My Lords, following the collapse of Dairy Farmers of Britain, the Government’s prime objective, shared with the industry and the receiver, is to find buyers for milk produced by farmer members. As a result, 96 per cent of the milk has been taken up by other buyers. The Government are optimistic that more of the remaining farmers will find buyers, but we must recognise that some might not be able to find a commercially viable outlet for their milk.
My Lords, the Minister will know that dairy farming is in crisis and that 46 per cent of UK dairy farmers have ceased production since 1997. The Milk Marketing Board, shut down by the Official Opposition when they were in government in the 1990s, had a contract obligation to every dairy farmer to collect all their milk however remote their location. The collapse of Dairy Farmers of Britain, referred to by the Minister, leaves 200 dairy farmers without guaranteed milk collection from their farms. Will the Government step in and ensure collection of this milk, underwrite these producers’ May milk cheques and bring forward a new milk marketing Act, as in the 1930s, to ensure that these dairy farmers get a fair price for their milk which is above their production costs? The 10p per litre currently being given to these 200 dairy farmers is a disgrace.
My Lords, we do not intend to interfere with the milk market to the extent that the noble Lord suggests. The milk market is a commercial operation and reflects the fact that the milk production industry in the United Kingdom and in Europe is suffering from the recession because demand has dropped. However, the Government are optimistic about the future of the British industry. If the noble Lord is using the recent collapse of Dairy Farmers of Britain as an instance of crisis, he may be exaggerating the point because, as I indicated in my Answer, 96 per cent of the milk being produced has found another buyer.
My Lords, do the Government have any idea of the implications of what has happened? It is all very well for the Minister to say that 96 per cent of the milk will be collected, but that does not necessarily mean that 96 per cent of dairy farmers are protected, because the milk that other buyers do not want very often comes from small, family farms. Will the Minister also comment on how much of the agricultural industry as a whole will be affected? We are talking not just about dairy farmers but about feed merchants, the transport business and the production—or at least the processing—areas. As for the Minister’s latest comment about the industry being in good heart, can he explain why it seems necessary to reopen intervention for butter and skimmed milk powder?
My Lords, certain areas of discrete intervention are always open and are necessary. I am saying that milk production in this country cannot be identified as being in crisis. It is no more in crisis than is the whole of the British economy in relation to the slump in world demand arising from the present recession. I marvel at the fact that, although noble Lords opposite continually advocate the free market, the moment they identify a stick with which to beat the Government they demand government subsidy and intervention.
My Lords, does the Minister appreciate that milk is a staple part of our diet in this country and that we should be very sure that we are self-sufficient in it? We were at one time self-sufficient, and we were exporting milk. We are now importing milk in the thousands of gallons from France. Is he satisfied that our milk industry is in good heart while we are importing from another country?
But, my Lords, we are also exporting milk as well. Therefore, I do not think that it will stand up to suggest that the milk industry is in crisis in those terms. There are certainly pressures on some small producers—we recognise that and we have sympathy for them. We are concerned. We called a meeting to analyse this problem and to give a reassurance that every mechanism would be employed to sustain as many of the small farmers concerned as possible. I am pleased to report that it was quite clear from that meeting that constructive action was being taken by all those concerned. However, we cannot extrapolate from that that the British milk industry is facing a bleak future, because it is not. What it is suffering from, in certain very exposed areas, such as the very small producers, is reduced demand, but we all recognise the reasons for that.
My Lords, it is proper that the Minister is made aware of the seriousness of the situation, but I am not sure that he has totally taken it on board. Is he satisfied that the Government can do no more as dairies close and jobs are lost? Has he considered the impact of government weakness and indecision on issues such as bovine TB and the huge cost to dairy farmers of NVZ regulations?
My Lords, both those last two factors are very important considerations that we need to address, and we are addressing them as very important problems indeed. I maintain, however, that the long-run future of the dairy industry and the milk-producing industry looks good. There are problems in the interim, but, as I indicated, milk production in this country will be reduced by a fraction of 1 per cent by the loss of these farms. The loss of production on these farms is a personal tragedy for each of the farmers concerned and their families—I am not underestimating that at all—but when considering the industry, which is what the noble Lord addressed his Question to, I do not accept that the industry is going through anything other than short-term difficulties with a long-run prosperity beckoning it.
My Lords, I am sorry, we have hit 30 minutes.