Dairy Industry

Lord Trees Excerpts

Thursday 17th September 2015 Lords Chamber

[Lord Trees (CB)]

My Lords, I too thank the noble Earl, Lord Shrewsbury, for securing this timely debate. The current crisis in the dairy industry is indeed severe, as he so clearly articulated. Moreover, it is causing great stress and hardship to our dairy farmers, who rightly attract much public support. They work incredibly hard for very modest reward; they cope with the disasters of epidemic diseases such as foot and mouth every few decades; and they cope constantly with the persisting endemic disease problems, such as bovine tuberculosis. Sadly, but perhaps not surprisingly, they suffer the highest suicide rate of any working group.

The current situation is complex. It involves an ephemeral conjunction of events, as has been described: the Russian ban, a global glut in production, a fall-back in Chinese demand and other factors. All that is overlaid on a long-term agricultural revolution, as the industry seeks to achieve financial sustainability in a competitive global marketplace. That latter challenge is one that many of our industries have had to face in the past 40 to 50 years, but I would argue that there is a strong case for some special support for our dairy farmers—particularly in the short term.

Special pleading is never easy, but I suggest that it is justified for a number of reasons. Our dairy farmers produce a nutritious, essential staple food, which contributes substantially to our food security. We cannot afford to lose the industry. Moreover, our dairy farmers are major stewards of the countryside. They have a key role in the rural economy. Finally, the UK has the geography and, dare I say it, a very good climate for growing grass, which dairy cows very efficiently convert from something that we cannot eat to a nutritious edible product.

What is being and what can be done? The recently announced EU support package has been referred to by several noble Lords, and the €500 million is certainly extremely helpful, but in reality it is fairly modest set against the value of the dairy industry in the EU of about €40 billion per year or the loss of the Russian market, which in Europe stands at about €5.5 billion a year. In the UK, I understand that the slice of the emergency package that we are likely to get is about €36 million. Again, that should be set against the loss of the Russian export market, which our farmers have hitherto enjoyed, valued at about €2.3 billion.

Consumers can help. We can buy British, as the noble Lord, Lord Plumb, said. Incredibly, in this time of crisis for processed dairy products, there is a trade deficit of about £1.2 billion. We could be producing those products and consuming them ourselves.

Milk schemes for children should be maintained. They not only support our farmers but provide valuable nutrition for our young children and promote a healthy diet. That leads me to my first question. Can the Minister assure the House that the EU school milk scheme and the UK’s nursery milk scheme will be continued?

We can do more to ensure fair contracts for dairy farmers. The groceries code was introduced after a Competition Commission report into the supermarket sector which found that the main problems were between the 10 biggest supermarkets and their suppliers. Now, most of the milk produced by farmers in the UK is bought by just two processors. Will the Government bring forward the review of the groceries code during April 2016 and legislate to extend protection to primary producers of milk?