Dairy Farming

Caroline Nokes Excerpts

Tuesday 7th June 2011 Westminster Hall

[Dr Poulter]

Instinctively, I do not like unnecessary red tape. However, given that the National Farmers Union has already been involved in some considerable nudging and given that there is a considerable imbalance between the power of the dairy producers and of the retailers, perhaps the Government have a role to play. I agree that it would be good to see a mutually agreed solution that supports the code of conduct and the role of the ombudsman. However, if that does not work, I hope that the Government will intervene. To start with, I would like to see things being resolved without using unnecessary red tape. Hopefully, we will see many organisations taking corporate responsibility and backing British suppliers. We have seen that in the pork and meat sectors of the industry, with many British retailers beginning to show greater corporate responsibility in buying British meat and putting it on their shelves. In the dairy industry, we need to see our retailers taking a similarly robust attitude and showing such corporate responsibility as well. I want to see that first and then, if necessary, further action and intervention from the Government.

[Caroline Nokes (Romsey and Southampton North) (Con)]

I thank my hon. Friend for giving way and for having secured this important debate. Does he not acknowledge that there are a number of retailers who are showing greater corporate responsibility? Waitrose, for example, operates a partnership of dairy farmers, one of which is based in Leckford in my constituency. Can we not encourage a greater use of that model in the rest of the country?

[Dr Poulter]

That is a good point. Marks and Spencer provides us with another good example. Like Waitrose, it has already shown a high level of corporate responsibility. Indeed, Waitrose has a good attitude to supporting British farming in general. My hon. Friend is right to say that there is a need for a number of companies to support a profitable and sustainable agricultural sector. The crisis in the dairy industry at the moment highlights such a need.

A number of dairy farms are being forced out of business. The prices of commodities and fuel are making it difficult for farms to be as successful as they once were. My hon. Friend is right to say that retailers should show some support, and we hope to see the model that she has mentioned rolled out across the country. However, it is important for us to trust the retailers to show that greater corporate responsibility before the Government intervene.

In conclusion, the number of dairy producers in the UK is plummeting, and the price paid for milk is consistently low. At the moment, we are 25th out of 27 in the EU league table. Input costs have soared for producers in recent years, especially over the past few months. In 2009-10, milk production was at an all-time low in the United Kingdom.

The crux of the matter lies in the fact that contracts between suppliers and producers are skewed against the producer, so that prices can be changed arbitrarily while notice periods are often 18 months or more. Most contracts are exclusive, which means that a producer can be tied to one supplier for a long period. The penalty clauses in many contracts are detrimental to the producer and favour the retailer.

The Food Labelling Regulations (Amendment) Bill will help to address some of the imbalances, and I am sure that the Minister will discuss it. None the less, retailers need to show greater corporate responsibility. The Government must be prepared to intervene if retailers do not support the industry in such a way and if the current nudges in our regulations do not work.

I thank the Minister for attending the debate and look forward to hearing his remarks. Some colleagues may wish to add some remarks on bovine TB.