Dairy Industry

Guto Bebb Excerpts

Wednesday 5th November 2014 Westminster Hall

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Diolch, Mrs Riordan. It is a pleasure to serve under your chairmanship. I start by congratulating the hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart) on securing this debate. I associate myself with many of his comments.

The Welsh dairy industry contributes about 10% of the milk produced in the UK, and Carmarthenshire is one of the places in Europe most ideally suited to producing milk, due to the plentiful resources of fresh grass. However, the long-term trends in the industry have not been particularly good. Since 1999, the number of dairy producers in Wales has fallen by 51.3%.

Recently, the price of milk has fallen below 27p a litre, with the cost of production being higher than that. First Milk has announced that it will cut its prices even further in December. In the Baltic states, the price of milk is down to 13p a litre; that shows the fall in milk prices throughout the EU and the world. Milk is a highly nutritious product and a vital component of any healthy diet, but in the supermarkets it is cheaper than water, so something is going wrong somewhere.

During the recess, I visited a local farm, Bremenda Uchaf at Llanarthney, in the middle of the Towy valley, with the Farmers Union of Wales to discuss the emerging situation in the dairy industry. As I said recently during Welsh questions, the most recent crisis has been caused by two main factors: another supermarket price war, in which dairy foods and milk in particular bear the brunt as they are gateway products; and reprisal Russian sanctions on EU food products. President Putin introduced a one-year ban in August, and CNN reported that it is worth £1.5 billion to the EU dairy sector. Demand for milk and other products, such as beef, has fallen significantly and over-supply in domestic and EU markets has depressed prices. I read in The Guardian today that the situation in the eastern part of Ukraine is still highly volatile, so the sanctions may remain in place.

[Guto Bebb (Aberconwy) (Con)]

On the impact of sanctions from Russia, does the hon. Gentleman believe that the Government should act in the same way as the Polish Government, for example, who have encouraged people there to eat apples to stand up to Putin? Should we not encourage people to eat Welsh cheese to stand up to Putin?

[Jonathan Edwards]

I would certainly encourage people in Wales to eat Welsh cheese and to drink as much Welsh milk as possible. My daughter is on a pint a day, so I am doing my bit for the cause.

The industry also faces other long-term challenges, in particular the end of milk quotas next year. Competitors in Ireland are preparing for this by increasing milk production, and unless there are strategies in place to help Welsh farmers, we could have a long period of milk price instability. I fear that there is a lack of political direction at Welsh Government level. In a recent evidence session of the Welsh Affairs Committee, the new Secretary of State for Environment, Food and Rural Affairs seemed to indicate to me that the current difficulties were likely to be short-term. I invite her to reconsider her position and to put in place interventionist measures to help the industry before we face another serious crisis, like the one we faced a few years ago.

I want to list a series of interventions that are needed, from the Department but primarily from the Welsh Government. We must ensure that all that can be done is done, and that no one in the supply chain is using the current downward price trend as a convenient excuse to make additional cuts to farm-gate prices. We need retailers who use milk as a loss leader to ensure that they fund those deals from their own profit margins and not from the pockets of farmers. It is vital that those retailers put transparent pricing mechanisms in place and ensure that suppliers are compliant with the voluntary code.

Put simply, milk being sold cheaply devalues the product in the eyes of consumers, and this could have long-term negative ramifications for the sector as a whole. It is extremely worrying to every dairy farmer to see milk being used as a battleground between retailers.

--- Later in debate ---

[Guto Bebb (Aberconwy) (Con)]

I, too, congratulate my hon. Friend the Member for Carmarthen West and South Pembrokeshire (Simon Hart) on securing the debate. It is a pleasure to follow the hon. Member for Ynys Môn (Albert Owen). Most of my prepared speech will be thrown out the window in view of the change in the time limit, but most of the points have already been made, not least by the two Carmarthenshire Members, who have highlighted many of the issues facing the farming industry in Wales. The impact of the decline of the dairy industry is not only on farming communities and rural communities. In my part of north Wales, the fact that the average herd has gone from 40 to 125 cows means that there are fewer family farms, and there has been a direct impact on the Welsh language and Welsh communities as a result, so the issue is not just economic but cultural in our part of Wales.

I want to pick up the point about a price of 99p for 4 pints of milk. I was once asked on the radio what the price of milk was, and I responded by saying that it was possible to buy 4 pints of milk for £1 in a supermarket. I thought that I had done well in answering that question. Most politicians fail to get the answer right on the price of milk, but obviously, as a Member of Parliament for an agricultural area, I was then condemned by the two farming unions for buying my milk in a supermarket.

It is important that we make points such as the fact that milk and bread, for example, have for a long time been loss leaders. The key point is that the loss should be borne by the supermarkets. If they want to have a price war over the price of milk, they should bear the loss.

[Ian Lavery]

Is it not time that we looked at regulating supermarkets to protect the farmers and suppliers?

[Guto Bebb]

That is a fair point, but it should be pointed out that there are some supply chain initiatives that we should see as moves in the right direction. For example, Tesco, which is not a company associated with good practice most of the time, has an interesting supply chain for dairy farmers that takes into account the cost of production and the need to create a profit, but it represents only 5% of UK dairy farmers. However, it is an example of what can be done. I understand that another supermarket is going down that road, but I will not name another supermarket just in case people think that I am in the pocket of the supermarkets.

I want to make some key points in relation to the situation in Wales. We need to look at the long-term opportunities as well. The impact of the sanctions on Russia, for example, shows that we are working in a global market. I would like my hon. Friend the Minister to give me some assurances that the potential for a free trade agreement across the Atlantic will be an opportunity for Welsh farmers and British farmers to exploit. It is important to remember that we have a market in north America that could be identified as a possibility for Welsh farmers, but we need to have some progress on the transatlantic trade and investment partnership. When markets are closed to us, there is a direct impact on our communities.

Another issue that I want to touch on is the movement of funding from pillar one to pillar two. The situation in England is that 12% of the money from pillar one is moved to pillar two; in Wales, it is a more draconian 15%. What is key, if that money is moved to pillar two, is what can be done with that funding to encourage diversification and new opportunities for Welsh food producers. I am following the speech from the hon. Member for Ynys Môn, and Ynys Môn has done a fantastic job of promoting local produce. That example could be followed and, indeed, is being followed in other parts of Wales.

I will give one small example from my constituency. By utilising European money in a creative manner, we have created in my constituency the Welsh food centre in Bodnant. Among other things, it has bought the entire milk production of Gerallt Jones, of Tal-y-Cafn Uchaf farm, and created new markets by creating high-premium cheese, butter and cream products. We could take such opportunities with the money going to pillar two.

I will end my speech at this point in order to ensure that someone else can speak.

Oral Answers to Questions

Guto Bebb Excerpts

Thursday 24th January 2013 Commons Chamber

[Mr Heath]

I will certainly be delighted to meet my hon. Friend to discuss these matters if that would be helpful, because I understand entirely the concerns of farmers in his area, which are shared by people across the country who face the devastating scourge of bovine TB.

[Guto Bebb (Aberconwy) (Con)]

10. How his Department plans to encourage innovation in the dairy industry.

[The Minister of State, Department for Environment, Food and Rural Affairs (Mr David Heath)]

We are already taking action to support innovation and to help the industry achieve its potential. I have launched a £5 million RDPE—rural development programme for England—dairy fund to boost competitiveness and help businesses grow. I am working with UK trade international experts to develop a dairy exports summit, offering support to businesses that see export as a route to growth. We are also putting £2.5 million into research on sustainable proteins for feeding livestock, including 15 projects for the dairy sector.

[Guto Bebb]

I thank the Minister for his response. Will he join me in celebrating the work of the Tesco dairy centre of excellence, a partnership with Liverpool university located on a working farm in the Wirral? The centre ensures that best practice guidelines are offered to the supply chains for Tesco, many of whom are located in Wales. It is a great example of how the supply chain can work for the benefit of the industry.

[Mr Heath]

I welcome and encourage all such beneficial collaborations. They can serve to optimise the input costs, efficiency, competitiveness and ultimate profitability of our farmers, all of which are key to their long-term future.

--- Later in debate ---

[Mr Speaker]

We must now speed up.

[Guto Bebb (Aberconwy) (Con)]

T2. One of the largest employers in my constituency is Edwards of Conwy, the makers of the finest sausages in the United Kingdom. It has recently won a significant new export order to Malaysia. What work can the Department do to ensure that this country’s fantastic food producers get as much support as possible to export our product?

[Mr Heath]

The one controversy that I will not enter into is the question of who makes the best sausages in the country, because it will never end. I congratulate Edwards of Conwy on its success and entrepreneurism. Export is a key way of creating growth and I am committed to supporting our farming and food and drink sectors in doing so.

Bovine TB

Guto Bebb Excerpts

Wednesday 14th December 2011 Commons Chamber

[Mrs Spelman]

I can give my hon. Friend that assurance. Very strict requirements have been set out, and tomorrow I will publish the guidance to Natural England and he might wish to read that to see precisely how this will be controlled and how we will test the infection of badgers. On the point about coterminous vaccination and controlled reduction, it is important to remember that this is a package and the option we have chosen to pursue combines controlled reduction of the badger population with vaccination. Some parts of the area might not be suitable for one method of controlled reduction and boundaries might be secured by a programme of vaccination, too.

[Guto Bebb (Aberconwy) (Con)]

May I, too, congratulate my right hon. Friend on her statement, which I welcome? In view of our bitter experience in Wales with proposed trials, however, how confident is she that these proposals will not be subject to a legal challenge?

[Mrs Spelman]

Far from it: I think we can be reasonably confident that they will be subject to a legal challenge and that is one reason why we have taken the utmost care. We have taken our time and we have taken a precautionary approach, and every step of the way we have tried to ensure that we have a copper-bottomed reasoned analysis that is the basis of our judgment that we should proceed with this policy.

Public Bodies Bill [Lords]

Guto Bebb Excerpts

Tuesday 25th October 2011 Commons Chamber

[Mr Williams]

I thank the right hon. Gentleman for that comment. As he is aware, the Select Committee on Welsh Affairs is undertaking an inquiry on this matter and we will not allow it to wither on the vine. The requests of the Welsh Assembly Government must be responded to.

In not pursuing the amendment that some of us sought, we are missing an opportunity to ensure that Wales can have the best possible model to deal with consumer policy. The Bill will pass tonight, but in the coming weeks and months the Government will present the results of consultations on the consumer landscape and if they do decide that Wales should have the power on these matters, sadly they will have no suitable legislative vehicle to grant that.

I welcome the announcement on S4C, although I regret more that we did not have an opportunity to talk about S4C today. We had a prolonged debate in Committee on it but, like the hon. Member for Arfon (Hywel Williams), I would have welcomed the opportunity to push our amendment on providing financial stability for S4C. I welcome today’s announcement that the BBC will not have representatives on S4C’s management board, but S4C will still be reporting to the BBC under the terms of the operating agreement, once it is finalised, and will be reliant on the BBC for its funding. That decision did not need to be taken now in this Bill; it could have been taken in the forthcoming communications Bill, and concerns remain.

We heard the welcome announcement by the Government that there is now to be a duty on the Secretary of State to provide sufficient funds, although how closely involved the Secretary of State will be remains to be seen. I am firmly of the opinion that this must not just be a rubber stamp of whatever the BBC decides. Like the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), I feel that until the day when devolution is passed down to the Cynulliad as part of that settlement, the Secretary of State must be central to and engaged in the process.

We do now have a longer-term funding settlement. Again, it is welcome that S4C has a better long-term idea of its funding, albeit not at the level that some of us hoped for. But what we tried to achieve in Committee and hoped to achieve on Report were genuine stable funding criteria that will provide guidance and direction on what S4C requires. That is particularly important to the creative industries in Wales. I have concerns that tying S4C into the operation agreement that it will have––to which it has perhaps reluctantly agreed––means that it is difficult to see protections for its independence, particularly its operational independence.

[Guto Bebb (Aberconwy) (Con)]

Is it not the case that this morning’s agreement between S4C and the BBC has guaranteed a six-year funding stream for S4C? In the current economic climate, would not the majority of small businesses be very grateful for a six-year funding guarantee?

[Mr Williams]

I ask my hon. Friend to examine the justification given some 15 years ago by the Conservative Minister at the time for a stable, formula-based funding settlement for S4C. It was convincing in 1996 and I suggest that that is the direction the Government should have taken.

Nobody at S4C has ever doubted the need to make cuts to reduce costs but the Government need to recognise that the action they are taking is not tinkering around the edges or making a few savings but fundamentally changing the dynamic that makes S4C valued by fluent Welsh speakers and Welsh learners. It is a guarantee for the independence that is valued. This decision should not be taken lightly, but I have to say, without the history lessons that we considered at great length in Committee, that the decision was rushed and taken without due consideration.

I sincerely hope that the arrangements work well and that the assurances that have convinced my hon. Friend the Member for Aberconwy (Guto Bebb) and others are realised but I fear that the S4C we knew has been changed for ever. As someone who represents a Welsh-speaking constituency, I testify to the importance of this issue. I do not regret for one moment the hours we spent talking about these issues on Second Reading and in Committee. Had we been given the chance, we would have spent some time on them on Report as well.