Dairy Industry

Gregory Campbell Excerpts

Wednesday 4th February 2015 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to speak in this debate. I thank the hon. Member for Ribble Valley (Mr Evans) for giving us all the opportunity to participate.

I am here because the dairy industry is an important issue in my constituency. I have spoken about it before, but there are new issues to raise. In Northern Ireland, we have 3,425 dairy farms, boasting almost 280,000 dairy cows, with a market value of £627.5 million—the value of the dairy industry to the Northern Ireland agriculture sector is therefore enormous. The industry also employs 2,318 people.

As we have heard, the price of milk has continued to drop. In the past month, however, it appears that the market has bottomed. The milk price indicator hit a low of 19.24p per litre in mid-December, but it has now risen to 20.09p per litre. There is an indication that it may be 20p to 22p per litre before the early summer. Let me put that into perspective. If someone gets 21p per litre for their milk, and the cost of production is 28p, they lose 7p per litre. A base price of 20p per litre means that a 100-head dairy herd would lose £5,000 a month. Over a year, that would amount to £60,000. For those in the dairy industry, that is a serious issue. One of my constituents started dairy farming just before Christmas, and he is getting an extra 2p per litre, but even that is not enough.

[Mr Gregory Campbell (East Londonderry) (DUP)]

Does my hon. Friend agree that the fact that many supermarkets in Northern Ireland and across the UK use milk as a loss leader to get footfall is a key issue, which the adjudicator must address?

[Jim Shannon]

That is clearly an issue, and the Groceries Code Adjudicator needs to address it.

Northern Ireland exports 85% of its milk products. There are a large number of dairy farmers in my constituency, and Pritchitts is one of the major milk powder producers. It is therefore immensely important for me to ensure that things change.

There is hope on the horizon with the pending abolition of the milk quota, which maintains high production levels even if demand remains static. I also welcome the resurgence of the Chinese market. I believe demand there is coming back, and we are pleased to see that. That might just be the thing that makes the difference.

A further concern, as my hon. Friend the Member for East Londonderry (Mr Campbell) said, is retailer price cuts. Asda is selling two litres of milk for 79p. That means that only 23p profit has been made—23p that has to be split between the farmer and the supermarket giant. It does not take Einstein to work out who is really making the money. I will give hon. Members a clue: it is not the dairy farmer. Farming unions are trying to encourage Dairy UK and the Dairy Council to support the promotion of local dairy products, and we agree; every hon. Member can talk about how the milk is sweeter, the cheese better-tasting and the yogurt particularly tasty in their area. My hon. Friend knows about yogurt—he is an expert.

The issue is clear for us. Farming unions have continued to fight for the EU intervention milk price to be reviewed. That has received support from the Minister at the Northern Ireland Department of Agriculture and Rural Development, and has been backed by the Scottish and Welsh Farming Ministers. The Minister has claimed that there is no value for money in such interventions, so it would be unlikely that the UK would fight for the review. He needs to rethink his position, given the regional support and clear need for a review. I would certainly like a consultation, at least.