Dairy Industry

Baroness McIntosh of Pickering Excerpts

Thursday 13th September 2012 Westminster Hall

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

It is a pleasure to follow the hon. Member for South Down (Ms Ritchie), and to see so many colleagues from the Select Committee here. I welcome you to the Chair, Mr Walker, and I give heartfelt congratulations to the hon. Members who secured the debate, the hon. Member for Dunfermline and West Fife (Thomas Docherty), and my hon. Friend the Member for Tiverton and Honiton (Neil Parish). They have thereby given the issue an audience wider than just those of us who have the honour of serving on the Select Committee.

I draw your attention, Mr Walker, to my entry in the Register of Members’ Financial Interests. May I also mention, hesitantly, another interest: I am half Danish, although I shudder to declare it before this afternoon’s audience. Perhaps I can use my language skills to make representations beyond these four walls.

I welcome the new Minister to his place. It is a pleasure to see him there. I know that he will build on the excellent work done by the outgoing Minister, my right hon. Friend the Member for South East Cambridgeshire (Mr Paice). It is poignant that the ink was hardly dry on the dairy industry voluntary code before my right hon. Friend was moved.

Many hon. Members have already described the problem: the volatility of the market and the imbalance in the supply chain, which the voluntary code is intended to address, between producers and purchasers of milk. I yield to no one in my admiration of those who work in the dairy sector—not least those in the hills and uplands of the UK, especially in the inclement weather that we often suffer in North Yorkshire. The hon. Member for South Down alluded to the poor weather pushing the cost of feedstuffs up dramatically, and the cost of keeping cattle indoors for longer this year has increased production costs. We are all aware of the other debate today, on fuel prices and the general cost of living. I acknowledge that production in the uplands has been reduced to the bare bones, and those now working on farms, particularly in the uplands, are strictly family members.

I draw hon. Members’ attention to the Select Committee report of July 2011, on what should be included in the EU proposals for the dairy sector contract. We noted that, despite having one of the most efficient production systems in the world, UK dairy farmers are unable to recover their costs, and dairy producers are out-competed by imported products. We recommended that

“raw milk contracts should include the four elements specified by the Commission—price, volume, timing of deliveries, and duration.”

I am delighted that under the voluntary code, contracts between producers and purchasers must set out either a clear price or a clear pricing mechanism.

It is unacceptable that every time we deal with the issue, the purchasers add another 2p, and, when our backs are turned, or we take our eyes off the ball, prices are reduced. Even at 29p per litre, the price of producing the milk is not being covered. What is the result? As recently as the Farndale show at the end of August, I met yet another dairy producer who was selling his dairy and his sheep, for that reason.

The elephant in the room, to which I hope the Minister will turn his attention early, is the push for large units. The Government should say what their view is on large dairy units. They should acknowledge the public concern. There are welfare issues about dairy cattle being kept indoors with no access to fresh air and no room for exercise; and there are large-scale environmental issues concerning how to dispose of the slurry. That is a separate debate, which must happen. However, it is unacceptable and unsustainable that purchasers of milk continue to offer dairy producers less per litre than the cost of production. That cannot continue.

A cheese producer has brought to my attention a worrying development in North Yorkshire, which is that local suppliers are threatening not to provide cheese producers and others with the milk they need. The Government must tackle that.

I congratulate the outgoing Minister on securing the dairy package. We must recognise the fact that many dairy farmers are being pressed to abandon milk production, because they cannot secure a break-even price. That must be tackled. I urge the Government to respond to our earlier report on upland farming. We welcomed the rural statement this week, but in addition to that I want the Government to present an uplands action plan, setting out the policy area and retaining farming as the primary activity in the UK’s uplands.

We need to know where the £5 million that the Government are allocating to producers will be sent. We want contracts awarded to dairy farmers that cover their production costs. I hope that the Select Committee recommendations on the groceries code adjudicator will ensure that the adjudicator has the power to investigate on his or her own initiative, and to impose fines.

Let the message go out today that we will not accept the behaviour that has been shown towards dairy producers. I welcome this debate in that spirit.