My Lords, in February, we published our response to the Farming Regulation Task Force recommendations. This set out how we will address each recommendation. We are making good progress on meeting our priority commitments, which include reducing the burden of inspections and paperwork, and we have appointed an independent-led group to hold us to account in delivering them. However, this work cannot be rushed. It is important that standards in the farming industry continue to be maintained.
My Lords, on a day when over 1,500 dairy farmers are coming to London because of the crisis in their sector, should not more progress have been made by now on the implementation of the excellent Macdonald report? How can that best be achieved? Does the Minister agree that a culture of partnership and proportionate regulation is far more productive than a regime of excessive regulation?
I totally agree with my noble friend. It is a partnership arrangement. We can deregulate only in partnership with the farming industry. The dairy industry is no exception. However, it has a particular problem at this time. At Parliamentary Questions today, my right honourable friend the Prime Minister announced £5 million from the rural economy grant scheme to support innovation in the dairy industry for dairy farmers at this particular time. We understand their concerns and anxieties, and we need to strengthen their position in the marketplace.
My Lords, will that cover the cost of milk in the retail market? Why do some supermarkets appear to be happy to keep prices as they are while others put prices up? Surely this is the time for some form of regulation about milk prices, particularly in view of the extra costs to dairy farmers in other directions concerning their cattle.
I understand my noble friend’s question, but we are talking about deregulation rather than trying to regulate the market. The key thing, if I may say so, is to strengthen the role of the dairy producer in the dairy market, and that is where the Government’s efforts are going. I hope that my noble friend will understand that I want to stick to the principal theme of this Question, which is about deregulation.
My Lords, will the money which I understand the Prime Minister has been offering get quickly to the farmers? This is extremely urgent at the moment. One of the problems is, of course, that the wet weather means that the cattle are indoors and the food for the winter is being used now.
I have to emphasise that this is not direct income support and therefore it is designed to strengthen the productive capacity of the dairy industry. The scheme will be launched in the autumn, so this is not immediate relief and I do not want to mislead the House by pretending that it is. I understand the difficulties that a lot of dairy farmers are facing with the very poor weather that we have had this summer.
My Lords, while Defra has accepted the majority of recommendations that outline the new partnership approach between government and industry, we ignore the far more important matter of relationships in the supply chain between sections of the industry. Today, as we have heard, we see turmoil in the dairy sector. Surely regulation must have the objective of improving the workings of the industry. Regulatory proposals must make a difference to those on the ground. How will the Minister and his department measure and evaluate their success?
I hope that we can measure success by having a prosperous and successful agriculture in this country that is capable of expanding its market. There are huge opportunities for our high-quality agricultural products within the European Union and I hope that we can encourage the industry to look in that direction.
My Lords, given the price cuts, which mean that many farmers are losing 4p per litre, can the Minister outline the progress in securing a voluntary code of practice to secure fair milk contracts, which the Government agreed to in their response to the Farming Regulation Task Force?
My noble friend is quite right; part of our strategy is to agree a voluntary code of practice with the dairy and the retail industry and to work with them to ensure stability within the market. Having said that, there is no market control or price control; the market is based on voluntary contracts between producers and the industry.
My Lords, will the Minister ensure that his department takes great care when deregulating agriculture? Does he not recall, as many in this House do, that the changes to regulation in heating food for pigs were one of the factors that were identified as a great risk for foot and mouth disease? Will his department ensure that it never again deregulates at the expense of the consumer?
My Lords, what advice will the Minister give to the thousands of dairy producers who are leaving the industry? When I was a young man working for the farmers there were 6,000 milk producers in Carmarthenshire alone. Now there are probably fewer than 3,000 in the whole of Wales. He talks about strengthening the industry. How will the industry be strengthened, as opposed to the buyers?
The fundamental problem is currently that the productive capacity of the dairy herd has greatly increased. Until the industry is capable of expanding its market beyond the liquid milk market, which in itself is fairly inelastic, to use an economic term, we will not actually solve this problem. I hope that the answers that I have given today have given the House an indication of my view that the solution lies in creating new markets for processed milk and the infrastructure to provide that.