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Dairy Industry

Volume 461: debated on Thursday 21 June 2007

The prospects for the dairy industry are good, thanks to the current positive world market situation. Although there are challenges to come in the short to medium term, the UK industry is well placed to tackle them.

I think that the Minister must be living in a different world. The situation facing the dairy industry in this country is critical. Dairying is vital to UK agriculture—mainly in the west of England, but particularly in my own constituency of Macclesfield in the county of Cheshire. Despite the increase in feed and energy prices and the effect of modulation on dairy farming, the farming industry of dairying is receiving less per litre now than it did some years ago. In the last two years, more than 6,000 dairy farms have gone out of business, so is it not time that the Government woke up and sought to help a vital part of British agriculture? I believe that the Government should be condemned for what has happened to dairying in the United Kingdom.

I have the highest regard for the hon. Gentleman, who has always been a champion of his dairy farming constituents. He will know, I am sure, that the April farm-gate price for milk is the highest April price since April 2004. In fact, it reached the same level in 2004 and it has not been higher since before April 2001. I am sure that the hon. Gentleman will know that there has been a significant surge in demand in the world commodities market because of the export controls imposed by Brazil and India and also, of course, because of the Australian drought. All those factors have contributed to the situation. Let me quote Barry Nicholls, the chief executive of Milk Link, who said it is

“unprecedented over the last 30 years to have the luxury of deciding where to place our milk.”

My hon. Friend could do no better than to make a submission to the Competition Commission inquiry into supermarkets. The reality is that dairy farmers are paid so badly because this particular trade has had a history of strong conflict. The biggest problem has been the complete lack of honesty in respect of how supermarkets operate and how they organise their pricing. I hope that the Minister will make a submission to that inquiry and call for some transparency and fairness in this matter.

I know that my hon. Friend will be aware of the recent move by a number of supermarkets, through various measures such as Localchoice suppliers of milk, to do deals with farmers to get local product into the supermarkets. That is giving farmers prices of up to 23p a litre for their milk. That is not as high as the historic levels of 10 or 15 years ago, but it is certainly a good deal higher than it has been over the past few years. Indeed, the Dairy Supply Chain Forum, which is chaired by my noble Friend Lord Rooker, met yesterday and all the stakeholders involved expressed what they called “cautious optimism” about the improved global market position.

Does the Minister agree that the prospects for the dairy industry, particularly in the western half of the country, would be greatly enhanced if there were a long-term solution to the problem of bovine tuberculosis? To that extent, may I seek his assurance that his Department will not be rushed into reaching a conclusion on future strategy in the light of the recently published report by the Independent Scientific Group? Will he assure me that due time will be given for all parties to meet and discuss those and other findings, and for the Select Committee to continue its own inquiry into the subject?

The right hon. Gentleman speaks with great authority in the House as Chair of the relevant Select Committee, and I would wish to give him all the assurances that he seeks. It is absolutely appropriate that the Government take time to look at what is, after all, an extensive piece of research going back over 10 years. We will certainly look at its findings and conclusions and give it weighty consideration. We also look forward to the report of the right hon. Gentleman’s Select Committee on the matter, and we shall obviously take that into account in relation to the Government’s thinking and policy formulation.

Further to the point raised by the hon. Member for Stroud (Mr. Drew), has the Minister considered meeting representatives of the large supermarkets to determine exactly what their pricing structures are, and where he could intervene to persuade them to be fairer with milk producers? We are losing hundreds of milk producers each month and, at some point, there will be a shortage of supply. We could end up importing milk from France or elsewhere. That would be a ridiculous situation. I know that the Minister cannot enforce anything, but surely he can persuade the supermarkets to be a bit more honest, transparent and fair with producers.

Let me simply say to the hon. Gentleman that, of course, Ministers meet representatives of the supermarkets on a regular basis. I cannot give him an assurance that we will intervene in the price-setting mechanism as he requests, because we do not feel it is appropriate for the Government to intervene and set price controls in this area. I am sure he will also recognise that there has been an increasing dialogue between the supermarkets and representatives of the dairy industry, which has resulted in recent positive moves. I am sure he will accept that greater efficiency is still needed across the sector, and that the disparity in profitability within the sector is still far too high. The Government have invested some £130 million in this area to try to improve the productivity and efficiencies in the sector over the past few years.

Is the Minister aware that dairy farmers in general, and in South Staffordshire in particular, will be bewildered and distressed by the mind-boggling complacency of his answer? Will he think again about the answer that he gave to the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd), who asked not for intervention but for a commitment?

I am distressed that the hon. Gentleman, for whom I have the highest regard, thinks that I am being complacent in my response to the House; that is certainly not the case. I recognise—as do this ministerial team, the Government and the whole House—that dairy farmers have been through a very difficult period, and that they are facing extremely strong challenges from all the new demands that will be placed on them in the years to come. None the less, those are things that we have quite properly sought to help with, in the way that I have just suggested to the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd). I believe that that shows a commitment. The Government have tried to help the sector to become more efficient and to realise the benefits of value added and niche marketing.

We have a particular problem in the United Kingdom. Unlike our competitors, we consume 51 per cent. of our milk in liquid form. In France milk goes into cheese, yoghurt and other value-added products, which allows a better price to be obtained. However, there are signs that the world commodities market for skimmed milk and whole milk powder is improving. Indeed, there is now a shortage. I should have expected the hon. Gentleman to welcome the fact that, for the first time, export support from the European Union has been set at zero.

If the dairy industry is finding the situation so good at the moment, can the Minister explain why in this country we pay more for a bottle of mineral water than for a pint of milk?

I would always recommend that the right hon. Gentleman should not buy mineral water, but should stick to tap water. It is very good, it is much cheaper, and it is a good deal less carbon-intensive.

Notwithstanding the question from my right hon. Friend the Member for Fylde (Mr. Jack), Professor Bourne has said that the Government ruled out a widespread badger cull from the outset of the study by the Independent Scientific Group. Does that not prove that the consultation that took place more than a year ago was a complete waste of time? We know that the final report was on the Minister of State’s desk a month ago—

The Minister should read the ISG report, which clearly identifies the date on which the Minister of State received the final report. Ministers had a month in which to come up with conclusions, yet all that they have announced is further deliberation and delay. Moreover, it is four years since the Conservative party advocated the polymerase chain reaction test. It has taken four years—until next month—for research to begin on that.

Is not the record of the last 10 years one of constant delay and prevarication in dealing with TB, while taxpayers, farmers and cattle have had to suffer? When will the Department make some real decisions, and get a grip on this dreadful disease?

I find it difficult to respond to that, because it was not really a question. It was a rant, and uncharacteristically ill-judged on the part of the hon. Gentleman—in stark contrast to the contribution of the Chairman of the Select Committee, the right hon. Member for Fylde (Mr. Jack).

I am well aware, as is the whole House, of the cost of bovine TB to farmers and, indeed, the taxpayer. It is absolutely right that we should look at the ISG report. The hon. Gentleman made some remarks about the timing of the report. He will know that draft chapters are very different from a final report complete with recommendations and conclusions. That certainly did not arrive at the time that he suggested.

We will consider the report carefully, and will give it due importance in policy making. We will listen to the industry and take account of the Select Committee report, and we will make our policy decisions in due course.