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Agriculture: Dairy Prices

Volume 803: debated on Tuesday 28 April 2020

Question

Asked by

To ask Her Majesty’s Government what assessment they have made of the impact of changing dairy prices on farmers.

The Question was considered in a Virtual Proceeding via video call.

The Minister, Lord Gardiner of Kimble. Lord Gardiner? We have no Minister. Is the Whip able to answer this Question?

I will come in, as the Chief Whip. I am very sorry, but the answer is that I have no idea why my noble friend Lord Gardiner is unavailable. I apologise to the House. Something technical has obviously gone wrong, and I can only ask your Lordships’ forgiveness on this occasion. There will be a thorough inquiry into this, and I apologise to the House.

Thank you, Chief Whip. Can you stay on the line and at least field the questions that will come? The right reverend Prelate needs to ask his supplementary.

Thank you very much. I cannot thank the Minister for his Answer because he has not given me one, but he will be aware that some dairy producers are unable to change contracts and are finding it extraordinarily difficult to access business support grants. What changes have Her Majesty’s Government made in the past month to cut red tape and save some of our dairy farmers who are going bankrupt?

I should first declare an interest. I am not a farmer, but I own a farm and my tenant is a dairy farmer. Obviously, these are difficult circumstances. Dairy farmers have a particular problem. I know that there is a great difference depending on where dairy farmers sell their milk. For example, if they are selling their milk to supermarkets, that is okay, but those selling to other enterprises that are not functioning in the same way have different problems. I know that some have had to pour milk down the drain. I will take the right reverend Prelate’s specific question away and make sure that I get him a sensible answer because I do not know the details at the moment, I am afraid.

Perhaps the noble Lord, Lord Gardiner, can give me a written answer to my question. I understand that Meadow Foods pays more to its farmers in Cheshire than those in Cumbria for milk. Furthermore, it cannot give any guarantees that the price in Cumbria will not fall further, thereby threatening the viability of the industry. How can the industry survive under such conditions without the Government temporarily—I repeat, temporarily—setting a national minimum price for milk, as happened under the old Milk Marketing Board? I suggest a price of 25p per litre.

The noble Lord makes a very powerful point. I will ask my noble friend Lord Gardiner to answer that specifically. He raises an important issue about differences between parts of the country. I have just seen a message that my noble friend is having technical difficulties; I think we knew that anyway.

I would very much like to. I apologise to noble Lords. I have been on to PICT for an hour now and therefore on the telephone.

My Lords, I declare my farming interests as set out in the register. Dairy farmers are crucial in ensuring that food supplies remain resilient in this difficult period. While prices for most dairy farmers are largely unaffected, some have been impacted by the closure of the food service sector as a result of Covid-19. Defra is working closely with the NFU, the AHDB and Dairy UK to support farmers during this period of disruption.

We have had the supplementary from the right reverend Prelate, so we will move on to the noble Baroness, Lady Bakewell of Hardington Mandeville.

My Lords, dairy farmers desperately need certainty for the price of milk. It is estimated that 20 million litres of milk would normally go into the food service sector. Only 20% of this market is still viable due to lockdown. The national dairy herd is nearly 2 million, with an estimated 80,000 cows likely to be culled if financial support is not forthcoming. Once herds have been culled, it will take a long time to rebuild capacity. Farmers want to be ready to meet demand once restrictions are lifted. The financial support legislation promised on 17 April has yet to be laid. Can the Minister say when this lifeline will come forward for legitimate inclusion in statute?

My Lords, it is very important for me to say that the easement of competition law for the dairy sector—a statutory instrument, which is widely supported by the devolved Administrations and industry—will be retrospective to 1 April. That will ensure that the competition rules are relaxed for the dairy sector temporarily to allow retailers, suppliers and logistics services to work together. This has allowed the dairy industry to redirect some of its supplies to retailers. Clearly, Defra is working very closely on this. It is an issue that affects, as has been said, those farmers who are supplying the food service sector, and we are working with others to ensure that the situation improves for those farmers affected.

I declare my interests as set out in the register. As has been said, the dairy industry is under huge pressure in the current crisis as coffee shops, cafés and canteens are closed, so I really welcome the move to lift the sale restrictions on liquid milk in supermarkets so that we can all drink more at home. But does my noble friend accept that the horticulture industry is an even more immediate difficulty? This would be eased if garden centres could reopen soon. Will he kindly press the case within the Government?

My Lords, I very much hope in the fullest extent that I will be answering a Question on garden centres tomorrow. I am of course sympathetic to the interests of the horticultural sector. We are working on that and a more fulsome explanation may come tomorrow.

My Lords, I draw attention to my interests in the register. Some of the dairy producers who have been hit hardest are specialists who work with artisan cheese manufacturers serving the restaurant trade. As he considers further measures, will the Minister work with the large supermarkets to help small businesses to find new routes to market?

My Lords, that is a very helpful suggestion. From the calls that I have been having with the Secretary of State and retailers it is clear that a lot of work is going on. One of the advantages of the temporary easement of competition law is to ensure that there is available capacity in the supply chain for processing milk into other dairy products such as cheese and butter, but I will very much take away the point noble Lord has made.

My Lords, does the Minister understand the urgency of the problem and the need to act quickly? As we have heard, a cohort of dairy farmers are currently pouring milk away and their businesses are close to collapse. They need reassurances that their businesses will not go to the wall. They are only a minority of farmers but obviously they are still an important group. Given the importance of the UK dairy sector to our food sustainability in the years to come, what guarantees are the Government able to give that that group will be protected? There have been a lot of talks, but they need underpinning with guarantees—that is really what is being called for at the moment.

I understand what the noble Baroness is saying, and it is why we are working with the banks on this part of the dairy sector in particular. In fact, Defra has had priority discussions with the major banks to ensure that they are clear that farmers, milk buyers and milk processors are eligible for the coronavirus business interruption loan scheme. The Agriculture Bill will provide us with opportunities for further work on a range of initiatives to improve the position of milk producers. However, I understand absolutely the noble Baroness’s point about urgency. That is why we are in urgent discussions with, and are working with, farming bodies and organisations.

My Lords, I am afraid that that brings Question Time to an end. I apologise, particularly to the last group of questioners, for the fact that it was a rather eventful set of questions one way and another. However, these things happen, and we will have a wash-up session in which we will examine the lessons of what happened, particularly in that last section.

I remind noble Lords that there will be a Private Notice Question at 2.15 pm from the noble Baroness, Lady Thornton, on the membership and attendees of the Scientific Advisory Group for Emergencies, and that, some time after 5.15 pm, a Ministerial Statement made in the House of Commons on Monday giving an update on the economy will be repeated in the House of Lords.

I am very grateful to noble Lords. There have been one or two problems with today’s transmission, but I think that things will get better as we go along. I thank all noble Lords for taking part, and I also thank the Chief Whip for coming in to answer Questions, which is not really part of his job.

Virtual Proceeding suspended.