Dairy Industry

Ian Lavery Excerpts

Wednesday 5th November 2014 Westminster Hall

[Albert Owen (Ynys Môn) (Lab)]

It is a pleasure to follow the hon. Member for Somerton and Frome (Mr Heath). I pay tribute to him for the work that he did as a Minister, and in a previous Parliament when he worked with me on these issues. I congratulate the hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart) on obtaining the debate. I assure him that I have not prepared a press release, or even written a speech, but I feel passionate about the subject. My first job and my brothers’ first jobs were working on dairy farms. The herds were small in those days, but it was great experience. Sadly, those farms have gone, for many different reasons, and the fields where they were are now full of horses. I love horses, but would prefer to see dairy cows there.

The farming industry has suffered for many years from external factors, which we have heard about today. More recently, high fuel and energy prices and expensive food stock have been added to by the Russian sanctions on the EU. I want to deal specifically with the price war in the supermarkets. I have long campaigned for a supermarket ombudsman, which was brought in as the groceries code adjudicator, but the current arrangement is lacking and needs to be strengthened. That is not a criticism. When we bring in legislation, we always find out later that it needs to be strengthened in response to issues such as the one we are considering.

Some supermarkets are devaluing a great British product. I want the red tractor on milk produce, but also the red dragon, so that people know about the local involvement, time and effort. Dairy farmers work damn hard. It is a tough job, throughout the year, and they cannot just diversify when the price moves up and down, because theirs is a long-term commitment. Producing the stock needed to produce dairy milk does not happen overnight, and it is not possible to cut back and switch on and off with demand.

We need greater localism and food labelling. The Minister has done some good work on food labelling, but it needs to go much further. In my constituency of Anglesey, for instance, local farmers supply a producer in the area.

[Ian Lavery (Wansbeck) (Lab)]

Does my hon. Friend agree that there are also pressures on, for example, the baking industry, in that the prices of cakes and bread are being driven down, to the detriment of suppliers? Their situation is very similar to that of the suppliers in the dairy industry, and we must tackle the supermarkets on this issue.

[Albert Owen]

Absolutely. The example that I was going to give is that of Glanbia Cheese, which produces mozzarella for pizzas across the world. That is produced in my area, yet credit is not given to the superb milk that comes from north-west Wales and from Anglesey. That is an important point—the problem feeds into other food industries. My hon. Friend is right to make the point about cakes and so on.

We need to stand up together for British dairy farming, and today’s debate has been very useful, because we are coming to good conclusions. We want to strengthen the groceries code adjudicator’s remit, so that it can look at this issue. We want to stand up for the farmers, who are working damn hard to produce a product that is increasing in importance. Yes, there are external factors, but we want to be proud to be Welsh and proud to be British when it comes to our milk and dairy industry. I feel that this debate will help to move things forward.

The issue is a recurring one, and there are no party political points to be made here. The dairy industry is a difficult one, and it needs long-term support from across the parties—I know that the Minister is listening carefully to what is being said by Members from all parties—because we want Welsh and British dairy farmers to be able to produce the fine product that our children need and that our children’s children will need in the future.

--- 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.