department for Environment, Food and Rural Affairs

Lord Hanson of Flint Excerpts

Tuesday 17th July 2012 Commons Chamber

[Mr David Hanson (Delyn) (Lab)]

I support the hon. Member for Montgomeryshire (Glyn Davies) in his request to the Minister today. The hon. Gentleman represents mid Wales and I represent north Wales, and a number of my constituents from the National Farmers Union and from the Farmers Union of Wales have echoed very much the concerns that he has raised. They simply cannot plan their businesses on the basis of a 2p cut in the price of milk already, with the potential for further cuts before 1 August. As he has mentioned, dairies such as Robert Wiseman Dairies are squeezing the dairy farmers of north Wales hard on the price of milk. A number of farmers in my constituency have raised the concern that they have potentially lost, because of the cut to their businesses, between £40,000 and £60,000 per business. No business could take a mid-year hit of that proportion with so little notice without it potentially having an impact on their viability. Farmers in my constituency came to London last week to raise the issue and are seeking the solution proposed by the hon. Member for Montgomeryshire.

[Andrew Griffiths]

I thank the right hon. Gentleman for giving way and agree with much of his speech. Does he share my concern that the contracts that dairy farmers have to put up with mean that they have to live with cuts of 2p, then another 2p, then further erosion, but if they want to get out of them they have to give six months’ notice? Does he not agree that that is unacceptable?

[Mr Hanson]

I am grateful to the hon. Gentleman for raising that issue and the key is to have a code of conduct for the contracts. I know that the Minister had discussions last week about a potential voluntary code and look forward to his updating the House today on his progress. If a definitive decision has not yet been made, I would welcome hearing from the Minister what plans he has to ensure that during the period between now and when the House returns in September he will be able to update Members who have an interest in the dairy industry, as well as Members in general, on this matter. I share the wish of the hon. Member for Montgomeryshire to see a voluntary code at first, but I know that my colleagues on the Labour Front Bench would certainly support regulation through a statutory version of that code if the voluntary form was not successful.

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

I wonder whether my right hon. Friend can help me. Was it not a previous Conservative Government who did away with the milk marketing boards? The whole question of their being able to maintain prices meant that the farmers could maintain their businesses.

[Mr Hanson]

My hon. Friend and I have both been in the House since 1992 and I vividly remember the Milk Marque being abolished in the early 1990s, which led to a free-for-all that caused some difficulties. Let us put those issues to one side, however, as I am concerned about how we can make progress today.

The Minister has an opportunity to explain to the House how he is progressing on the voluntary code. If a voluntary code does not succeed, he will certainly have my support and that of my hon. Friends on the Front Bench, I think, for a statutory code in due course. The key issue, however, is how to ensure that those who produce get a fair price for their produce. At the moment, the big businesses mentioned by the hon. Member for Montgomeryshire in his opening remarks, such as Robert Wiseman, can squeeze my constituents to the extent that they cannot make a living out of the production of milk.

Much of the milk produced in my constituency does not go to retail in supermarkets; it goes into the production of butter, yoghurts, cheese and other produce. The code needs to encompass not just supermarkets but all outlets for milk.

[Jim Shannon (Strangford) (DUP)]

Does the right hon. Gentleman feel the same concern as many of us about the large investments that farmers have had to make because of the new regulations on slurry and its disposal? That investment, on top of a worse price for milk, makes it more difficult for them to survive.

[Mr Hanson]

The key point is that whatever challenges farmers face in their investment and their businesses, no business can take the type of change that has been imposed now with a 2p cut some months ago followed by a further 2p cut by August. That is being imposed by businesses that are choosing to do so to enable supermarkets to have loss leaders. Customers can have cheaper milk, which must be welcomed in some ways, but ultimately we need a fair deal for all. We need a fair deal for producers, for supermarkets and for those people who buy and transport milk and make it into other products. At the moment, that is not happening because, as the hon. Member for Burton (Andrew Griffiths) said, the inflexibility of contracts means that farmers cannot get out of them.

We need an update from the Minister on the review of the contracts and an examination of how we can ensure long-term stability for milk production. We need the voluntary examination of contracting and, if that fails, we need the Government to take regulatory action to ensure that the interests of all parties in this important industry, not just in my area of north Wales but throughout the United Kingdom, are defended.

Finally, will the Minister update us on his discussions with my colleagues in the National Assembly for Wales? They have a devolved responsibility for some aspects of dairy production but contracting legislation must be dealt with on a UK-wide basis to ensure that markets are not further distorted between England, Wales, Scotland and Northern Ireland. I support what the hon. Member for Montgomeryshire wants to see, which the hon. Member for Brecon and Radnorshire (Roger Williams) will no doubt comment on in a moment.