Intensive Dairy Farming

Chris Skidmore Excerpts

Tuesday 14th December 2010 Westminster Hall

[Mr Paice]

Without wishing to duck that question, I should say that trade issues are, as my hon. Friend is well aware, a matter for my right hon. Friend the Secretary of State for Business, Innovation and Skills. Obviously, however, we would wish to pursue as best we can commitments made by the Prime Minister before the election.

Let me move on to the point about competition in the domestic market and about supermarkets, which all my hon. Friends have raised in various ways. First, let me reaffirm that the Government are committed to introducing legislation to bring in the supermarket code adjudicator. We will call it an adjudicator because, compared with existing ombudsmen, it is not strictly an ombudsman.

I urge those of my hon. Friends who share my view that the sooner we introduce the adjudicator the better, to press the Secretary of State for Business, Innovation and Skills because this is his legislation. We will proceed as quickly as possible, but we need to be absolutely honest with ourselves and with farmers that this proposal will not in itself lead to a price rise; it is about ensuring that we have fair and transparent terms of trade and about enforcing the code, which has been in operation since February. We must not be accused of misleading people into thinking that the adjudicator will somehow make everything all right.

My hon. Friends said a lot about supermarkets, so I will not go further into that issue. However, we also need to look at processors. As my hon. Friend the Member for Tiverton and Honiton (Neil Parish) said, certain processors have massively bid for contracts to process and bottle for supermarkets. They then pass on to the producers the results of what is, in many ways, over-bidding. We are now in the absurd situation where the farm-gate price paid for milk that goes into liquid products or relatively high-value cheese products is lower than that which people could afford to pay if they were going to convert that milk into skimmed milk powder, which is the lowest-priced global commodity—although, even then, the global price for the raw milk is about 27p or 28p a litre.

The Government are, of course, committed to the concept of free trade and open markets, and the Opposition probably largely share that fundamental belief. We do not believe in interfering in how business operates, but it behoves business to operate a fair market arrangement.

I cannot stand here and say that the Government will never intervene if we clearly see unfair practices going on. We hope that the adjudicator will resolve all that, but let me make it clear to the dairy processing and retail sectors that it behoves them to operate a fair market. They must recognise that if they do not, we will, as hon. Members have frequently said, lose the British dairy industry, whatever the type of housing, to overseas competitors. The result will be ever-more volatile prices.

[Chris Skidmore (Kingswood) (Con)]

Will the Minister give way?

[Mr Paice]

I am sorry, but I cannot give way any more.

People would not have the cheap liquid milk that they want, because, as we all know, importing liquid milk is always expensive given its bulk cost. As a result, therefore, business will find that it is operating against consumer interests in the long term.

That reminds me of the point that my hon. Friend the Member for Richmond Park (Zac Goldsmith) made about imports and exports. He is right about the figures for liquid milk, but virtually all our liquid milk exports actually go over the Irish border, from Northern Ireland to southern Ireland, where they are made into cheese before coming back into the UK market.

Overall, our dairy market is massively reliant on imports of dairy products, which is why I personally believe—there is no strong evidence one way or the other—that the fear that a mega-dairy will destroy smaller dairy farmers is not necessarily justified. There is huge scope in this country to improve and expand our dairy industry. With the exception of Ireland, we grow the best grass anywhere in Europe, and we should be competitive. It is my job to try to create that competitiveness.

I am clearly running short of time, and I cannot respond to all the points that have been made. However, as my hon. and learned Friend opened the debate, I must emphasise that, as has frequently been said, I have no powers to intervene in any application. Issues to do with traffic, pollution and noise are for the local council to consider. My hon. Friend the Member for Richmond Park talked about my using my influence on the Secretary of State if an application went to appeal, but that would be seen as illegal and would be wide open to judicial challenge, so I am afraid that I cannot accept that invitation, much as I might wish to.

In conclusion, the Government understand the great public concern about this issue and about the changes to cattle—a lot of genetic improvement has taken place—and we accept, as the hon. Member for Glasgow North East said, that there is a need for research. That is why we have commissioned research—the previous Government commissioned some of it, and we are very happy with that—from the Scottish Agricultural College on improving the robustness and welfare of cows through the development of breeding indices, as well as a further study on the management and welfare of continuously housed cows.

If those studies demonstrate that the Government need to act on welfare codes, or in any other way, we will, of course, have to consider that, but I do not wish to pre-empt the conclusions of those studies. The Government believe in being led by scientific evidence; we will examine those research studies when they come out and we will act if necessary. I am grateful to my hon. and learned Friend for giving me the opportunity to discuss this matter.