Dairy Industry

Baroness Parminter Excerpts

Thursday 17th September 2015 Lords Chamber

[Baroness Parminter (LD)]

My Lords, I add my voice to those thanking the noble Earl, Lord Shrewsbury, for bringing forward this debate on an issue that is vital not only for hard-pressed dairy farmers but for the wider rural economy and tourism in dairy areas, where in the last 10 years the number of dairy farms has halved.

The business of producing milk has been one of the great influences on the shape of our British countryside and British rural life. It helped create the patchwork quilt of small fields and hedgerows threaded together by lanes and punctuated by rural hamlets. It sustained small family farms for generations and inspired artists and writers to give expression to a sense both of place and of who we are as a country. If we want vibrant rural communities in future, then the Government must retain a very sharp focus on supporting our dairy industry and its farmers.

We know that milk prices are no longer protected. The reality is that they are and will remain at the mercy of the global market. Other noble Lords expressed many of the pressures that that puts on the industry. However, I welcome what our Government and our partners in Europe are doing. There is no single solution to this crisis, and it is better that we work with our European partners to support them in making the situation much better.

In the time I have available, I will touch on two issues: the importance of strong supply-chain relationships, and how the Government champion and respond to rural issues. Strong supply-chain relationships exist between some dairy suppliers and supermarkets, including Waitrose, Marks & Spencer, Sainsbury’s and the Co-op, which have schemes in place to ensure farmers are paid a price above the average cost of production for fresh milk for at least a portion of their liquid milk supply. However, as the noble Earl said in his opening remarks, that accounts for only 10% of the market. Much more could be done. Like the noble Lords, Lord Plumb and Lord Trees, and the noble Duke, the Duke of Somerset, I hope that the review next year of the operation of the Groceries Code Adjudicator—a welcome introduction under the coalition Government— will, as the House of Commons EFRA Committee recommended earlier this year, look at how the GCA remit can be extended to incorporate suppliers throughout the supply chain.

Further, it is very clear that producer organisations build greater resilience into the industry and individual businesses, giving more collective power. We see that the strong co-operative structure within the organic sector has helped to keep supply and demand in balance as it has discouraged overproduction and developed added-value products, opened export markets and been able to negotiate with processors on behalf of its members. As such, organic dairy farmers are weathering the crisis better than their non-organic neighbours, as prices have not been decimated in the same way. What specifically are the Government doing to encourage more farmers to unite in producer organisations?

The issues affecting dairy farmers cannot be seen in isolation. There is an interconnected and often symbiotic relationship between those issues and the solutions that need to be looked at and the needs of wider rural communities—and, indeed, the need to protect our nature. It is vital that there is one department that has responsibility for them all—rural businesses and communities and the environment—as Defra does at present. We have a Secretary of State able in Cabinet and in Europe to argue the case for our farmers while mindful of the needs of rural communities and nature, which sustains them both. Rural businesses and communities and nature need one champion in government, and it would be a significant blow should it be dismantled. In the light of the forthcoming tight spending review, can the Minister confirm that the Government have ruled out disbanding Defra?