Dairy Industry

Heather Wheeler Excerpts

Thursday 13th September 2012 Westminster Hall

[Heather Wheeler (South Derbyshire) (Con)]

It is a pleasure to serve under your chairmanship, Mr Walker. I congratulate the hon. Member for Dunfermline and West Fife (Thomas Docherty) on securing the debate. With 370 farmers operating in Derbyshire, and a major milk producer, Dairy Crest, based in my constituency, it is clear that the dairy industry is very important to us locally. During the summer recess, I met several local farmers. They are a community of hard-working individuals who believe that they have been ganged up on, and forced to accept opportunistic price cuts. They want to ensure that the dairy industry is put on a sustainable footing for them, their children and their children’s children.

I have been told that the minimum cost of producing a pint of milk is about 30p. However, many farmers up and down the country are not getting a fair price for a pint of British milk. I understand that Arla Foods has announced a new standard price of 29.5p from 1 October, and we have heard about Wiseman coming through with 29p. It is clear that more needs to be done to put milk and the dairy industry as a whole on a more sustainable footing for the long term.

I have here a picture showing how the price of a pint of milk is split, and it is clear that there is a real problem. The farmer receives 14p a pint, the processors have a 3p mark up, making 17p per pint, and when it gets to the shop floor it retails at between 30p and 50p. The price of a pint in a Westminster corner shop is over 50p. None of that mark-up goes to my farmers. Although my good friends in the National Farmers Union have informed me that those figures will have changed a bit since August for different companies, they provide a sense of the state of play for farmers during the past few months.

Over the summer, two things became clear. The first, on the rowback in prices by the big names from 24.5p to 27p—we are now hearing 29.5p—is that those prices are guaranteed only for farmers with aligned contracts, which is about half of them. It does not sort out the problem at all, and could be seen as window dressing. The second is that the price reverted to is only for liquid milk consumption; a lesser price may still be paid for milk that goes to cheese or other types of production. Again, that will not really sort out the problem.

My farmers would like us to push a campaign for a fair price for a pint of British milk. They are keen for me to see how they can get fair trade status for British milk. They are convinced that the British public would not be happy if they knew about the standards of farm production in many parts of Europe from which milk is imported. We need to build a fair supply chain that gives the farmer, the processor, the retailer and the customer a fair price for a pint of British milk.

I applaud the good work done by Ministers from the Department for Environment, Food and Rural Affairs, who worked tirelessly throughout the summer recess. The huge improvements secured are due to the clarity of their campaign, and I thank them for what they did. I also congratulate the Women’s Institute on the campaign that it is running.

[Mr Clive Betts in the Chair]

There is scope for the future. The new dairy code could do much to resolve the issue of cost among farmers, processors and retailers. The code will be voluntary, and I hope that the £5 million in additional funding announced by the Prime Minister for a rural economic grant, for which farmers can apply in the autumn to increase their competitiveness, will be another element of solving this long-term problem for our farmers.

I will cut down enormously what I wanted to say, as it is important that colleagues from around the country should be allowed to have their say. I look forward to hearing the Minister’s comments on the industry as a whole and his recommendations on what steps my farmers in South Derbyshire can take to ensure that they get a fair price for a pint of British milk.