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British Dairies (European Commission)

Volume 451: debated on Tuesday 7 November 2006

I want to discuss the future of the UK dairy industry, which is worth a great deal of money to this country but which has suffered unduly because of the traumatic, seismic changes that have taken place in the past few years.

We in Cheshire, which is a dairy county, are particularly concerned about what happens to those who produce liquid milk. It is also true to say that because of the pressures on milk prices, the hazards of the increasing growth of supermarkets, their economic power to dictate the price of milk, and the direct effect that that has on the incomes of dairy farmers, many people have sought to expand, in line with Government policy, out of the direct provision of milk into cheeses, yoghurts and many other products that are regarded as essential.

We in Cheshire know of the very real problems with income in the dairy industry. It is noticeable that the number of people who are responsible for dairy farms falls every year, but actual output frequently rises. It is said, of course, that that is a response to economic pressures, which is true, but it is also the result of the efficiency that can be introduced by putting constant pressure on the dairy farmer. I have considerable worries about that. Indeed, if we are not careful, we will discover that because so many farmers are leaving, animal welfare problems will arise as people are required to handle large herds without the number of farm workers that they had in the past. The industry has not always suitably rewarded those working in it, but I hope that in future we will not constantly assume that, because people are leaving the land, we are automatically getting a more efficient or productive regime.

I am concerned about the future of the industry, but I raised the debate because of a particular case that has dramatically demonstrated the very real problems that UK producers face when basic decisions about the future of the industry are taken not by the UK Government but by European institutions. I sat on the Agriculture Committee in the European Parliament for four and a half years, having volunteered for the job on the basis of the simple theory that any Committee that spends initially 60 per cent., and finally 80 per cent., of the budget of any institution ought to be the one on which one serves. I found it a highly educational process. During those four and a half years, I learned that many decisions were taken in Brussels on a wholly arbitrary and, in some instances, a wholly uninformed basis. However, few of the effects of those decisions have been as utterly brusque and unacceptable as the effect on Bowland Dairies.

I apologise to my hon. Friend the Member for Pendle (Mr. Prentice), who represents the area in which Bowland is located. I made it obvious to him that I was raising the case in a wider context, but this Parliament should take note of it. We are standing on the site where Parliament was convened because the people of Great Britain would not accept the imposition of unfair and unjust laws. That is why we have a Parliament—that is why we are here—but it is clear that we are subjected in some instances to decisions taken not by elected Members or by a Government of member states, but wholly by representatives of the Commission in Brussels who, frankly, are neither answerable for their deeds nor apparently aware of the unjust and unacceptable way in which they behave.

Bowland Dairies is a small dairy in Lancashire that employs 25 people. It is perhaps not the largest cheese-making organisation in the UK. Indeed, there are three or four cheese makers in my area that are larger and more able to deal with the problems of economic upturn and downturn. During a random check, inspectors from Brussels became concerned about what they saw as breaches of law. They said that there were serious breaches of EU food safety rules, and they challenged the competence of the Food Standards Agency to deal with them. In itself, that would not constitute a great hazard. It would involve an argument between two groups of bureaucrats which, under normal circumstances, presumably would be dealt with in a series of exchanges, and there would be time for conclusions to be reached.

However, what happened in the case of Bowland Dairies was utterly unacceptable. I shall briefly summarise that. Bowland initially faced criticism and gave several detailed replies. It was told that the explanations were not acceptable, even though some of the objections that were raised are not accepted by the scientists at the FSA and, as far as I can see, are still being disputed scientifically. The Commission proceeded, irrespective of the view of the FSA and, presumably, against the recommendations of the UK Government. Bowland, unusually and rather courageously, then took the Commission to the European Court of Justice.

Perhaps because I am old and long in the tooth, I have always been rather cynical about the European Court of Justice which, in my day, was a wholly political organisation. It never found in favour of anyone other than the Commission. Interestingly, on this occasion—uniquely, I suspect—it found for Bowland Dairies.

I draw attention to my entry in the Register of Members’ Interests. It would be helpful if the hon. Lady made it clear that Bowland was not a cheese-making plant like any other cheese-making plant. It dealt, in essence, with residues—with things such as interface milk, which is used to clean milk machines. It performed a special role in the industry, and therefore the argument between the FSA and the European Union was about specific circumstances that affected that plant.

Absolutely, but it is precisely that specific nature that was very much at risk. The extraordinary thing was that British scientists apparently were reasonably content with what was happening and were prepared to argue with the Commission about the scientific basis, but the Commission proceeded with what were, in effect, prohibition methods, irrespective of what was manifestly a technical argument. I know that it will come as a total surprise to you, Mr. Martlew, that my acquaintanceship with interface milk began only this morning, but I am sure that you are fully acquainted with it.

The reality is that Bowland took the Commission to the European Court of Justice, and the Court found in its favour. It said clearly that it was not at all sure that the Commission had the powers to do what it had done, and that it certainly did not have the powers to do it urgently. The import of that is significant, because if we take urgent action against a small business under limited conditions, we will discover that it can be put out of business. Indeed, that is what happened. In fact, the Commission simply persisted, as far as I can see, although I hope that I am not right, because there was a holiday looming and it felt that that was one convenient way in which it could deal with the problem urgently even though there was considerable doubt about the accuracy of the scientific arguments. What is more, it put out notices throughout the European Union that included clear statements which were highly damaging and were not corroborated by those who were there. There is some doubt whether the Commission’s summary of the views of the Foods Standards Agency contained all the information that would have been relevant to the argument. That, after all, is essential.

We have the extraordinary situation whereby the Department for Environment, Food and Rural Affairs, the Food Standards Agency, which is rightly concerned with health, and the Commission are involved in an argument about the hygiene and production methods of this particular dairy. Although the dairy has had the protection of the European Court of Justice, it has nevertheless been put out of business. That is be something with which the House should concern itself very urgently.

To add insult to injury, the Commission then apparently reversed its position and said that it would be prepared to examine in a working party whether the science was acceptable. It seems extraordinary. I would have thought that both Governments and international organisations ought to get the facts right before they take action and not afterwards.

Does the hon. Lady agree that when the Commission issued a letter of infraction to the British Government, it would have been up to them to contest it? In fact, they have chosen not to do so. They appear to have ordered the Food Standards Agency to issue new instructions on the health processes to fall in line with what the Commission asked for. Does she feel that it would have been more reasonable if the Government had had confidence in the agency to argue the case?

I can honestly say that I do not understand the attitude of the Food Standards Agency, the Department or, to be fair, Members of the UK Parliament, where the subject has not received the publicity or support that it should have done. It is too simple merely to blame the Government. I shall be asking the Minister for his interpretation of those matters, but since the Food Standards Agency has, as far as I can see, never said that it agrees with the Commission’s interpretation of the tests that are the basis of the discussion, I do not understand why it did not take a public and strong stand. Instead, it appears that the Commission has issued documents throughout the Community, many of which are totally subjective histories of events.

I want to quote from an attempt by Bowland’s lawyers to persuade the Commission that the recitals, which is the hilarious way in which we talk about such things,

“comprise a subjective history of events which have been superseded, grossly exaggerate any risk to human health, materially misrepresent the current position as well as the law”.

I would have thought that that constituted quite enough for the Department to make public its displeasure at the way in which the British industry was being treated. Let us have no doubt: this might have been one unfortunate dairy hung out to dry between two sets of bureaucrats, but the reality is that the effect goes much wider. It will have an impact on cheese makers, the dairy industry and on the sale of liquid milk. There was

“no concrete or new evidence for the adoption of emergency measures”—

let us remember that the Commission took such measures—

“which for the reasons set out in our letter earlier…would, in our view, be illegal.”

The Court agreed. It was illegal.

I have made curd cheese quite often. I had a grandmother who never wanted to waste milk, and we were brought up to believe that people should make their own curd cheese. I am told that it cannot be made if antibiotics are present in the milk. That directly impinges on the Food Standards Agency’s argument.

We have limited time, and I do not intend to go on for long. We are talking about a cheese industry that has increased by 9.6 per cent. to 409,000 tonnes in 2005. There is an increase in imports from all over the world of high-value and specialised cheeses, so it is clear that we are not impinging on the free movement of goods. Nor are we seeking to protect our industry at the expense of anyone else’s. We should also be aware that the Food Standards Agency wanted to oppose the measures but was not backed by Her Majesty’s Government. The Department ought to be leading the charge, not simply saying that it is a matter for the agency.

I have a series of simple questions to ask the Minister. What role has his Department taken in the discussions with the Commission? What efforts are being made to ensure that the scientific views of the Food Standards Agency are fully debated? Does the Department accept that the British standards not only are acceptable but should be imposed across the board in the UK dairy industry? Were the views of the British Government influenced not only by the fact that the Commission said that it would demand an immediate audit of the whole UK dairy industry, but by the fact that it has already initiated such an audit and intends to go ahead with it as soon as possible?

When this House stands by, for any reason, and allows the small business, the small man or an individual constituent to be treated in an arbitrary, unacceptable and totally illegal manner by anyone, we have reached a dangerous situation. The Government of the United Kingdom should not only oppose what has happened to Bowland, but they should do so publicly and make it clear that they do not accept such arbitrary behaviour. They must certainly make it plain to all the other countries in the European Union that in this country injustice is an unacceptable way of providing some kind of administration.

I am not sure whether I was in short pants when my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) first spoke on the dairy industry in the UK. I suspect that I might well have been. I feel that I should probably have come to the debate with an egg and two straws—not that I wish to imply that she is my grandmother, but it seems rather like trying to teach one’s grandmother to suck eggs to be talking to her about the dairy industry.

My hon. Friend has focused our attention on what she sees as a tremendous injustice that has been done to one company in the UK dairy industry. I shall try to address my remarks to the points that she has raised. It is clear that there has been considerable concern about the outcome of the European Commission’s Food and Veterinary Office’s inspection of Bowland Dairy and the implications that arise from that for the UK dairy industry.

I want to make it clear at the outset that food safety matters—I know that my hon. Friend does not like the fact that this is the case, but it is—are the responsibility of the Food Standards Agency, so questions on that topic ought more properly to be directed to the agency. I shall outline our understanding of the events to date, what needs to happen next and the implications for the wider industry.

A Food and Veterinary Office mission in June 2006 found a number of practices at Bowland Dairy that caused concern. The FSA and the local authority worked with Bowland in the weeks following the FVO mission. However, the FSA disputed the scientific backing for the Commission’s interpretive guidance on dealing with milk that failed a commercial rapid antibiotic residue screening test. Bowland Dairy allegedly used such milk—milk that had been rejected for processing by other dairies under their own quality standards. That practice, although not at odds with FSA guidance at the time, was not accepted by the Commission.

I do not have the time to go through it, but I am holding a copy of a Belgian protocol that proves that the Commission cheerfully accepts different standards in relation to other dairy industries. If the Minister wishes, I will give him chapter and verse. However, it would take rather more than the 10 minutes that remain.

I would be grateful to receive that from my hon. Friend, perhaps by letter, or we may discuss it afterwards. If I may, I shall return to addressing the points that she raises.

The FVO returned to inspect Bowland in September, but it did not consider that enough had been done to bring the premises up to the required standard. On 6 October, the Commission used emergency powers to ban the sale of curd cheese from Bowland, effectively shutting the business down. On 16 October, the Commission sent a letter of formal notice initiating infraction proceedings against the UK for failure to implement food safety legislation, and announced that an FVO mission would be sent to inspect the UK dairy industry in November.

The Department for Environment, Food and Rural Affairs maintains close contact with the FSA on the matter because it is important that the dairy industry does not suffer as a result. The United Kingdom has a dairy industry to be proud of; it is a matter for congratulation that the processing sector sets itself higher standards than those required by legislation and voluntarily uses rapid screening tests to check for antibiotic residues.

The FVO mission made a number of allegations, some of which are still disputed. I hope, Mr. Martlew, that you will understand that there are certain elements into which I may not go for fear of prejudicing legal proceedings. However, we need to be clear about what is and is not acceptable. None of us would support the use of milk contaminated with substances such as detergents or dyes. None of us could endorse the use of out-of-date milk collected from retail establishments to be reprocessed into dairy products. I am sure that my hon. Friend would not support the use of mouldy and contaminated cheese, including floor waste, being vacuum-packed for sale.

In my view, it is also important to acknowledge that the majority of the UK dairy industry consistently applies much higher standards of food hygiene practices—ones that often exceed the requirements previously set out by the FSA. The industry is to be congratulated on such rigorous self-vetting. However, it is clear that in future the whole industry needs to be certain about what is and is not acceptable, and that must be reinforced by guidance from the FSA.

The Government responded to the infraction letter by agreeing to implement the Commission's interpretive guidance on milk that fails a rapid antibiotic residue screening test. The FSA supported that approach and issued revised guidance to local authorities and the dairy industry on 20 October. At the meeting of the European Standing Committee on Food Chain and Animal Health on 18 October, the Commission agreed to bring together all the parties concerned in order to enable discussion of the outstanding scientific issues on antibiotic testing. That is a welcome development. In the long term, it should resolve the scientific questions at issue.

The FSA, working with local authorities and the dairy industry, needs to ensure that there is no confusion over its revised guidelines and that the UK dairy sector knows exactly what is needed to pass this month's audit with a clean bill of health.

The Minister may like to know that at no point has the Commission carried out any product testing, nor does it have any direct evidence of the risk from Bowland’s products, and it talks about things being “on the floor”, but it was cheese that had fallen from vats. There is considerable doubt about the accuracy of what the Commission says.

As I indicated earlier, Mr. Martlew, I do not wish to get involved in aspects of the case that may lead me into prejudicing further proceedings on the matter. I would not wish to be drawn by my hon. Friend into the specifics of what was or was not found at Bowland.

The FSA, DEFRA and the dairy industry take the matter seriously. Revised guidance has been issued, and the dairy trade body, Dairy UK, has held seminars to prepare the industry for inspection. DEFRA has actively participated with the FSA in explaining the animal by-products regulations that deal with the disposal of milk containing antibiotic residues and the disposal of pre-packaged milk.

Does the Minister agree that the job being done by Bowland has to be done in any country with a significant dairy industry? Does he further agree that, whatever the outcome of the negotiations and discussions, it is important that the rules ultimately agreed run across the whole of the European Community? Will he make it one of the Government’s priorities to ensure that the levels of enforcement are equal and that the rules being enforced are equal?

The right hon. Gentleman is correct to say that there should be equal treatment of the companies and industries across the European Union. I confirm that that is of paramount importance to the Government.

Bowland is not the whole story: a debate has been called on the future of the UK dairy industry, and I want to say something about the future as it appears to the Government. I realise that the immediate future will be challenging for the dairy sector. Pressure on farm-gate prices will remain, and it is important that the sector is realistic about the prospects, as prices are unlikely to return to historic levels. There will be no return to managed markets, with the Government setting the price of milk; those days are over. Prices are a private commercial matter, and the Government cannot and should not become involved.

Given the significant cost pressures on the sector, it would appear that some restructuring of the industry is inevitable at all levels. The good news is that there are signs that the industry is addressing its problems. It is important, for example, that each part of the chain recognises the pressures on other parts. Indeed, my hon. Friend alluded to that in her customary fashion. The industry must continue working together: it must maintain a dialogue.

The dairy supply chain forum, chaired by Lord Rooker, has played an important role in bringing the industry together to discuss issues where collaboration can benefit all. The forum has worked hard to try to drive forward work that could ultimately ensure better rewards for all. That includes work on supply contracts, and ensuring that producers supply an attractive and valuable product—for example, by considering the barriers to innovation in the dairy sector.

DEFRA has provided more than £200,000 over the past three years to help to improve the evidence base for the dairy sector, partly through the dairy supply chain forum. For example, the Department provided funding to analyse the impact of CAP reform on the dairy sector, the prospects for the dairy sector in a more liberalised world market, barriers to innovation and skills and training in the sector. Again, skills and training were raised by my hon. Friend, particularly in relation to animal husbandry and welfare. That analysis has helped to inform the industry’s debate on future prospects, and it has dispelled some myths and challenged and changed people’s thinking. That is where the Government can add value—by bringing all parts of the supply chain together. However, the dairy industry must take ownership of the challenge to find solutions.

Given the impact of price pressures on profitability, it is important for the whole supply chain to consider how to strip out unnecessary costs and to achieve efficiency gains. DEFRA has invested £1.3 million through the agriculture development scheme to help the whole dairy sector to address issues of efficiency.

Is the Minister going to tell us about the audit that has been ordered by the Commission of the entire dairy industry—on extremely spurious grounds? How do the Government intend reacting to that?

My hon. Friend will note that I have already said that the Department is working closely with the industry to enable it to prepare for that audit, and explaining how best to ensure that it passes the audit with flying colours.

It is interesting to note that not everyone is gloomy about the prospects of the dairy farming sector. A survey of farmers at the dairy event in September revealed that of those producing between 350,000 and 1.5 million litres a year, nearly two thirds would raise production.