Dairy Industry

Daniel Kawczynski Excerpts

Thursday 13th September 2012 Westminster Hall

[Thomas Docherty]

The House of Commons Commission has urged the catering and retail services to ensure that we operate within the European rules—I am conscious that I am now setting off a whole new avenue for the hon. Gentleman—but perhaps the Minister will set out what steps he will take to ensure that all Departments buy their milk from British farmers.

The issue that we have faced time and again during this dispute is that retailers have argued that the cuts on farm-gate prices were being implemented by the milk processors and not by the retailers. The reality is that, as the hon. Member for North Cornwall (Dan Rogerson) mentioned earlier, the downward pressure has come from the supermarket shelves, and that pressure is passed on to the milk processors, who then pass it on to the producers.

We have urged Ministers in the Lords to keep open the option of extending the powers of the groceries code adjudicator. I hope that when the Bill comes to the House of Commons, the Minister will consider talking to his colleagues in the Department for Business, Innovation and Skills about the potential of extending the GCA’s powers if necessary.

In closing, I have a few questions to put to the Minister.

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

Before the hon. Gentleman finishes, I hope that he will give us an indication of what the Labour party’s position is with regard to bovine tuberculosis, which of course is the other great threat to many of our dairy farmers.

[Thomas Docherty]

I do not speak for the Labour party; I think that my hon. Friend the Member for Ogmore (Huw Irranca-Davies) will have an opportunity to set out whatever issues he wishes to when he speaks, if he has time to do so.

I am conscious that other Members wish to speak, so I will conclude very briefly by asking the Minister some questions. If the voluntary code does not deliver, will he step in and consider regulatory action? Will he tell us when he expects the code to be published? I understand that it is waiting for clearance from the Office of Fair Trading, but I am sure that he will try to ensure that it is published as soon as possible, so when will that be? What assurance has his Department been given about the full implementation of the voluntary code by all milk processors? As the signatory to the code is Dairy UK and not all the players, how will the Department for Environment, Food and Rural Affairs ensure that all the processors play fair? When do the Government expect to bring forward a consultation on the dairy package? I would be grateful to him if he gave us an indication of some of those timings. Finally, when will the Government publish the framework that will underpin the establishment of producer organisations?

I am very conscious that a large number of Members wish to speak today; I am sure that this will be an excellent debate; and I commend everyone who is taking part.

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[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

I, too, pay tribute to the outgoing Minister with responsibility for farming, my right hon. Friend the Member for South East Cambridgeshire (Mr Paice). I had the immense privilege and honour of being his Parliamentary Private Secretary for a year and a half. With his experience and expertise, he was one of the best farming Ministers this country has ever had. His departure is a great loss to the Government.

I set up the all-party group on dairy farmers in 2006, in the previous Parliament, because of the terrible crisis my Shropshire dairy farmers were going through. An important statistic to remember is that in 1997, 47 cows were slaughtered in Shropshire as a result of bovine tuberculosis; last year, that figure was more than 2,000. I repeat those figures: from 47 to more than 2,000. The misery that that disease has caused many of my constituents is appalling. When I set up the all-party group, 170 MPs joined it. Uniquely, the then Leader of the Opposition, now the Prime Minister, joined the group. I believe that that was the only all-party group he joined in the previous Parliament.

Our group produced a report in which the two recommendations were that we needed a limited cull of badgers and a supermarket regulator. At the time, we were told that it would be impossible to get either. We pleaded with the Labour Government to introduce a regulator and to take action on bovine tuberculosis. Our pleas fell on deaf ears. I am therefore slightly bemused to hear Labour MPs calling for us to support their actions on an adjudicator, because we pleaded on bended knee for years and no action was taken. One reason why the situation is so perilous at the moment is the inactivity of the previous Labour Government.

[Andrew George (St Ives) (LD)]

On the point about a supermarket or groceries code adjudicator, I have been chair of the Grocery Market Action Group for the past six years. I am sure that my hon. Friend will agree that it was only just before the 2010 general election that we had agreement from all three main parties that an adjudicator or ombudsman should be put in place.

[Daniel Kawczynski]

Indeed. I pay tribute to my hon. Friend, who is one of the leading proponents of the Groceries Code Adjudicator Bill. I look forward to working with him to get that proposed legislation through Parliament.

I want other hon. Members to be able to speak, so I will just briefly say that I have sat with dairy farmers at their kitchen tables, and seen those grown men burst into tears. The emotion involved in seeing their herds slaughtered is profound. I hope to hear from the Minister what steps the Government will take to address this appalling issue.

I will write to the Minister specifically with regard to a constituent of mine, Mr Jones of Pontsbury, who recently lost a lot of his herd. He has been given new figures on compensation that are much lower than he thought. He is worried that he will not have enough money to replace the cows he has had to send to slaughter. I would be grateful if the Minister looked at that case.

I reiterate the comments of my hon. Friend the Member for Stone (Mr Cash) regarding exports. I feel passionately about exports to north Africa and the middle east. Libya, Egypt and Tunisia are full of Dutch and Danish cheeses, yoghurts and other dairy products, yet there are none from the United Kingdom. I hope that the Minister will work closely with his colleagues in the Department for Business, Innovation and Skills to try to help the dairy sector find new markets in those countries.

Finally, I would like to put on the record that we now have a new Waitrose supermarket in Shrewsbury—the first one has just opened. My daughter and I go every Saturday to Waitrose, because it is the supermarket that pays most to dairy farmers.

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[Andrew Griffiths (Burton) (Con)]

It is a pleasure to serve under your chairmanship, Mr Betts. I am absolutely delighted that so many Members have chosen to take part in this debate. I am a new Member—I was elected just two and a half years ago—and during the time that I have been here, I have never seen such a well-attended Westminster Hall debate. It speaks volumes about how important the plight of the dairy industry is to Parliament. The supermarkets and processors must be left in no doubt how seriously we intend to take the issue. The phrase was used at one point that journalists were drinking in the last chance saloon. I suggest that the supermarkets and processors are drinking in the last chance milk bar, because I think that we all recognise how serious the issue is. I pay tribute to the hon. Member for Dunfermline and West Fife (Thomas Docherty) and my hon. Friend the Member for Tiverton and Honiton (Neil Parish) for securing the debate.

I speak today to represent my farmers in Burton and Uttoxeter, who played a little part in getting us where we are today. Many Members will know that the SOS dairy campaign kicked off with a meeting in Staffordshire. The brainwave for that meeting came around a farmer’s kitchen table in my constituency with Mr David Brookes, Mr Philip Smith and Mr Trevor Beech from the NFU. They came up with the idea of being more vocal and taking the campaign forward. When they rang me with their original idea, I had to tell them that I did not think that it would work. They said that they wanted to milk a cow in Downing street to make their case. I had to dissuade them from doing so, but I think that we all recognise how important the SOS dairy campaign has been in uniting farmers.

[Daniel Kawczynski]

One of the best campaigns over the past few years has been from the Women’s Institute, whose work I acknowledge. WI members came from all over the country, and one of them sat in a bathtub in a bikini and had milk poured all over her. That got a lot of publicity for the campaign.

[Andrew Griffiths]

I thank my hon. Friend. I am left with a marvellous image of him up to the navel in milk. I know that he has done his best to support dairy farmers in his constituency.

We got to this point because dairy farmers felt that they had no choice. They were faced with a further 2p cut in their prices, and that was a cut too far. They would not have been able to survive. Dairy farming would not have been sustainable at that level. It is almost unique that having had the 2.5p reinstated in many cases, many dairy farmers are still only meeting the cost of production. In what other industry do we expect producers to sell their product at the cost of production? We do not say to Toyota that we want to buy a Prius at the cost of production or to Apple that we want to buy the iPhone 5 at the cost of production, yet we expect our dairy farmers to survive by selling their product at the cost of production. That is absolutely unsustainable, which is why it is so important that we, as Parliament and as a society, get behind our dairy farmers. If we do not, we will lose the industry for ever.

We need to be aware of why we got ourselves in this situation: it was a case of supermarkets using milk to tempt people in, just as they have with my other beloved product, beer. They have driven down the price, and milk processors, to chase supermarket contracts, have put pressure downwards on our farmers to the point at which the pips are beginning to squeak.

I shall make a few quick points to close. First, we all recognise that more than 90% of the milk for the liquid market is produced here in the UK, but just a third of the butter and half the cheese products on our supermarket shelves are produced from British milk. We must do more to get into that very lucrative market, which could save our dairy industry. Secondly, we have heard a lot about the groceries code adjudicator and the idea that it must have teeth. The industry is setting so much store by what the groceries code adjudicator can deliver in future, and we must make sure that we arm it with the tools that it needs to do its job. Thirdly, some £5 million has been made available to dairy farmers under the rural economy grant. There are rumours and concerns among farmers in my constituency that, although that money would help them to survive, not all of it will reach dairy farmers, so I would be grateful for clarification on how the scheme will operate.

We recognise that the land that we live in is green and pleasant because it is farmed and because our farmers make such a massive contribution. [Interruption.] The phrase “for whom the bell tolls” comes to mind. It tolls now not only for me, but for our dairy industry, and it is imperative that we, as Parliament and as a society, offer a lifeline and support to the great British dairy industry.

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[David Rutley (Macclesfield) (Con)]

It is an honour to serve under your chairmanship, Mr Betts, although I must confess that, with the new technology here, this debate has sometimes felt as though we were participating in “Just a Minute”.

I thank the hon. Member for Dunfermline and West Fife (Thomas Docherty) and my hon. Friend the Member for Tiverton and Honiton (Neil Parish) for securing this debate. The enthusiasm of so many Members shows how important the issue is to so many of us and, most importantly, to the farmers in our communities. I welcome the new Minister, who has probably had to spend a lot of time absorbing all this new information. Hearing us today will, I hope, reinforce how important the issue is to our farmers. I want to put on the record my tribute to my hon. Friend—now my right hon. Friend—the Member for South East Cambridgeshire (Mr Paice) for his tireless work in opposition before he became a Minister, and also as a Minister. He helped many of us and he helped many farmers.

In preparing for this debate, I took a look at that well-known agricultural journal—“Lonely Planet”. Its guide to Cheshire states, obviously authoritatively, that the

“largely agricultural Cheshire is a very black-and-white kind of place—if you focus on the genuine half-timbered Tudor farmhouses and the Friesian cows that graze in the fields around them.”

Cheshire is great dairy country. We have heard about other counties, but Cheshire is supreme as far as I am concerned. [Interruption.] Did my hon. Friend say Cheshire?

[Daniel Kawczynski]

Shropshire.

[David Rutley]

Okay, fine.

From speaking to my local farmers’ forum, our local NFU branch, it is clear that farmers are facing extremely challenging times. It is worth while pausing on the degree of consolidation that they have gone through. According to DairyCo figures, there are 609 farmers in dairying in Cheshire, but just 10 years ago there were nearly double that number—1,007. That amazing change is because of the extreme challenges that they are going through. Of course, that is due to the power of the supermarkets, as we have heard, and to the fact that the cost of production is going up, while others have mentioned broadband—many of us are campaigning for improved broadband services in rural areas—and my hon. Friend the Member for Totnes (Dr Wollaston) has made an important point about TB. Those are all huge challenges for our farmers and for our rural communities that depend on farmers’ well-being, so we of course want to support them.

It is also important to say that farmers have responded to such conditions. They have not sat back; they have faced into these headwinds. Yields are up; farmers have adopted innovative farming methods; they have added value to their milk; and they have diversified. Just look at Blaze farm in Wildboarclough, with its world famous Hilly Billy ice cream—it has an extraordinary taste. Blaze farm now also has ceramic pottery painting and even hosts wedding receptions. That is diversification: farmers are facing into these headwinds and responding to market pressures. They do not want to defy the laws of gravity or the laws of the market. When I speak to farmers in Gawsworth and Siddington, and such great places, they want to be able to compete on a level playing field, in a fair market with fair prices.

Many of us attended the protest at Westminster and, with 2,000 farmers there, it was clear that they need action. I shall summarise my words quickly, because I want the Minister to be able to reply. It is good that processors and retailers have responded—keep the pressure on. The voluntary code is incredibly important, and the fact that farmers can now give 30 days’ notice and terminate contracts with three months’ notice is vital. It is amazing that that has not been the case before. Let us ensure that, like the groceries adjudicator, the code has teeth. I pay tribute to colleagues and to the NFU for their hard-fought campaigns. I have said enough. We need to hear from the Minister. Again, I thank the hon. Member for Dunfermline and West Fife for securing this debate.

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[Huw Irranca-Davies]

Indeed. I will return to that important point shortly; the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) raised it earlier, too. It is absolutely right that the Welsh Government are already considering what will happen if the code does not work. I will raise the point with the Minister, too, because we need to ensure that a discussion takes place across the UK about having an approach that, if it is not universal, respects both devolution and the fact that we need to work on behalf of all our farmers—not only farmers in the Principality, but right across the nation.

I say to farmers who may be tempted to pause for breath because they think that the summer storm is now passing that they should not do so. I say to them, “Organise yourselves; invest in producer organisations and in the value of the raw product, and do it now. And keep the pressure on us as parliamentarians and on the Government to deliver, as the groceries code adjudicator comes to the House.”

One of the last acts of the former Minister was to sign off on a voluntary code for best practice between milk processors and suppliers. That was good, and the code has been broadly welcomed. However, as night follows day, or in this case—please excuse my pun—as knighthood followed that day, the announcement was welcomed but with some caution. The chairman of the National Farmers Union, Peter Kendall, said that although the announcement

“gave some hope for the long term, it did not solve the dairy farming issues of today”.

So we must keep up the pressure to ensure that those processors that are not paying a fair price announce—as we have heard today—that they are rescinding their former announcements. Peter Kendall went on to say:

“This agreement will give us the architecture we need to make sure that we don’t end up with the same dysfunctional markets that are responsible for the dairy crisis we have today”.

We now have the architecture there in front of us, as long as we can make it work.

Let me make it absolutely clear that Labour supports the voluntary agreement if it can be made to work and once the legal niceties have been ironed out, but we also seek assurances from the Minister that the Government do not rule out additional measures, including legislation, should they prove necessary.

We are not alone in seeking that assurance, as the Minister has already heard today. Conservative parliamentarians—including the hon. Members for Bridgwater and West Somerset (Mr Liddell-Grainger), for Burton (Andrew Griffiths) and for Tiverton and Honiton, who have spoken in this debate, and many others who have spoken elsewhere—have queued up to express caution. As I was saying to my hon. Friend the Member for Dunfermline and West Fife a moment ago, that does not sound like the party of regulatory bonfires. This must be one of those good bits of regulation that some people talk about, while others jeer at the very idea.

I will express one word of caution to the Minister, to urge him not to rush headlong down the Stalinist end of the spectrum of views on this issue. Such views have been expressed by the hon. Member for Bridgwater and West Somerset, who has stated:

“There is no way it”—

the voluntary code—

“is going to work—it is just another rather sad red herring—it has been tried I don’t know how many times and it is always a disaster”.

He says that the code, which the Government support, is “nowhere near sufficient” and that Parliament needs to set a minimum price for

“a strategic resource like milk.”

I urge the new Minister to avoid capitulating to the old, central, statist control-and-command tendency in the Conservative party—next thing he will be arguing for a price set at a European level. Give the voluntary agreement some time to work, but as those in the less red-in-tooth-and-claw tendency of the rural Conservative party argue, keep the legislation ready to hand in case it is needed. Alternatively, as the Minister’s own Liberal Democrat party president, the hon. Member for Westmorland and Lonsdale (Tim Farron), has said, although the voluntary code is fine for now, the Government must

“commit to back that up with legislation if needed.”

That point has been made consistently today by many MPs from all parties.

[Daniel Kawczynski]

I am grateful to the hon. Gentleman for giving way, as he is running out of time, but I hope that he will not finish speaking without giving an up-to-date explanation of the Labour party’s views on a limited cull of badgers, following the decision of the courts.

[Huw Irranca-Davies]

I will try, but I might well run out of time. We need another debate, and following that decision, I suspect that we will have one on that matter in the near future. I will try to get to the issue. I want to draw on some of the points that have already been raised.

I seek assurance from the Minister that he will keep the voluntary agreement under extremely close scrutiny, that he will report back to Parliament on its operation with genuine urgency and that legislation is being kept as an option. I assume that he will be open—more open, in fact, than his predecessor—to the suggestion that the groceries code adjudicator should be given a few more teeth than the Government seemed willing to countenance formerly. In fact, I am confident that he will want to do an about-turn, because he is rightly an openly professed friend to good sense, to farmers, to a healthy and prosperous supply chain and, by default, to the position that is being expanded upon today. There is cross-party consensus; let me explain.

The new Minister, not without some background or expertise in the farming and food sector, including in dairy production, is on record as saying that he favours

“an ombudsman with teeth, who can deal with the iniquities of the food supply chain”—[Official Report, 20 January 2009; Vol. 486, c. 165WH.]

He said that the sooner that was established the better. We note the phrase “with teeth”, to which I will return in future debates.

Today, we particularly note the reference to the food supply chain. In 2009, the Minister said, with wisdom and foresight, that we need

“a sustainable price that allows our producers to get a return on their investment in milk”.—[Official Report, 18 June 2009; Vol. 494, c. 501.]

He also talked about

“a regulator who will be able to regulate the whole supply chain effectively, and ensure that the relationships are fair and transparent”.—[Official Report, 20 January 2009; Vol. 486, c. 165WH.]

That refers not to a limited part of the supply chain, such as a direct link between retailers and suppliers, but to the whole of it, which would include intermediaries such as milk processors. However, that is not what the Government propose in the Groceries Code Adjudicator Bill. Now that he is Minister in charge—the man with the levers of power who will stamp his own authority on the Department—I know that he will want to amend the Bill in line with the proposals.

I have run out of time. We will have to debate the matter again. I welcome the new Minister, and I hope that he can confirm that his imprint will now be on the proposals for the groceries code adjudicator.