Skip to main content

Dairy Industry

Volume 547: debated on Thursday 5 July 2012

This week’s announcement of further price cuts for many dairy farmers, especially those who are not aligned to supermarkets, is a heavy blow, especially when global commodity prices seem to be rising again. I will be meeting industry representatives next week to hear their concerns. In the meantime, I remain committed to persuading the industry to develop its own code of practice regarding contracts and, as the House will be aware, the Bill to introduce a groceries code adjudicator is in the other place.

I thank the Minister for that answer, but he will know that the dairy industry is in crisis. Dairy farmers in my constituency faced a 2p cut in June and face a further 2p cut in August. That is unsustainable. Is it not time that he intervened to impose a code of conduct, so that our dairy farmers get a fair price?

I fully understand the anger; it has been expressed to me by many farmers in the past few days. I am as concerned as my hon. Friend. However, as he knows, Ministers cannot and should not set prices. A compulsory code is provided for in the EU dairy package and we have said that we will consult on it. However, that would exclude a number of aspects that could be included in a voluntary code. That is why I still believe that a voluntary code is the better way forward.

A year ago, our sympathies went out to the Secretary of State, who said that she was having sleepless nights over the plight of dairy farmers—no one wants to see a Cabinet Minister with bags under her eyes at the Dispatch Box. However, Ministers have slept soundly while milk processors, one after the other, have slashed farm-gate prices to dairy farmers below the cost of production. Will the Government act urgently on the calls from Labour and the National Farmers Union to allow farmers to exit contracts when price changes are made; do more to bring farmers together in producer organisations; and either bang heads together to strengthen the voluntary code and enforce it, or consider regulation of this dysfunctional supply chain? No more sleeping on the job, please.

I think the House will recognise synthetic anger when it sees it.

I am absolutely determined to do everything in the Government’s power to put things right. I have already explained that we want a voluntary code, on which I am more than prepared to bang heads together, and that we will consult on a compulsory code. We have also made it clear that we strongly support the idea of producer organisations, but I have to point out to the hon. Gentleman that the biggest cut announced this week was by a producer organisation.

Dairy farmers in Cumbria and across the country are being exploited appallingly by supermarkets and milk buyers of all kinds. They are now getting an average price per litre of 6p less than the cost of production. I am sure we all welcome the introduction of the groceries code adjudicator, which is real action to tackle the problem in the long term, but will the Minister take immediate action to call in the supermarkets and other buyers and tell them that the current situation is not only morally reprehensible but massively counter-productive? The low cost of milk under the Labour Government saw 50% of dairy farms close.

We have to look at the picture in the round. The reality is that most farmers on aligned supermarket contracts have not had their prices cut. The problem is with supermarkets and the other big retailers that operate in the middle ground, whose processors have continued to invest in new bottling plant and undercut each other for contracts instead of attacking growing markets both overseas and in import substitution.

The Gangmasters Licensing Authority is very important to the dairy industry, and the recent ministerial statement on the GLA has given the supermarkets grave concern. Has the Minister had any discussions with the supermarkets about that matter and the potential suspension of the supermarket protocol?

No supermarket has approached my Department with any concerns about the GLA or the changes that I announced a few weeks ago, so frankly, I think the hon. Gentleman is whistling in the wind. If supermarkets have evidence that there are problems, I am happy to listen, but I am not aware of any concerns.