Fair Dealing Obligations (Milk) Regulations 2024

Lord Curry of Kirkharle Excerpts

Monday 25th March 2024 Lords Chamber

[Baroness McIntosh of Pickering (Con)]

My Lords, I warmly congratulate my noble friend on bringing forward these regulations. They plug a gap which has long been open, as most farmers do not supply supermarkets directly and so are not covered by the Groceries Code Adjudicator.

When I chaired the Environment, Food and Rural Affairs Committee in the other place, I took a small delegation to Denmark to learn about the effectiveness of its milk and other co-operatives. Does my noble friend see this as an opportunity to encourage more co-operatives and producer organisations than we have seen in the past?

I grew up in the hills of the north of England, where I could see how fiercely independent hill farmers and others were. There is often a certain resistance to working together. I hope that the regulations my noble friend has presented this evening will lend themselves to producing such co-operation in future.

The NFU has long argued for fairer, more transparent supply chains. I hope that its pleas will be rewarded in the regulations before us. Can my noble friend assure the House that the Government will lend their support to the development of representational structures, such as the producer organisations and co-operatives to which he alluded? This will ensure that the dairy sector can work collaboratively and effectively with improved trust and greater collaboration across the supply chain.

I warmly welcome these regulations.

[Lord Curry of Kirkharle (CB)]

My Lords, I too warmly welcome these regulations. It is interesting and rather ironic that the farmers are protesting in Parliament Square while we are addressing this topic. When I saw the tractors outside, I felt rather envious. I wished I had brought my own tractor from Northumberland, although it might have taken most of the weekend.

This has been an issue for a very long time. I have been involved in trying to encourage better relationships within the dairy and other sectors for at least 25, if not 30, years. This is an important development. I welcomed it when the then Agriculture Bill came into the House. It was a big step forward for the Government to bring this in as part of that Bill.

I have two questions for the Minister. First, did the Government seriously consider whether to extend the existing GSCOP and Groceries Code Adjudicator to include the elements contained in that Bill? There have been at least two reviews of the scope of GSCOP during the years. Many of us have been keen that that scope should be extended down the supply chain to provide greater protection and support for primary producers.

Secondly, if the answer to that is, “Yes, we have considered it but have decided to go it alone and establish our own adjudicator within the dairy sector”, are the Government likely to extend that scope to other sectors? Many of the issues dogging the dairy sector dog other sectors too. Relationships within supply chains are nothing like as good as they should be and, in many cases, degenerate into confrontational relationships. In my view, it is important to look at other sectors. When the adjudicator is appointed, it should be made clear that—if it is government policy—the remit is likely to be extended to include other sectors.

[Lord Grantchester (Lab)]

My Lords, I thank the Minister for his explanation to the House today. This is an incredibly important measure to help resolve deep-seated problems at the producer end of the milk supply chain.

I declare my interests and experiences from being involved in a supply chain, as I have owned a dairy farm and received payments for over 40 years. I supplied milk in the beginning to Milk Marque and subsequently to several other processors, as well as chairing a producer group and the milk co-op Dairy Farmers of Britain. I was also a shadow Agriculture Minister in the Lords during the passage of what became the Agriculture Act, opposite the noble Lord, Lord Gardiner. I thank him for committing Section 29 into the Act.

The milk industry is extremely competitive. It has evolved with the rise and consolidation of supermarkets. Their dominance in the grocery trade has migrated milk away from doorstep deliveries. The consolidation of the top, supermarket end of the supply chain has driven consolidation in the processing sector. I liken it to the challenge of playing musical chairs, whereby the number of processors is successively reduced by the expanding supermarkets, which channel the supply chain towards expanding processors. An example of this business is the Co-op, which, at that time, expanded by acquisition. It reduced its milk suppliers from two to one, whereby the Co-op’s amalgamation costs of £6 million were, in effect, paid for by the dairy supply chain competing to be the one supplier of milk, without much regard to fair dealing.

By contrast, the service sector can be equally unstable and volatile, supplying milk to outlets such as Starbucks and others. In the other place, the debate mentioned the possibility of waste. I agree with the Minister in the other place, Mark Spencer, that there is virtually no waste in the milk chain. The recent example of so-called waste, when Covid shut down such outlets, resulted from those dairy suppliers being suddenly told that there would be no collection of their milk for the foreseeable future, and they faced the problem of safe dispersal immediately, with full tanks and cows needing to be milked again. I pay tribute to Dairy UK and Defra, led at that time by the Secretary of State George Eustice, for rectifying the situation.