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Dairy Industry

Volume 457: debated on Thursday 8 March 2007

My right hon. Friend the Secretary of State and the Minister for Sustainable Farming and Food, Lord Rooker, regularly discuss the dairy industry with industry representatives and other interested parties.

The Minister will be aware that the Secretary of State recently visited the NFU conference and he will know that farmers are determined to play a part in producing a sustainable food chain, particularly in dairy products. However, Farmers Guardian, Country Living and Waitrose are launching a campaign, “fair trade for British farmers” so that agriculture can regain profitability and deliver those public goods that are so highly prized. What role does the Minister believe his Department and the Government can play in the campaign?

We certainly welcome the initiative. He might have heard that Sainsbury’s has today announced an increased price for milk, and I believe that Tesco did so yesterday. Those are moves in the right direction, as we have always said that there should be a sustainable industry and a fair price. However, that is a matter to be determined between the industry and retailers—under the auspices, of course, of the competition rules and so on—and not a matter for the Government.

I was in agreement with what my hon. Friend said until the end of his answer, but he must surely realise that in a competitive market environment, supermarkets are going to force the price down, even though they are making gestures now. They have no responsibility to provide food for this country, whereas the Government do have responsibility to ensure a continuation of the supply of provisions. Surely we do have an interest and we must be a stakeholder at those talks.

We are regularly involved in talks, as I have already pointed out. My hon. Friend is wrong to imply that the supermarkets do not have an interest in maintaining a sustainable dairy sector. I think that they do, and they have recognised that in the discussions that my right hon. Friend the Secretary of State, Lord Rooker and I have had with them. We are pretty much self-sufficient in raw milk, which shows that they do have an interest. I would not be churlish about the recent price increases. I also think it important to remember that there is a massive gap of about 12p a litre in the difference between some of the most and some of the least efficient milk producers. We want to ensure that some of the least efficient get up to the standards of the most efficient.

The Minister will understand that much of the future well-being of the dairy industry will depend on the resolution of problems connected with bovine TB and the EU dairy regime. May I raise with him the question I put to the Prime Minister yesterday? Will he have a word with the Secretary of State so that this House of Commons is given an opportunity to debate all these matters in a comprehensive discussion on agriculture, bearing in mind that we have not had such a debate since December 2002?

These are matters for those who organise the business of the House, not for us. The right hon. Gentleman can always apply for a debate in Westminster Hall, or his Front-Bench colleagues might like to hold such a debate on one of their Opposition days.

My hon. Friend is well aware that farm prices for farmers’ households have dropped to about £13,000. That figure has dropped by more than 60 per cent. in four years. That is a tragedy and it is not sustainable for dairy farmers to receive such low incomes. What will the Minister do to be an honest broker and to try to ensure that all supermarkets give a fair price to farmers, at the same time as ensuring better value for customers? Farm-gate prices are dropping, but at the same time prices are increasing for customers in the shops. We need to ensure that farming can survive and be sustainable.

I have already referred to some of the increases that have recently been announced. I do not think that my hon. Friend is right to say that farm incomes dropped again this year; I think that I am right in saying that average farm incomes increased this year, as they did last year. He is right about the dairy sector, which has been going through a particularly difficult time. As we are talking about farm incomes, it is worth pointing out that farm land prices rose again substantially last year and are now at record levels.

Last March, the Minister announced a consultation on the question of badger culling and dealing with the wildlife reservoir. In answer to a question in the House, he told me that the time for a decision was nigh. When will the decision be taken to do something about bovine TB, to relieve the plight of hundreds of farmers in my constituency?

I am aware of the problem faced by farmers in the hon. and learned Gentleman’s constituency. I have met him and representatives of his local farming community and the area is not far from my constituency. We are well aware that TB is a difficult problem. However, we also want to be careful to ensure that any decision on badger culling is guided by the science. We do not want to initiate any sort of action that could be counter-productive. As he well knows, one of the things that all the science says is that a piecemeal, patchy culling regime for badgers could make matters worse. One of the other myths that a number of people still repeat and that it is worth exploding while we are on the subject is that it would be possible to have a cull of sick badgers. That is not possible. One cannot tell whether a live badger has TB. One can tell only through a blood test. Any badger cull would have to include healthy badgers, as well as sick badgers.

Going back to the dairy industry, may I urge the Minister to do more? Currently, an average of three dairy farmers a day leave the industry altogether. Dairy farmers obtain about 17 to 18½p per litre. In the big supermarkets, the price is 50p-plus. There is a huge gap there. Somebody is ripping somebody off. My Friend the hon. Member for Brecon and Radnorshire (Mr. Williams) and the hon. Member for Burnley (Kitty Ussher) mentioned fair trade. It is high time that the supermarkets traded fairly with the dairy farmers.

The Competition Commission is looking into that very issue, as I am sure the hon. Gentleman knows. One of the problems that it highlighted when it published its interim findings a short time ago was that it had not had many complaints from farmers. It is important that farmers who share his concern, or their representatives in the farming unions—either at a UK-wide level or in Wales—provide examples to the Competition Commission, which has made it quite clear that it would accept anonymous examples so that people do not need to be worried about any penalty that they may suffer as a result of giving that evidence. I appeal to farmers to do that.

Why are dairy farmers in my Lincolnshire constituency finding it so desperately difficult to earn a living? They are not inefficient. If the fault does not lie with the supermarkets, where does it lie?

This is an extremely complex area, as I am sure the hon. Gentleman appreciates. As I indicated in my answer to a previous question, there is a huge variation in the costs for dairy farmers. I am afraid to have to tell him that, according to the information that I have, many dairy farmers do not even know their own costs of production. That is a problem. Yes, there is a role for Government and for the supermarkets, but there is also a role for the industry, and particularly for farmers whose production costs are much higher than those of a number of others, who manage to operate profitably because their costs are much less.