Dairy Industry

Ian Liddell-Grainger Excerpts

Thursday 13th September 2012 Westminster Hall

[Neil Parish (Tiverton and Honiton) (Con)]

Thank you, Mr Walker, for calling me to speak. It is a great pleasure to speak in this debate.

I thank the hon. Member for Dunfermline and West Fife (Thomas Docherty), because he and I have secured this debate. He has a great knowledge of the retail trade, so perhaps with that knowledge, my own knowledge of farming and some cross-party support we can get a really good price for milk. We want this debate to be about the price of milk, and the fact that we have nearly 40 Members in Westminster Hall who want to speak in this debate shows how important the issue is to everyone in this House. In fact, I suspect that at the moment there are probably more people in Westminster Hall than there are in the main Chamber. I thank all Members who are present for coming, and the number of Members who are here shows the seriousness of this matter. I also thank the Backbench Business Committee for granting this debate; it is a very important one.

Confidence in the dairy industry has been at an all-time low this year, not only because of the prices for its products but because we have had probably some of the worst weather that we have ever seen in the UK. As a result, we have had some of the worst May silage, and all those types of things, coupled with the high price of cereals, have meant that farmers are being crushed between low prices and the high cost of feeding animals.

Ten years ago, there were more than 26,000 dairy farmers; now we are down to fewer than 15,000 dairy farmers. That shows how many dairy farmers have been forced out of the industry, and how things have become more and more competitive.

It is good to see the new Minister here in Westminster Hall today and it is also good to see my hon. Friend the Member for Thirsk and Malton (Miss McIntosh), the Chairman of the Environment, Food and Rural Affairs Committee, here.

The voluntary code of best practice on contracts between milk buyers and dairy farmers is an important settlement. It will prevent producers from being trapped in unfavourable contracts and it will add much-needed transparency to milk contracts. I pay great tribute to my right hon. Friend the Member for South East Cambridgeshire (Mr Paice), who worked absolutely tirelessly with all parties to reach that agreement. It is a great legacy and I know that Members from all parts of the House are grateful to him for his profound knowledge of farming and for his support.

I welcome the new Minister to his post, and I hope that he can pursue the voluntary code as quickly as possible. The contract between producers and purchasers should set out a clear price. It should also set out that in future producers must receive at least 30 days’ notice of a price change; that retrospective price adjustments will not be accepted; that dairy producers are allowed to supply more than one processor when their primary milk buyer seeks to cap their production; and that supermarkets setting farm prices must engage meaningfully with farmers and their representatives, rather than just driving farmers into a corner and every now and again adding a sop, when what farmers need is a long-term future. The code must be implemented and then monitored for compliance and effectiveness. If it is not working, the Government must consider what statutory powers and mandatory powers can be added to it.

The Government have also made a very welcome and long-overdue move to introduce the Groceries Code Adjudicator Bill. It was presented to the House of Lords only last week and we now look forward to its Second Reading.

This issue is about fairness. It is also about supermarkets, particularly the few large ones that dominate the retail market and that have been able to increase their profits at the expense of food producers by using—

[Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)]

There is one issue that my hon. Friend forgot to mention just now. He lives in Somerset and I represent a Somerset constituency. However, he forgot to mention the Wiseman dairy at Bridgwater, which is one of the processors, and the processors are equally culpable in this matter.

[Neil Parish]

I thank my hon. Friend for his intervention. I will be talking about processors shortly, but he is absolutely right to make that point. However, we should not forget that processors, especially when there is a fixed price with the supermarkets, are very often the ones that get squeezed, because there is a guaranteed price to the farmer and then the farmers enter into a trade war with their supermarket friends—or enemies—and at the end of the day it is probably the processor that actually pays the price.

We must move more swiftly to make the Groceries Adjudicator Code Bill law, so that supermarkets play by the rules, producers have confidence that their complaints will be taken up and third parties can also raise issues with the buyers. If the supermarkets and other larger retailers are not doing anything wrong, they have nothing whatever to fear from the groceries code adjudicator. However, some supermarkets and other large retailers are less than enthusiastic about the adjudicator, so I feel that there is much to answer for.

It is also very important that third parties, such as unions and trade associations, are able to submit complaints to the groceries code adjudicator on behalf of producers, so that producers are able to benefit from the legal advice and support that those third parties may be able to offer.

All supermarkets can and should do more when it comes to responsible sourcing of all dairy products. The pursuit of ever greater margins, coupled with a short-termist approach to sourcing British dairy products, is jeopardising the future of the British dairy industry. Marks & Spencer, Waitrose, Tesco and Sainsbury’s should be acknowledged for introducing more transparent pricing mechanisms into their milk groups but, as the hon. Member for Dunfermline and West Fife said earlier, they have got to do much more about the cheese market. Retailers that have promised to do more, such as the Co-op, Morrisons, Lidl, Farmfoods, Iceland and Spar, have got to be brought to the table actually to do something, rather than just promising to do something, because let us not forget that all the time they are driving the price of milk down.

The point that I want to make very strongly to everybody here in Westminster Hall today is that consumers already pay enough money for their milk. The problem is that many of the large retailers are taking 16p in profit out of that money. That is where the problem is, and therefore some percentage of that profit needs to go back to the farmer. It is not just a case of farmers breaking even; they need to be able to make a profit to reinvest.