Oral Answers to Questions

Debate between Cat Smith and George Eustice

Thursday 5th May 2016 Commons Chamber

[Liz McInnes (Heywood and Middleton) (Lab)]

8. What progress her Department has made on ensuring that farmers receive a fair price for milk.

[The Minister of State, Department for Environment, Food and Rural Affairs (George Eustice)]

These are undoubtedly very difficult times for many dairy farmers. The combination of oversupply around the world coupled with a weakening of demand in major markets such as China has led to a very depressed commodity price. We secured a £26 million support fund last November to alleviate short-term cash-flow pressure. We introduced a dairy supply chain code to improve dealings between dairy processors and farmers. Longer term, we are working on a project to introduce a dairy futures market to help farmers manage future risks. We are exploring the potential to facilitate investment in new dairy processing capacity, so that we can add value to our production.

[Cat Smith]

A food-secure Britain needs British farmers to be able to make a living. Milk prices plummeted in March this year; they were at their lowest since 2009, with farm-gate prices as low as 16p per litre. This comes at a time when British dairy incomes are dropping; they are forecast to fall by almost half this year. I was disappointed that there was nothing for dairy farmers in this year’s Budget. What action will the Minister take now, working with supermarkets, retailers and farmers, to ensure a future for the British dairy industry?

[George Eustice]

We have introduced tax-averaging across five years to help farmers who face a tax bill; they can average it against difficult years. Her Majesty’s Revenue and Customs has been clear that it will take a generous approach to the time-to-pay provisions to help farmers who may be under pressure with their tax bill. I completely understand that this is an incredibly difficult time for many farmers. There is a mixed picture; a small number are still on aligned contracts, and still receive a fair price. We constantly meet retailers to try to improve the contracts that they offer, and to encourage them to offer more aligned contracts and to source more dairy production. Many of them are now offering those aligned contracts, or higher prices, to their farmer suppliers.