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Page 6 and in any case without an expansion of bacon-curing capacity, of which there can be no hope in the near future because of the limitation on the Investment Programme, we could not make any more bacon in the United Kingdom. There is no prospect at present of our making up the deficiency from overseas and if we place a ceiling upon bacon imports even at the estimated level of 1953, we shall undoubtedly get less and we shall certainly condemn ourselves to the acceptance of bacon rationing until the end of that year. The discouragement to pig production in Denmark which must inevitably be involved, will, I believe, put off the decontrol of bacon for two or three years.

6. As for Danish eggs, these too are of very great importance from the supply angle. 25 per cent. of our supplies in the winter period come from Denmark. Those supplies are notoriously meagre, and any further decline could not fail to excite a great deal of dissatisfaction. The Danes are exploiting other markets, particularly West Germany, and we have already in the past been compelled to accept a reduced percentage of their exportable surplus. The contract I have in mind is for one year only and I should like to negotiate for 75 per cent. of their export surplus as was done last year.

Butter and Fats Ration

7. Paragraph 8 of the Supplementary Note to which I have referred sets out the consequences, so far as butter and fats are concerned, of our dropping altogether the uncommitted purchases of these commodities. I should like to make it clear, however, that, even if we purchase all the butter which is uncommitted, the butter ration will have to come down later in the year, and that I included in the Import Programme, as it stands at present, the purchase of sufficient oils and oil- seeds to enable me to offset the reduction of the butter ration by an increase in the margarine ration so as to keep the total fats ration at 9 oz. per week.

8. For more than two years up to September 1951 the total fats ration was never less than 10 oz. per week and consumption of edible oils in food manufacture stood at about 330,000 tons per annum. On 9th September, 1951, the ration was reduced to 9 oz. and as a result of our import cuts in November consumption of edible oils in manufacture was reduced to rather less than 250,000 tons. The current 9-oz. ration is made up of 4 oz. margarine, 3 oz. butter and 2 oz. cooking fat.

9. As a result of reduced supplies, mainly from Australia, the butter part of the fats ration must be reduced in August to 2 oz. for 16 weeks. In compensation I should like to increase the margarine ration to 5 oz. for the same period. This would cost about £2 million in non-dollar, non-sterling currency. Against this would be set savings in respect of butter not already taken into account in the Import Programme amounting to about £1 million.

10. I appreciate the Chancellor's difficulties in the light of the current balance of payments situation, but I have felt bound to bring to the notice of my colleagues the serious consequences of introducing limitations upon our purchases of Danish bacon and eggs and of cutting out of the Import Programme the provision for purchasing oils and fats to make up for the coming reduction in the butter ration. Progress with these matters has now been delayed for some weeks pending the submission of the Import Programme to Ministers. If our bacon and eggs supplies from Denmark for the next year or two are not to be impaired, I should let the Danes know almost at once that I am prepared to negotiate fresh contracts with them of a kind which will keep up their production for this market and, unless I begin to make purchases of oils and fats in the immediate future, it will be too late to get the supplies to this country to avoid a reduction in the total fats ration.

G. LL.-G.

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Ministry of Food, S.W. 1,

18th June, 1952.

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THIS DOCUMENT IS THE PROPERTY OF HER BRITANNIC MAJESTY'S GOVERNMENT

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