UK Dairy Sector

Antoinette Sandbach Excerpts

Wednesday 20th April 2016 Westminster Hall

[Mr Mark Williams (Ceredigion) (LD)]

I beg to move,

That this House has considered the UK dairy sector.

I am grateful for the opportunity to serve under your chairmanship, Ms Ryan, and to address the state of the UK dairy sector. This is an important debate, and I am glad that there are so many people here, not only from Wales and the devolved nations but from across the United Kingdom. I suspect there may be some interventions but, given the number of Members who wish to contribute, perhaps we will keep them to a minimum.

Everyone here will recognise and agree on the importance of the agricultural sector, especially the dairy sector, which is a vital part of our economy, our landscape and, in many parts of the country, our communities. In the rural areas that we represent—I represent Ceredigion—local family farms are the lifeblood that run through our community. Without them, many parts of my constituency could not survive and, in many cases, would not exist at all. Many farmers who work the land and tend the flocks and herds have done so from generation to generation for hundreds of years, and they want to continue, yet the future looks bleak for many of them. I get that ongoing and constant message from farmers and their representatives in the farming unions. This is a time of grave uncertainty for many farmers in my constituency, in Wales and throughout the United Kingdom. It is a time of difficulty and, day by day, many farmers are struggling to get by, which has led to the harrowing fact that almost half of all dairy farmers in Britain have stated their intention to quit the sector.

There has been an incredibly difficult market for dairy produce in the past several years. That difficulty has not been caused by one specific issue that can be easily addressed. A number of factors are involved: local ones, national ones and, of course, global ones. Farmers understand that—they have told me about it—and it has been endorsed by reports from the Select Committee on Environment, Food and Rural Affairs. I am glad that the Select Committee Chairman, the hon. Member for Tiverton and Honiton (Neil Parish), is here to share with us his wisdom and expertise on the back of an excellent report that has many positive recommendations, which I will pursue later.

Whether the factors are local, national or global, the impact is the same. In the summer of 2014 alone we saw farm-gate milk price returns to UK farmers fall between 25% and 50%, which meant a fall from about 34p a litre to 23.3p a litre as of late last year. That is the lowest price farmers have seen since 2009, yet many receive even less than that low figure. Yesterday, at the excellent Anglesey day pioneered by the hon. Member for Ynys Môn (Albert Owen), farming unions told me that some farmers in north Wales may soon receive payment of just 16p a litre. Although 23p is difficult for many dairy farmers, and perhaps 26p or 27p would be sustainable, there is simply no farmer in this country who could survive for long by selling milk as cheaply as 16p a litre. Many farmers are already struggling and living on the edge financially. Yes, Government action on averaging out tax payments over three years for farmers is incredibly helpful, but it does not address many of the challenges they face.

[Antoinette Sandbach (Eddisbury) (Con)]

One issue that farmers in my constituency of Eddisbury raise with me is the fact that the processors are not subject to the Groceries Code Adjudicator and that there is a huge gap between those on aligned contracts and those on non-aligned contracts, and it is those on non-aligned contracts who are really suffering at the moment.

[Mr Williams]

I completely concur with the hon. Lady, who has experience of the farming industry both in England and in Wales. I will address the Groceries Code Adjudicator later, but I agree with her sentiments.

In Wales, the dairy sector continues to suffer from months of continuing low prices and poor profitability, and many of the farming unions are not convinced that there is likely to be a recovery any time soon. According to AHDB Dairy, for the 12 months to December 2015 total full costs of production ranged from 25.7p to 34.4p a litre. In short, there is huge disparity between the costs of production and the price that producers receive, which is a huge concern. The figures over the past decade show the loss of 5,500 dairy producers in England and Wales, and that downward trajectory will continue if nothing is done to help support dairy farmers. That means a change in the ethos of some of our farmers, but it also means positive action from the different Governments, whether it is the Government here in Westminster or the devolved Administrations. If we do not do that, it will have a terrible impact on the rural communities that many of us represent.