UK Dairy Sector

Baroness Ritchie of Downpatrick Excerpts

Wednesday 20th April 2016 Westminster Hall

[Ms Margaret Ritchie (South Down) (SDLP)]

I congratulate the hon. Member for Ceredigion (Mr Williams) on securing this incredibly important and hugely topical debate on our dairy sector. The dairy sector has a long and proud history in Britain and in Ireland, both north and south. In Northern Ireland, the dairy industry stretches back many generations. Members will agree that dairy products are so much a part of our everyday diet that it is easy to forget the huge skill and effort it takes for farmers to produce such world-class produce. In fact, the all-party group on dairy—I am one of its vice-chairs—recently produced a helpful document on the need for Government, schools and the wider industry to promote dairy as an essential part of our diet.

We have already heard about the challenges faced by the dairy sector in Britain. Unfortunately, the issues are even greater in Northern Ireland, where they are amplified by our reliance on the export market. Northern Ireland’s small population and proportionally larger dairy sector mean that our farmers must seek export markets for their produce, either in the south of Ireland, in Britain or further afield. That means that our farmers are the first to feel the impact of falls in the global dairy price or currency shocks. The situation is made worse by the lower prices Northern Irish farmers tend to get for their produce.

Despite producing dairy products that are as good as or better than products produced here in Britain—forgive me for being slightly parochial—Northern Irish farmers consistently suffer from lower average prices paid by national processors and retailers. In 2014, the average price for milk in Northern Ireland was 4.42p per litre less than the average price in Britain. In 2015, the price difference was even greater, reaching 5.34p per litre. Farmers are having to sell their milk for less than what it costs to produce. Anyone can see that that is unsustainable.

This is not just a matter for us Northern Ireland MPs or the Northern Ireland Executive in Belfast; regional dairy price inequality should concern every MP and Minister in Northern Ireland and Britain. Although we would say that Northern Ireland is the worst affected, there are many areas of England, Scotland and Wales where farmers are paid less than the cost of production. There is no doubt that that has dire implications for the long-term future of the industry. The Environment, Food and Rural Affairs Committee produced a very good report on farm-gate prices and made recommendations that I hope the Government will be able to implement.

[Rebecca Pow]

Perhaps a leaf might be taken out of the Northern Irish book, because I believe that the dairy companies of Northern Ireland successfully bid for an EU grant to help to promote the export of dairy products. Northern Ireland is obviously very successful at that, which is perhaps a good reason for remaining in Europe.

[Ms Ritchie]

I thank the hon. Lady for making that helpful point. She is on the same page as me in terms of retaining membership of the European Union.

[Neil Parish (Tiverton and Honiton) (Con)]

Hear, hear!

[Daniel Kawczynski]

Shame! Shame!

[Ms Ritchie]

Perhaps it would help if I moved on.

We must look at solutions. The Government must seek to bring to Britain and Northern Ireland a scheme that the European Investment Bank has already trialled in the south of Ireland. Under the scheme, the bank would allow DEFRA and the devolved Administrations to act as guarantors for loans made to dairy farmers. That added level of security would allow banks to make loans on much more favourable terms. For instance, in Northern Ireland, a bank loan made to a dairy farm typically has a pay-back period of 15 years, which is well below the average in Britain because of the difficulties to which I have referred. The Ulster Farmers Union believes that with the Government acting as a creditor, banks could offer loans with pay-back periods of 30 years, doubling the time farmers typically now have. Will the Minister and his colleagues in the Department give some consideration to that scheme? Will he give us his opinion, or at least go away and have a think about it before coming back to us MPs with a particular interest in the matter?

[Joan Ryan (in the Chair)]

Order. The hon. Lady should draw her remarks to a close.

[Ms Ritchie]

Like the all-party group on dairy, I believe that dairy should be put back on the daily menu. That means encouraging parents, schools and others. I urge the Minister to take heed of this debate.