small farm. The hon. member spoke about research, and said that we still find people who sow any kind of tobacco seed under thorn trees. I wonder whether there is one farmer in this enlightened age who still sows tobacco under thorn trees. That is an insult to the tobacco farmers. They say here in the M.T.G.A.’s annual report [Translation]: “It is most strongly recommended that members should only use the tobacco seed of the Research Institute.” Here they discuss the various varieties which have to be used for blending, and about which the hon. member for Turffontein is so concerned. They say this [Translation]: “Members are courteously requested to make use of the suggestions of the Research Institute and to discuss any production problems with them.” They warn against a too swift change-over to any new type of tobacco, because the present types have been tested and adapted as a result of the research which has been done over a long period. Extension services are available to every tobacco farmer. I have here a pamphet which has recently been issued, in which the Research Institute gives information regarding new artificial fertilizer mixtures, flue-curing and new fuel and heating systems. They go on to say [Translation]: “The tendency to change varieties when one comes up against a problem in the production programme is seldom justified.” What the hon. member has said should be done is, therefore, already being done in a very efficient way. We, who are the representatives of tobacco-growing constituencies, are also sometimes disturbed. We are sober enough to convince the hon. the Minister that the gap between the producer price and the consumer price of many products in our country is wide. It is unfair of the hon. member for Turffontein to accuse us of not doing so. We do it every day. The hon. the Minister sometimes gives two interviews a week to our tobacco group, our drought group and other agricultural commodity groups when we want to discuss the problems of the farmers with him. [Time limit.]
I want to deal with something that was said by the hon. member for Gordonia (Mr. G. P. Kotze) just before the lunch interval. He placed a great deal of emphasis on the figures given in this report. He said that they say that the number of farmers, including White employees, fell from 136,000 in 1950 to 116,000 in 1960. He particularly emphasized the fact that the hon. member for Turffontein did not say “farmers and their employees”. But the chairman of the South African Agricultural Union has a completely different story to tell. He says that there are only 106,000 farmers at the moment and that this number will be reduced by 4,400 per annum. Therefore, at the end of 1965 there will only be 92,000 farmers. The figures which have been quoted are the figures for 1960.
I want to come back to the hon. the Minister. I listened attentively to what he had to say. I have never in all my life listened to a poorer speech. In any case, it was not a speech; it was a cross-examination, a cross-examination by somebody who apparently knows nothing about agriculture. It was not even of kindergarten standard. It was of the standard that one would expect from a child of two years old. When one tells such a child that it is time for him to go to sleep, he asks: “Why?” When one says: “It is 8 o’clock; you must go to bed”, asks: “Why?” When one says: “Sleep does you good; if you do not sleep, you will not grow”, he asks: “Why?” That is what the hon. the Minister kept asking us: Why and when? The hon. the Minister dealt with our contention that the economic prosperity prevailing in the country at the moment has by-passed the farmers. He said that contention was completely wrong. Then he said that there were other people who had also missed this economic prosperity such as the pensioners and the small shop owners. But the pensioners are, after all, not members of an industry like farming, Mr. Chairman. How can the hon. the Minister compare pensioners, people who were civil officials, with the farming population? The hon. the Minister also quoted various things. Eventually he came round to butter. We then heard the same argument that we hear in connection with every product. He said that he had lowered the price of butter and that the result was that the consumption increased. He said that there was a scarcity of butter now because more butter had been consumed. But there is not a scarcity now because more butter has been consumed; oh, no; the scarcity is as a result of the drought. The hon. the Minister now tells us that this scarcity has arisen because there has been a drought. One minute he says that there was a drought and the next minute he says that more butter was consumed. But, of course, he has forgotten that when one lowers the retail price of a commodity by 22 per cent, the consumption is only increased by 4 per cent, and yet the price to the farmer is so much less. That is what usually happens. On the one hand the hon. the Minister tells us that there is a scarcity of butter because more butter has been consumed as a result of the fact that he lowered the butter price and on the other hand he says that we must realize that there is a scarcity at the moment.
What does Danskraal have to say about that?
The people of Danskraal say that they are not sharing in the prosperity which that hon. member is sharing in because that hon. member receives R2,000 per annum for attending five meetings per year. If I were that hon. member, I would not say a word in this debate.
Then the hon. the Minister deal with the statements made by the hon. member for East London (City) (Dr. Moolman). He asked him which farmers he was discussing and which economic factors he was discussing. He wanted to know how one was supposed to know which economic production had to be increased. He asked which farmer had to be taken as a basis, a farmer in the highest income group or a farmer in the lowest income group. He asked these questions one after the other. When he reached the maximum he wanted to know whether it should be the maximum or the minimum production. He said that it was easier to talk about a balance and, speaking about markets, he said that we did not need any new markets because we were already exporting at the moment.
What actually do you want to say?
He spoke about the export of maize at the moment and he said that we do not have nearly enough maize to export this year. [Interjection.]
Order! I cannot hear the hon. member for Drakensberg (Mrs. S. M. van Niekerk) if hon. members make so much noise.
The hon. the Minister said that we do not have enough maize for export purposes. It was actually rather comical when he spoke about the Marketing Act and mentioned the Marketing Council and the control boards. In one breath he said that they were only advisory boards. He told us very clearly that he as Minister need not accept their advice but right at the start when we were discussing the reduced prices for dairy products and the reduced prices for maize products, he said that it was not the Minister who had reduced these prices; it was the boards which had reduced prices. The boards said that he should reduce prices. Does the hon. the Minister really think that we on this side of the House are so ignorant that we do not know that the members of the Maize Board—some of them are sitting here—argued for the three days with the hon. the Minister and that he eventually gave them the basis on which to work and said: “I want you to agree with this.”
That did not happen.
The funniest thing of all, of course, was when the hon. the Minister spoke about onions. He told us that he had abolished the Onion Control Board because one United Party organizer organized against him. He got the fright of his life. He said one United Party organizer had organized amongst the onion farmers and that because of this fact he had had to do away with the control board. [Time limit.]
Listening to the hon. member for Drakensberg (Mrs. S. M. Van Niekerk) and the way in which she approached agricultural matters, it was clear to me—and this is also the impression that I have gained from the whole debate up to the present—that the Opposition approach the problems of agriculture in a lighthearted way. They deal with these problems in this spirit because they realize that they will never be placed in the responsible position of administering this Department. There are still a few members opposite who are in some sort of touch with organized agriculture and I resent the fact that they have not informed the others who have tried to tell us something about agriculture, informed them in the sense that they can teach these people something of the way in which the prices of controlled products are determined. I am sure that it is no secret to any farmer in this House that it is a pleasant task to advocate a higher price for a product. No farmer is opposed to a good and high price. He likes the idea of a good price. But when the problems resulting from drought conditions have been put to the hon. the Minister on occasion and the hon. the Minister with a sense of responsibility has said that higher prices alone will not solve the problems of the farmers, he is interpreted by hon. members opposite—and particularly the hon. member for Port Elizabeth-West (Mr. Streicher) who has repeatedly referred to this matter in this House—as saying that higher prices are not good for the farmer. The hon. member goes on to say that if the hon. the Minister argues in this way, it means that the hon. the Minister contends that low prices are good for the farmer. That is the way in which the hon. member argues.
He also says that stable prices are no good.
The hon Minister has repeatedly said that higher prices are not the only solution to the difficulties of the farmer. That is a sensible point of view and if the Opposition had any responsibilities as far as agricultural matters were concerned, they would also make use of this platform to tell the farmers of South Africa: “Good prices are one thing, but there are other things which the farmer must have in order to make a success of farming, particularly, the times in which we are living, agricultural economic information. Make use of the services which this Department offers you”. But that is not what hon. members opposite say. They do not use responsible language in calling upon the farmers to make use of the excellent services which are available to them. The game being played by the Opposition is to tell the farmers: This Government, particularly this Minister, fixes prices. The Minister alone is responsible and he is causing your downfall.
Yes, quite right.
That is the lighthearted approach to this matter on the part of the Opposition. I want to tell the hon. member for Drakensberg that those tactics will not pay. That method of trying to upset a sensible point of view will avail them nothing. Our farmers are not uninformed people: they are developed people, and they can see through this cheap political game which has nothing to do with agriculture itself. The hon. member for Turffontein (Mr. Durrant) whom I believe is also farming with a few tobacco plants in the Rustenburg area, quoted this evening from the report of the Department to prove that things were going very badly indeed with the farmers. He spoke about 20,000 farmers who had left their farms over a period of ten years. One of the hon. members on this side has already told him that these 20,000 people were not all farming entrepreneurs but that this number also included White people employed on the farms. But the hon. member did not go on to read properly what is contained in the report. It states—
and this is the important point—that the man who stays on the farm must be able to make a good living there—
There we have the 20,000 mentioned by the hon. member.
Their numbers decreased.
Yes, of course, we do not deny that. No country in the world which has been in the process of changing over from an agricultural to an industrial country has seen any danger in the fact that more of its people are moving to the cities and making a good living there. But this is where the point comes in that those remaining on the farm must have a per capita income of such a nature that they can make a good living there. That is what is stated in the report and the hon. member omitted to mention this fact. The report continues—
That is essential information—that the man who has remained on his farm is making a good living to-day.
I referred just now to the fact that hon. members have shown an abyssmal ignorance in connection with the way in which the prices of controlled products are fixed. It appears to me as though some hon. members travel around the country addressing a few meetings and picking up a few things here and there—perhaps a bag of onions or a bag of wheat or something of that nature—and then come along and complain in this House. The hon. member for Gardens (Mr. Connan) spoke about wheat and also about onions, but the hon. the Minister has already replied to him in regard to the latter so I want to refer to his remarks in regard to wheat. He said that two years ago the price was decreased by 12 cents per bag, that there was an increase of eight cents per baa last year and that there has now been an increase of 27 cents per bag. The hon. member also said that he cannot accept the fact that production has decreased over this period and that this has given rise to fluctuating prices. In other words, he suggests that the hon. the Minister fixes the prices of these products in a completely arbitrary fashion. If on the day when he was to fix wheat prices the hon. the Minister gets up in a bad mood, he reduces the price by eight cents per bag!
That is how it seems.
Do you see; that is how they approach the matter. Does the hon. member not know that the price of wheat, as in the case of any other controlled product, is fixed on the basis of production costs plus an entrepreneur’s wage and then, on a average over five years; that if a farmer has a poor yield per morgen this year, he will be compensated as far as price is concerned next year; and that the 27 cent increase that was granted this year was the necessary result of poor crops over the past few years, which increased the five years’ average? If hon. members will only take the trouble to investigate the matter they will find that the system that we have is a guarantee to the wheat farmers and that it has been this system and not the alleged moods of the hon. the Minister which has given us a 27 cent increase per bag this year. I can draw no other conclusion but that hon. members of the Opposition approach the whole question of agriculture and the circumstances of the farmers in an extremely lighthearted fashion. The hon. member for North-East Rand (Brig. Bronkhorst) spoke about the difficulties of the poultry farmers. I do not know whether the hon. member is a poultry farmer himself but I do not think that he has done the people in his constituency whom he represents a favour by advocating the fixing of the floor price for eggs. This will have an adverse affect upon the Western Province which is the best egg producing area. I want to tell the hon. member that we solve our problems here ourselves. After making representations to the hon. the Minister, we have solved the problem and there is now a uniform price for eggs throughout the whole country.
Let me return for a moment to the question of price determination and whether it is done on an arbitrary basis or not. Hon. members try to make the farmers believe that this hon. Minister is the culprit. I should like to quote from a letter which appeared recently in Die Landbouweekblad. A certain person writes here about the increased prices for maize and wheat. He has this to say (translation)—
This brings me to the point that I want to make. [Time limit.]
The hon. member for Stellenbosch (Mr. Smit) dealt with the question of prices, and I think he should realize that members on this side of the House have always suggested that the farmer is entitled to a fair and reasonable price for his labours. In regard to farm-planning the hon. member should also remember that the position in regard to the shortage of agricultural economists is such that it will take about 80 years at the present rate of farm-planning before the job is completed. That is indeed a very long-term solution to the problem.
The reason why I would like to participate in this debate is to put the point of view of the consumer. We have listened to a large number of speeches to-day on the problems of the farmers, we have also heard speeches thanking the Minister, which is something not unusual in the debates on the Committee of Supply from the Government side. But I would like to put a point in regard to certain matters concerning the consumer. I want to deal with the position of dairy products, particularly butter, and the Minister’s attitude in regard to the manufacture of margarine. The dairy farmers, possibly fully justified, due to increasing costs and so forth, were entitled to an increase in the price of fresh milk. Therefore it was not unexpected that there was also an increase in the price of other dairy products, such as butter and cheese. On 18 May it was announced that the price of butter had been increased as follows: Choice butter 35 cents per lb., table butter 33 cents per lb. and household butter 31 cents per lb. When you look at the position in regard to butter in the Republic you find that during the next four months probably an amount of R4,000,000 worth of butter and cheese will have to be imported into this country to meet the needs and the demands. The figures that I have seen show that the present production of butter is approximately 400,000 lb. per week less than the national demand. The estimated demand is 2,100,0 lb. per week and the present rate of production is 1,700,000 lb. per week, which means there is a shortfall of 400,000 lb. per week. The position in regard to the stocks of butter is, according to the figures supplied to me, that at present we have some 10,000,000 lb. of stocked butter in the country whereas at the same time last year the stocks stood at some 15,000,000 lb. So you see that there is a deterioration in the position in regard to butter. To compensate this shortfall it appears that the Dairy Industry Control Board is importing some 5,500 tons of butter from New Zealand and America at a cost of approximately R3,450,000. In addition another 1,250 tons of cheese will be imported from New Zealand and Holland at a cost of R500,000. We are having to import this butter to South Africa to meet the demand but at the same time we have available in South Africa margarine which can be of great assistance to the lower and the middle income groups. Margarine is available at 20 cents per pound and in some instances 18 cents per lb. It is used to a certain extent by a large number of people who cannot afford to buy butter, and we know that the rising cost-of-living compels people to economize in every possible way so as to be able to exist reasonably well, and with the continual increase in prices those persons in the lower and middle income groups and those persons living on fixed incomes are perhaps the most adversely affected of all. So I believe that the provision of margarine could go a long way towards meeting the shortfall in butter. During the course of the past few months there have been requests to the hon. Minister to permit the manufacture of yellow margarine. We know that the quota for margarine is set by the hon. Minister after consultation with the Dairy Control Board, and I understand it is now somewhere in the region of 16,000,000 lb. On 17 April I put a question to the hon. the Minister in regard to this question of permitting the manufacture of yellow margarine and the hon. the Minister in his reply indicated that there had been a request from certain registered manufacturers and also recently there had been requests from the Oilseeds Control Board, asking for the lifting of the prohibition on the manufacture of yellow margarine. The hon. Minister gave as one of the reasons why he could not permit the manufacture of yellow margarine for local consumption that in some instances it might be served and sold as butter, and that the main reason for these representations was that the margarine would have the appearance of butter. Now I believe that the one particular difficulty in this respect could be overcome to a large extent if it were stipulated that this margarine would have to be wrapped distinctively so that persons and retailers selling yellow margarine would not be able to mislead the consumers. I believe that that aspect can be overcome. We know there are a number of people who wish to mix margarine with butter and those persons wish to buy yellow margarine. I consider that the provision of yellow margarine would go a long way towards meeting the shortfall that we are experiencing to-day in regard to butter. It would mean a saving of many millions of rand as far as the country is concerned and would also help to stimulate local manufacture and local industry.
Why must it be yellow?
One of the main reasons why a person wants the yellow margarine is that it will be more attractive to partake. One of the drawbacks of margarine is the white insipid appearance of margarine, and I believe that with a change in the appearance of that margarine a large number of people would be able to enjoy the margarine. Just as many people prefer white bread to brown bread. You know, the present Government when it came into power promised to provide white bread. Now you might ask why the people prefer white bread to brown bread, although brown bread has been proved to be more nutritious than the white bread. It just so happens that the demand is for the white bread. One might also just as well put a question why butter is coloured. If the hon. Minister in his reply wishes to give reason for the refusal to permit the manufacture of yellow margarine, he might also answer that particular question why butter also has to be yellow. I do hope that the hon. Minister will give serious consideration to this particular request. I believe it is one that could do the country a great deal of good and that it would be able to meet the demand that the manufacturers of butter at present are unable to meet. We have seen estimates as to what the position will have to be if we are to have an adequate supply of milk available in the country, and some estimates have even put it that we will require another 1,000,000 head of cattle to meet the demand in regard to milk.
There is another aspect in regard to which I would like to have some further information from the hon. Minister. It is also an important question of consumption in regard to the feeding of people and that is the question of the skimmed milk powder which is made available by the Minister of Health to the various local authorities and is playing a very important role in the combating of malnutrition and kwashiorkor. I hope the hon. Minister can give an assurance that the supplies in that commodity are readily available and that there is no likelihood of a shortage arising in that respect which would curtail the very important and necessary work that is now being undertaken in the combating of malnutrition and kwashiorkor.
I have nothing to say at the moment about the question of margarine. I want to confine my remarks to the co-operative movement. In connection with the buying and marketing of agricultural products the agricultural co-operatives have, in my opinion, a four-fold task to perform. Firstly, there is the sale of the products; secondly, the distribution of the products; thirdly, the processing and packaging of the products; and lastly, that they can serve as a purchasing channel for the requirements of the farmer. I want to discuss for a moment each one of these four functions which, as I see it, the agricultural co-operatives can fulfil in our agricultural industry.
I want to deal first with the function of serving as a sales channel. At the moment we have the position that our control boards have, to a large extent, taken this function out of the hands of the agricultural co-operatives, and to a large extent the agricultural co-operatives only act as the agents of the control boards as far as the purchase of the products of the farmer is concerned. I want to say that I think that the agricultural co-operatives can perhaps be of assistance in cases where the products of agriculture are required by the farmers themselves. Let me put it in this way: I am thinking now of the maize industry. I take it that the agricultural co-operatives are the agents of the Maize Board as far as the purchase of maize is concerned, but is it not possible for them also to become the organizations selling those maize products when they are needed by the farmers? There are many sections of the farming industry which need that product. If the co-operatives can handle it directly, then it will not be necessary for the maize to make the long detour of the distribution channels which are now being made available by the control board. This will also eliminate a great deal of expense and make those products cheaper to the consumer.
Are they not the agents of the Maize Board?
They are the agents of the Maize Board, but I say that if they are the purchasing channel, they must also become the selling agent of the product for local consumption, so that the co-operatives can deal with the cases in which the products of the farmer are required by the farmer. For example, the maibe product is required in the dairy industry. I say that the co-operatives should also be used as a channel for the sale of maize to the farming industry. I merely mention this as an idea which can perhaps be successfully investigated, because I feel that the farming industry does not need to sell its goods to the trade and then to have those goods returned to the farming industry where they are required. A shorter method can be followed. This is merely a suggestion.
I come now to the distribution of products. The distribution of the product of the farmer is not in the hands of the farming industry as a whole. There are many other persons doing the distribution of farming products, and I think that the agricultural co-operatives should also have a share in the distribution of the products of the farmer.
I come now to the processing and packaging of the products of the farmer. We know, for example, of the development of chain stores at the moment. We know that these chain stores negotiate with the distributors of the products of the farmers. Let me mention an example. There is the example of canned fruit. A 1-1b. tin of canned peaches holds six peach halves. Some of the large chain stores offer the canning companies a special price, because they buy in bulk. Because of this fact, they pay so much less. But, instead of each can containing six halves, it only contains five, the rest being made up with syrup. The weight still remains the same, but half a peach has been saved. This product is then placed on the market by the chain stores. They receive their goods far more cheaply in this way, and they are able to outsell the retailers who have to compete against them. I want to ask whether the time has not arrived when the agricultural co-operatives themselves should undertake the processing of the products of the farmers and market these products themselves in order to prevent this sort of misuse and forcing down of the price by chain stores and similar large undertakings as far as agricultural products are concerned. The same thing holds good in regard to packaging. If one enters one of these large chain stores at the moment, one will find small pieces of cheese of, say, 2 oz. or 3 oz., which have been specially packaged. The packaging also costs a large amount of money, but by packing small quantities they can bring down the price to the people producing the cheese, because they buy in such large quantities. It is not possible for people in the shops to cut up cheese and to sell it in these small pieces. As far as the packaging is concerned, therefore, it is perhaps time the agricultural co-operatives entered the picture and undertook the processing, packaging and the sale of their products themselves.
To the exclusion of private enterprise?
To my mind the agricultural co-operatives also form part of private enterprise. They are just as entitled to enter that sphere as anybody else is. I think that it is wrong to think that the agricultural co-operative does not form part of the private sector. It is just as much a part of the private sector, so why should it not be able to market its own products like so many other industries in the country?
But it can.
Yes, it can do so, but I ask that it be made more use of than is at present the case. I do not say that it should have an exclusive right in this regard, but that it should be included. The hon. the Minister’s Department has liaison with the agricultural co-operatives and the Co-operative Council, and I should like the Department to give some encouragement in this direction.
I come now to the fourth point, and that is that they should also serve as a purchasing channel for the requirements of the farmers. That is what they are now, but they can only buy goods which are actually farming requirements. I fear that the Co-operative Societies Act defines “farming requirements” rather narrowly, and that the co-operatives are rather restricted by this fact. The farmer is virtually in the hands of the trade to-day. The farmer is not only a producer; he is also a consumer as far as a large variety of goods consumed in the country is concerned. But, because he is in the hands of the trade in this regard, he cannot purchase his farming requirements where he can obtain them most cheaply. If the agricultural co-operatives can do more in this regard by acting as a purchasing channel so that they can mobilize the purchasing power of the farmer within their own circle, then they will be in a far better position to make those farming requirements available. I can mention many examples in this regard. There is, for example, Vetsak, which is now making plastic pipes. They forced the price down because they entered this sphere, and they are now manufacturing and marketing these products on a co-operative basis. They compelled the trade to sell those articles to the farmers far more cheaply. I also ask that the co-operatives should become a better purchasing channel, and that the definition of “farming requirements” in this Co-operatives Societies Act should not be as narrow as it is, and that they should not be restricted in this regard. It is my contention that the agricultural co-operatives will be able to function far more effectively in the interests of the farming industry. We may be able to bring down the high production costs of the farming industry by allocating these various functions to the agricultural co-operatives and encouraging them to fulfil these functions for their own industry.
The hon. member for Heilbron (Mr. Froneman) will pardon me if I do not reply to the arguments he advanced because, to a large extent, we agree with what he said. I want to come back to the question put to me earlier by the hon. the Minister. It is incomprehensible to me that the hon. the Minister considers it worth his while to defend the Marketing Council here, as though anyone on this side had made an accusation against the council, other than the fact that it is a council appointed by the hon. th6 Minister. He has never taken the trouble to change the constitution of the council and to accept the nominations of the South African Agricultural Union to that council. We have said that it is the function of that council to co-ordinate the prices of the various agricultural products but we have not criticized them for the work they are doing. I want to go further. I want to be courteous towards the hon. the Minister because, owing to a misunderstanding, the other day he accused me of discourtesy. I do not want to be accused of being discourteous, but why the hon. the Minister should deliberately avoid every argument advanced by the Opposition instead of saying that he agrees with us in certain respects and why he does not face up to matters squarely, I do not know. I want to come back now to the question of the control boards.
I was dealing with the Price Control Board and I told the hon. the Minister that, in its scope and composition, the board did not justify what it was doing for the industry. I said that the South African Agricultural Union had made representations to him that the producers should be given more representations on the board. The hon. the Minister replied that, because of the various industries that were represented on the board, it was not possible to give the consumers a considerable majority on the board. But that was not the way in which the hon. the Minister took up the matter. He contended that I had said that the appointments which he made to the board were wrong, as though they were not appointments recommended by the various organizations. But when we have to deal with a board like the Meat Control Board, which has 22 members, we find that the Meat Industry Committee has already made representations to the board to reduce the number of its members because of the fact that the board is constituted in such a way that it can never make a pertinent recommendation to the hon. the Minister to have the scheme changed. The hon. the Minister knows just as well as I do that half the trouble is caused by the composition of that board but he avoids the whole matter. He does not say that the board may perhaps be unwieldy and that he may perhaps be able to do something in this regard. He leaves that enormous board just as it is. What was the reply of the Meat Control Board to the Meat Industry Committee? It was: The board does not see the necessity for reducing the number of its members. I leave it to hon. members opposite to tell me what the Meat Control Board is actually doing. The hon. the Minister agrees that a few things are necessary, one of which is economic production. But where does the hon. the Minister start? He mentions only one thing. He asked me how I wanted to control the capital investments in and the price of the land, and how I wanted to calculate it; whether it would be calculated on the maximum or minimum price. He said that production costs have a great deal to do with economic production. The hon. member for Port Elizabeth (West) (Mr. Streicher) mentioned only one item—the container which is used for any product. If the container costs anything from 10c to 15c too much, because of the fact that one wants to have it manufactured locally, it means that the cost of production is immediately increased by 15c. If a grain bag costs 15c too much, it increases production costs. I am mentioning only one small item. We have previously mentioned the cost of fuel and spare parts and the hundred and one items which the farmers need in regard to which the Government is in a position to lower the production costs. When we say that it is necessary to produce economically we mean that the product must be produced in such a way that the price that is determined by the hon. the Minister and his Marketing Council can be accepted. Then one can continue farming, if one’s production is economic and within that price range. The worst thing that the hon. the Minister said was in regard to what I said in connection with maximum production. I want to ask the hon. the Minister whether he is afraid lest the farmers resort to maximum production. Is the hon. the Minister afraid that we will produce more wool or maize or dairy products? Is he afraid that we will not be able to find a market for these goods? Is he afraid that if we produce those quantities we will no longer be able to produce economically because we will be producing these goods in large quantities? What sort of economics is this? If a man produces the maximum, he can produce more economically and at an economic price level. [Interjections.] It follows as surely as day follows night, that if one wants to produce economically one has to resort to optimum production. But the hon. the Minister has asked what will become of the surplus if we produce more than we can use. If we have a Minister who is becoming afraid that the farmers will produce too much, then I do not know what will become of agriculture. We do not want to pass destructive criticism; we want to assist in placing agriculture on a sound basis. But if each time the hon. the Minister simply tells us that we are wrong and continues to use the arguments that he has used up to the present, we will get no further in this debate. He must not resent the fact then if, in great frustration, we eventually say; This is really the most incompetent Minister of Agriculture we have ever had!
The Opposition have built a platform for themselves in this debate but it is an artificial one. The fact that so many of them are sitting here is something that has been arranged so that they can make propaganda outside. I have been sitting here all the time watching them. [Interjections.] The platform set up by those hon. members here is an artificially established propagandist platform. Just listen to the criticism that has been passed throughout the day. It consists of words without any meaning. Their criticism is not cohesive and has no effect upon the hon. the Minister’s policy. If I want to give myself a true picture …
What do the farmers say?
There is nothing wrong. The relationship between the hon. the Minister and the farmers has never been as good as it is now. In order to have a complete picture of our country, we have to ask a few cardinal questions. The first question I want to ask is this: Is there sufficient food in the country? To this I must reply that our barns are full to overflowing. We export our food to countries beyond the seven seas. We are breaking every boycott. The other day the Philippines decided to boycott our fish and two months later we broke throught that boycott. The second question I want to ask is this. [Interjections.]
Order! The hon. member for Point (Mr. Raw) must stop interjecting.
My second question is this: How strong is the farmer in his industry to-day? I have only one reply to give. Their are fewer tenants and share-croppers to-day and more owners than ever before. People will not exchange tenancy or the position of sharecropper for ownership unless there is strength and security in the industry. My third question is this: How is the agricultural industry to-day absorbing the products of science and technology? Matchlessly. Our production methods have improved. Our processing methods are improving by the day. Our production per unit is rising. Our production costs are showing a downward trend which is a pleasing fact. This fact also reveals the false argument that has been used to-day that the income of the farmers has fallen. The volume has increased but the income per unit has fallen. My fourth question is this: Are there bottle-necks in agriculture which the hon. the Minister has not seen? I say that the greatest bottle-neck in agriculture is finance. I think that our Government has made ample provision for every possible bottle-neck that may exist in agriculture. The second bottle-neck that may exist is in the sphere of extension services and advice. I do not think that I am exaggerating when I say that never in the history of the Republic has there been such efficient extension services for agriculture as is the case to-day. Are there bottle-necks in regard to marketing? Our whole marketing system is a guided system. It is guided by the control board which is functioning well. Fourthly, is there any connection between our agricultural production and our industrial development? Here I must say that our agricultural production has not only increased in volume but has also exceeded our consumption. This does not create a bottle-neck but it is not a problem that can be ascribed to the hon. the Minister because it is a world problem, as I said yesterday. Having set up this platform and having given a constructive review of the position of our agriculture at the moment, I must say that it is sound and ready for what I want to say now. We shall in the future have to feed a steadily increasing population, and this is a very serious matter. The time has now come for us to have a completely new picture of agriculture as a result of the vast growth in population. I want to give a few figures in this regard. Our own country will have a population of 60,000,000 in 50 years’ time. The world population is increasing by 800,000 per week. Let us look at the East not simply because I want to see happenings in Africa from a military point of view but because these happenings will also have an affect upon our agricultural future. Half of the world’s population live in the triangle formed by Western Pakistan, Northern Japan and Southern Java. We know that India can no longer feed her population. The relationship between food and the population has now allocated a new place to agriculture and our agriculture must be ready for this. While all this has been happening, the arable surface of the earth has shrunk and in the future we will have to rely upon science and technology to increase our production per unit. The happenings in Africa over the past decade must not be considered from a purely military point of view. We must also see them from the point of view of agriculture. When the White man withdrew from Africa, the door to Africa as a source of food was closed for decades to come. The White man with his technical knowledge has left and it will take years for the Black man to become a food supplier. This will be our task in the future. [Time limit.]
I do not want to follow the hon. member for Ventersdorp (Mr. Greyling). I find that some of the questions he posed are somewhat strained in the light of the remarks made by the Minister. I understood him to say that production costs in agriculture are declining in relation to the volume of production, but if the hon. member would merely take the Secretary’s report, which the Minister admits he has not read, and refer to page 5, he would see a little graph titled “Figure 2”, where the exact opposite is stated by the Head of the Department. However, I will not pursue that matter, because I think that graph is probably above the head of the hon. member. [Interjections.]
I want to draw the Minister’s attention to something which is of considerable importance to a large number of farmers in the Transvaal, and that is the question of the toxic infection of groundnuts. I raised that matter rather fully with the Minister earlier in the Session, but there is still a misunderstanding among large numbers of farmers in regard to the arrangements made with the Oil Seed Control Board in regard to the payment for this year’s crop on delivery to the co-operatives to which they belong, and I would appreciate it if the Minister could give a fuller statement in regard to the arrangements that have been made for the acceptance of the crop from the farmers by the agents of the Oil Seed Control Board. [Interjections.] The difficulty we have in a debate of this nature is this. The hon. member for Middelland said this afternoon that this Government enjoys the fullest support of the farmers and it was brought into power by the farmers, but when I look around me I see only one or two hon. members opposite who represent the farmers, and for the rest those benches are empty. Then you get hon. members like the hon. member for Rustenburg making personal observations here when you raise matters in the interest of the tobacco farmers, particularly, and having made his little personal attack he runs out of the House. I want to use the evidence submitted by the hon. member for Marico to indicate the nature of the ignorance, the appalling ignorance, of the hon. member for Rustenburg in regard to the interests of his constituents. The hon. member referred to the M.K.T.V., and so did the hon. member for Marico, but why did he not quote from the latest circular of the management of that cooperative to its members? Why did he not quote to the House the appeal made not only this year but last year also in respect of tobacco production, and the request of the cooperative that production should be restricted by its members because of its inability to dispose of the crop on the overseas market? The hon. member tries to make a little political capital, but he does not come here in the interests of his constituents and put the plain facts before the Minister as I did. He failed to make an appeal to the Minister in the interest of the tobacco farmers that we should have more research in regard to the marketing and production of suitable varieties of tobacco, and the hon. member cannot even support such an appeal in the interest of his own constituents as I made this afternoon. That is typical of what we have come to expect from the hon. member for Marico. [Interjection.]
I want to come back to the point I made earlier, in regard to that section of his Department which deals with farm management. The Minister appears to have been under the impression that I was speaking about farm planning, which is under the control of his colleague. I am not. I am dealing with research in regard to farm management and I want to quote the introductory paragraph of his report which says this—
The point I want to make with the Minister is that when his Department interests itself in these matters, which is laudable and welcomed by the farmers, because it is quite clear that there is only one way to get rid of uneconomic farm units, and that is by adequate planning and management in respect of the unit as a whole and what it can produce—my plea to the Minister is this. The report is very comprehensive and the diagram in the report indicates the areas where there has been research and planning. But I want to appeal to the Minister in respect of that portion known as the Middle Veld of the Transvaal. It is an area which suffers periodic droughts, more so than other areas, and little or no research is being done there. My appeal to the Minister is that his Department should give some priority in carrying out the initial planning and investigations in order that they can select suitable farmers to carry into effect the full programme of research based on different farming units according to soil types, etc., in order to give the benefit to the farmers in that area of knowing what are the best types of crops to be planted and the best form of farm management to be applied. [Interjections.] You see, you get these, inane observations from the hon. member for Marico. He has not the faintest idea of what is contained in this report, and even if he tries to read it he cannot understand it. It shows the completely unsympathetic approach of hon. members opposite towards the farmers in these difficult times. It is shocking to behold. But, as the hon. member for Middelland said, it was the farmers who brought this Government into power, and I want to remind the hon. member for Wolmaransstad that it is traditional in the history of our country that it is the farmers who started agitating to have a new Government, and the farmers are also beginning to break this Government. [Interjections.]
Order! The hon. member must come back to the point.
I plead that the Minister should give some consideration to the suggestions I have put before him, and that his Department should give a measure of priority to the Middle Veld areas of the Transvaal when such plans are established.
Now I want to come to another point which follows on the point made by the hon. member for Heilbron. There was perhaps some merit in the suggestions made by the hon. member, but I want to carry it a bit further. It is clear from the report of the Department that the problem faced by the farmers to-day with our increasing surpluses is to dispose of their products on the overseas markets. The problem is this, according to the report—
It appears to me as though hon. members opposite think that insults are arguments. The hon. members for Drakensberg (Mrs. S. M. van Niekerk) and East London (City) (Dr. Moolman) think that they will win an argument by making belittling remarks. The hon. member for Drakensberg stood up this afternoon after I had spoken and attributed statements to me which I did not make. It is very clear to me that she does not have enough sense to understand what I said or else that she deliberately does not want to understand what I said.
Is that not an insulting remark?
The hon. member for East London (City) adopted the same attitude. I did not say the things which he attributed to me. I advanced certain counter-arguments to the arguments he advanced and I want to repeat what I said. The Marketing Act is more or less based on average costs plus a reasonable entrepreneur’s wage. The hon. member said that this was a wrong basis; it was not good enough. He said that I achieved nothing by means of my policy because it was wrong. He said I should base my policy on an economic price basis and I then told him what I used as a basis and asked the hon. member what basis he suggested. The hon. member now says that I spoke about prices of R100 and R200 per morgen. But I simply asked what his basis was and I expected him to tell me. The hon. member has every right to disagree with this basis of mine and if he says that another basis must be found then I have every right to ask him what that basis is. But the hon. member did not tell me what his suggestion was. The second argument advanced by the hon. member was that I had said that it was not my policy to obtain maximum production. But I said nothing of the kind. I said that one cannot under all circumstances encourage the maximum production of a product. If we were to encourage the maximum production of eggs to-day we would experience great chaos in that industry because we cannot absorb the production locally and we cannot export at a profitable price. But there are products for which we have a possible market and in regard to which it is of course in the interests of the industry to obtain maximum production. Wool is one of those products. But one cannot say that this should hold good under all circumstances for all products. Does the hon. member contend that the Government should encourage maximum production in regard to every product that can be produced? That is all that I asked him; he could just have answered yes or no. But the hon. member distorted what I had said.
On a point of order, is the hon. the Minister entitled to say that the hon. member has distorted his words?
I withdraw that remark. [Interjections.] Hon. members take part of what one says, make an argument of it, and then refute that argument with one of theirs. Arguments of this sort achieve nothing. If the hon. members are in earnest in making a contribution in the interests of agriculture they will not use arguments of this nature. The hon. member for Drakensberg is primarily guilty of doing this sort of thing.
I want to reply to a few questions put to me by hon. members. First of all I want to deal with the hon. member for Harrismith (Mr. J. J. Rall). He asked whether it was not possible to fix an incentive price for oats so that it would not be necessary for us to import oats from time to time. Perhaps the hon. member may know that oats is to a large extent produced in the Southwestern Districts and that it is more specifically produced for fodder purposes. The production of oats depends to a very large extent upon the circumstances of the year. If it is a good rainfall year, it is just as easy to produce a surplus as it is to produce a shortage in a dry year. So much oats was produced on various occasions in the past that part of the crop had to be exported at a loss. One does not therefore want to encourage production unnecessarily.
The hon. member for North-East Rand (Brig. Bronkhorst) spoke about eggs and the difference between the price in the Western Province and that in the Transvaal. He gave us to understand that this difference in price has existed now for the past few years which, according to him, is quite a wrong state of affairs. The price difference was only brought in about six months ago and it was done mainly because the Western Province is one of the areas which produces in excess of local consumption. There is a difference in price now because eggs which are produced here can only be transported to other centres at high cost.
The hon. member for Port Elizabeth (Central) (Mr. Dodds) spoke about bags and the fiber industry for the manufacture of bags in this country. We realize that when we do not have sufficient raw materials in the country but when there is the prospect of our being able to produce sufficient of these raw materials within the country for the manufacture, for example, of sacks, we must set up an industry of that nature. But there are other reasons too why we have to set up an industry of this nature here and keep it in operation. We are continually being threatened from abroad and particularly by those countries supplying us with bags. We are threatened with boycotts. It is a fact that it will be very easy for them to carry out those threats and then, if we cannot obtain the bags we need, hon. members may quite easily say that we should have established an industry of that nature here. This industry is subsidized, or rather, protected. It is not only the producers who do this because in the determination of the price for the product due consideration is given to the question of costs. We are all worried because this is such an expensive process but we have already had the case of other industries which we have established in this country under similar circumstances and which have later developed into good industries.
The hon. member for Turffontein (Mr. Durrant) spoke about groundnuts and the disease which they contract and he asked about the position in this regard. I am sure that the hon. member is aware of the fact that I have already made a statement in that regard here in this House. I said that this was something which had developed suddenly. The Control Board had then to take action because it could not allow those infected groundnuts to be marketed. The result was that new handling regulations had to be drawn up which had to be sent to the agents of the Board. These regulations were only drawn up as an experiment because this was the first time that the Board had to deal with this problem. When these difficulties arose, the Board and the Marketing Council investigated the matter thoroughly. Those difficulties have now been eliminated to the satisfaction of both the agents and the producers. They are also satisfied with the advance prices which are paid for the various types of groundnuts.
The hon. member for Umbilo (Mr. Oldfield) has asked whether it is not possible to use margarine as a substitute for butter in view of the fact that we have to import butter at the moment?
On a point of order, Mr. Chairman. Is the hon. member for Green Point (Maj. Van der Byl) allowed to read the newspaper while the hon. the Minister is replying?
Order! The hon. member for Green Point is not permitted to do so.
As I say, the hon. member for Umbilo has asked whether margarine could not be used as a substitute for butter, particularly because we now have to import butter. The position is that the quota for the manufacture of margarine is fixed at a maximum of 18,000,000 lbs. There is no shortage of margarine on the market. The hon. member asked us to allow the colour of margarine to be changed from white to yellow. But the only difference between yellow and white margarine is that the one is yellow and the other is white. There is no difference otherwise. In any case, one may ask why margarine should be yellow. The reason for this is not that margarine will then have a higher nutritional value but simply because it will then be the same colour as butter. But if we do this, we will no longer have any control over the mixing of margarine with butter. It is of course true that margarine can be sold in packages with a distinctive label but the large consumers like hotels and cafes could then just buy two packages of margarine, mix them with one package of butter and place the mixture on the table. One will not be able to see the difference if both are the same colour. The position is that the colour of margarine as it is now has been so determined with the idea of protecting the dairy industry; in order to prevent the sale of margarine as butter and to prevent its competing with butter in this way. But hon. members who have the interests of the farmers at heart will agree that this is the right thing to do. I wonder whether the hon. member for Drakensberg wants margarine to be yellow? She will probably not answer now because she is afraid that she will put her foot in it!
The hon. member for East London (City) spoke about reducing the number of members on control boards. He referred particularly to the Meat Control Board. I am sure the hon. member is aware of the fact that the Minister has continually to resist pressure exerted upon him to make the boards even larger. Representations are continually being received, particularly from the agricultural industry, for greater representation on control boards. We have a system of provinces and every one of them wants to have representation on the control boards. Similarly, every division of agriculture wants representation. My experience is just the opposite to that which the hon. member said their commodity committee maintained had been its experience. In other words, my experience is that instead of producers asking that the boards be made smaller, the Minister has continually to resist pressure to enlarge the boards even further.
Mr. Chairman, on a point of order. Is the hon. member for Pretoria (West) (Mr. Van der Walt) allowed to read a periodical while the debate is in progress?
Order, the hon. member is not allowed to do so. He must put his periodical away.
We are trying in all sorts of ways to restrict representation on the boards as much as possible, while at the same time ensuring that all interested groups will have representation on the boards. It is very difficult under our present setup to make the boards smaller than they already are. This is particularly the case with the Meat Board because meat comes from all the provinces and also from South West Africa.
Various hon. members spoke about the drought conditions in the Northern Transvaal. It is true that we are unfortunately faced with varying drought conditions in our country to-day, in certain parts more than in others. Indeed, our fluctuating climate has very adversely affected our farmers in many parts of the country recently. Last week I myself had the opportunity of visiting certain parts of the Western Transvaal in which severe drought conditions have existed for some time now. As far as these areas are concerned the Government has already taken measures over and above the usual measures taken in regard to normal drought conditions. We in South Africa still experience drought conditions at some place or other in the country throughout the year. There are measures which the Government have taken to combat these droughts which occur in the normal course of events. When an area is declared to be a drought-stricken area, the farmers there qualify for assistance for the transport of stock, fodder and so forth. As far as the Northern Transvaal is concerned, the Government has on previous occasions—when the area was first hit by foot and mouth disease and afterwards hit particularly hard by the drought—instituted aid schemes to assist the farmers to save their stock by purchasing fodder for their stock. They were assisted in this way to weather the period during which they could not market their animals because of foot and mouth disease.
But the Government has for some time now been deeply impressed by the particular drought which prevails in the Northern and Western Transvaal to-day. This is one of the areas from which a large percentage of our beef comes. In fact, 22 per cent of all oxen marketed on the controlled markets come from that area. There are very good herds there. They also have to combat various diseases, particularly heartwater. What is more, oxen from other parts of the country do not easily adapt themselves to the area. We realize that if the present drought conditions there continue, a large number of stock will die of hunger—that is to say, if the farmers cannot feed their stock. The Government has now decided to set up a special aid scheme for the farmers in that area—the area which stretches to the north and north-west of the Magaliesberge and the area which is subject to heart-water—in order to assist them at least to save some of their breeding stock and to carry them over until the drought has been broken. This scheme is being introduced provisionally for a period of five months only. It will, however, be extended if rain has not yet fallen. Of course, we all hope that it will have rained by that time. The scheme makes provision for a 50 per cent subsidy to be paid on the purchase of fodder for stock in those areas. This 50 per cent will be worked out at the rate of R2 per head per month. In other words, if a farmer spends R2 on fodder per head per month, the Government will subsidize half of that amount—Rl. This will hold good to a maximum of 250 oxen per farmer. In other words, if a farmer buys fodder to the value of R500 for 250 oxen, he will receive R250 of that amount as a subsidy. A certain amount of preparatory work has still to be done in connection with this aid scheme but it is hoped that the scheme can be put into operation within the next week or two. I am announcing it now so that farmers who want to make use of this aid scheme will be able to obtain further information from their various magistrates and farmers’ assistance committees.
Are there any qualifications in regard to the age of the animal, or anything of that nature?
A farmer will receive R2 per head of breeding stock. Half of this amount will be subsidized and he will receive the other half in the form of a loan. We estimate that the fodder ration that is necessary to feed an animal for a month will cost R2. The Government will contribute half of the cost in this regard as a subsidy contribution but to a maximum of 250 animals per farmer. As I have already said, this scheme will be in operation for 5 months or for as long as may be deemed necessary thereafter.
I just want to say again that the main consideration in this regard is the fact that the animals in this area have become acclimatized as far as heartwater is concerned. If they die, it will be very difficult to obtain other breeding stock which are acclimatized to those areas. Furthermore, the drought there has persisted now for such a long period that it is considered necessary to make this additional assistance available.
Will it also hold good for sheep?
It is not as expensive to feed a sheep as it is to feed an ox. An ox very soon eats his own value in fodder but that is not the case with a sheep.
In any case, I hope that this scheme will assist the farmers and enable them to save their herds. I am making this announcement timeously so that the farmers there will be aware of it. Over and above this assistance there are also other aid schemes which have been instituted for that area. I have already said that the other half of the R2 which will be made available per head can be obtained by means of a loan. Then there are also the subsidies on the transport of stock and stock feed. This holds good particularly in the case of farmers who want to transport their stock to other areas for grazing purposes.
The hon. member for Turffontein asked about the possibility of doing research into economic planning in that area. I want to point out to the hon. member that research in connection with economic planning was only started as recently as three or four years ago. The problem is that, as yet, we do not have an adequate number of officials to do this work. As more officials become available, they will be sent to the grain areas in which at the moment the greatest need for surveys exists. The purpose is, however, eventually to extend this research to other areas as well as an adequate number of officials become available.
We welcome the scheme that has just been announced by the hon. the Minister. Of course, it is difficult for me at this stage to pass any further comment upon it. It sounds reasonable and ought to be of great assistance to the farmers there. The hon. the Minister is quite correct in saying that an ox is a difficult thing to feed and also that it will be difficult to obtain more breeding stock for that area if the breeding stock already there and which have become used to heartwater, die. But in my opinion, this ought not to be the only motivating reason for the introduction of this aid scheme. The chief reason ought to be the tremendous losses the farmers there have already suffered over the past years, apart from the fact that it is a heartwater area. In any case, we welcome anything which can bring relief to the farmers there who are in such a difficult position.
There were a few hon. members who spoke before I did and to whom the hon. the Minister did not reply. In the first place, there was the hon. member for Stellenbosch (Mr. Smit) who expressed his satisfaction with the way in which the prices of agricultural products are determined. He spoke about the price of wheat and said that the production costs of wheat had fallen and also that the quantity of wheat produced over the past while had also fallen. He said that that was why we have an increase in prices. I do not know what the hon. member actually had in mind because I have here figures giving production costs from 1948 to 1963. According to these figures there was an increase in the cost of general requirements such as artificial fertilizer, implements and so forth, of 154 per cent. In contrast to this, the increase in the price of wheat was only 30 per cent so I cannot see why the hon. member should be satisfied.
The hon. member for Ventersdorp (Mr. Greyling) also spoke but I do not want to follow him in his flights of fancy in regard to the growth of our population over the next 50 years. I shall leave him at that.
The hon. member for Pretoria-District (Mr. Schoonbee) expressed his satisfaction in that he was able to save the farmers in his constituency from ruin. He was able to do so through the medium of loans from the Land-bank and elsewhere. I want to tell him that he has not come anywhere near saving the farmers from ruin by what he has done. All that he has done has been to prolong their agony because the farmers have still to repay every cent of that money and they are going to have to repay it under far more difficult circumstances than was the case in the past.
What is your solution?
Our solution is a Minister who is interested in the farmers and a party in power which is interested in the farmers. [Interjections.] Our solution is not a party like the one opposite whose members leave empty benches for us to address. As far as the hon. the Minister is concerned, if he had not made this announcement of assistance in his last speech, I would have nothing to which to reply. Except for that statement, there was nothing in his speech to which one could reply. In any case when I spoke earlier I said that our country was changing over to an industrial country. I also said that the result of this would be that the Government would come under increasing pressure to neglect farming interests for the sake of industrial interests. Indeed, this is already happening. The position will be that agricultural products will be able to be imported more cheaply than we will be able to produce them here. The question that arises to my mind is: How strong is this Government, particularly this hon. Minister, in being able to resist that pressure. According to the South African Agricultural Union there are 106,047 White farmers at present and their numbers are diminishing at the rate of 2,400 per annum. Nobody can deny this. At this rate therefore, we will have only 94,000 farmers in 1968. We are continually being told and we see from reports of the Reserve Bank and the Board of Trade and Industries that we are experiencing an economic upsurge at the moment and also that the real national income is increasing daily. Hon. members opposite take great pleasure in telling us that agricultural production is rising …
Mr. Chairman, let me say this in passing: I notice that the Whips on the other side have brought a few of their members into the Chamber. [Interjections.]
How many members are there on your side?
Order!
There have been sufficient members on this side throughout the evening. But I was interested to see that the Whips on the other side disappear …
Order! The hon. member must please discuss the Vote.
Yes, Mr. Chairman. What is more, it is more interesting to discuss the Vote. It has been said that the production of agricultural products is rising, but the point that we make is that the reward obtained by the individual farmer is not increasing. A great deal has been said here about the Marketing Act. The hon. the Minister himself has said that the purpose of the Marketing Act is to bring about price stability. But that is not what we mean. We are interested in the Marketing Act but we see this Act through the eyes of the South African Agricultural Union which has this to say [translation.]—
And that is what we are interested in—the income level of the farmer. I think that this is something in which the hon. the Minister should also be interested. But he throws his hands in the air and says that he does not know what we are talking about because production continues to rise. But neither the hon. the Minister nor any other hon. member on the other side has spoken about the reasonable return which the farmer should receive. We noticed this evening that the hon. the Minister had not yet read the report of his own Department. But I want to ask him to read Agricon of January, 1963, in which is set out very clearly everything that must be considered in planning an economic unit. [Time limit.]
Mr. Chairman, I want to make use of this opportunity to thank the hon. the Minister and the Government on behalf of the thousands of farmers who are experiencing a critical period in the Northern Transvaal, for the scheme that has been announced this evening. There are 200,000 oxen which are threatened with extermination at the moment but this aid scheme which the hon. the Minister has announced this evening will assist in saving some of those animals, animals which would otherwise have died during the next few months.
But it is not only on this score that we want to thank the hon. the Minister. We also want to thank him for having found the opportunity to visit those areas over the past few weeks. The farmers appreciate it, just as they appreciate the help which has been given up to the present. The hon. the Minister can be assured that the farmers in the Northern Transvaal will also greatly appreciate this particular gesture on the part of the Government. This is the only other method that there is to prevent between 200,000 and 300,000 head of cattle dying within the next few months.
Vote put and agreed to.
House Resumed:
Progress reported.
The House adjourned at