Dairy Industry

Jim Shannon Excerpts

Wednesday 5th November 2014 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart) on bringing this matter to Westminster Hall for our consideration. Every one of us in this room has an interest in the dairy industry, so it is important for us to put forward our case—in my case, for Northern Ireland.

The situation in Northern Ireland is different from the situation in the rest of the UK mainland, as I am sure the Minister is well aware. Agriculture is a devolved matter, but the industry is also different, because we export 85% of our dairy products, unlike the UK mainland. I have been contacted by many dairy farmers in my area who are directly involved in this, and by the Ulster Farmers Union and Chris Osborne, who gave me some background to this. I represent the Strangford area and its farmers, and we probably have the sweetest milk and the best cheese in the whole United Kingdom. I say that without fear of anyone saying anything different—well, they might say something different, but the key is in the tastebuds.

Here and across the mainland, it seemed that I could not pass a red bus without someone showing off their milk moustache on the side of it, and back home, the latest campaign has dubbed milk “A force of nature”. Clearly, the campaign for milk across the United Kingdom is of great interest to each and every one of us. Some 75% of primary schools in Northern Ireland receive milk through the EU milk scheme, which shows, again, the importance of the dairy industry for us. In Northern Ireland, there are 3,425 dairy farms, almost 280,000 dairy cows, and 2,318 people involved in the dairy industry. Clearly, dairy is an important farming sector for us. Some 85% of our milk is exported. Pritchitts, in my constituency, exports to all areas of the world, including the middle east, the far east, the United States, Canada and across the United Kingdom. I am not sure whether it is because we have the greenest grass or the best pedigree stock, but our product is well received in all parts of the world.

The difference between the prices received by dairy farmers on the UK mainland and those in Northern Ireland is where our problem is. The decrease in prices is due to a combination of things, including expected market demand and the Russian embargo. In the past few years, Northern Ireland farmers, like farmers on the mainland, have invested heavily in pedigree stock and new dairy cows. They have also invested in the slurry lagoon systems they have to have in place. Those are expensive, and the repayments on them are very long term. That is all because of EU bureaucracy. Many Members—indeed, many of us in the room—will say that that is EU logic gone mad, but we are all none the less subservient to the EU’s rules.

In Northern Ireland, the Ulster Farmers Union milk price indicator, which was launched in May, is the only barometer of local prices available to local farmers. Given the exceptionally volatile market situation, there are noticeable price differences between Great Britain and Northern Ireland. In September, the difference was 5.36p per litre. When commodity prices are good, the gap tends to be narrower; it is wider when they are under pressure, as they currently are.

As things stand, farmers in Northern Ireland are likely to lose 5p per litre just in November. Although many are hopeful that prices have bottomed out, there are fresh concerns about the direction of cheese prices. Of course, not having the correct price for dairy products has an impact on other producers down the line and on the agri-food industry overall. At the moment, the biggest concern for the Ulster Farmers Union is the pressure that this market volatility will put on farm cash flows. Many farmers have large overdrafts, and the impact on their ability to pay them back is great.

Farmers on the UK mainland have held protests about price cuts, despite their farm-gate price continuing to be 5p per litre higher than that of their Northern Ireland counterparts—that is how the market is at this time. When the Minister responds, I hope, from a Northern Ireland perspective, that he will be able to tell us what discussions he has had with the Treasury about a tax break for local farmers, because the situation in Northern Ireland is dire, compared with that in the rest of the United Kingdom. We have to put a marker down for dairy farmers in Northern Ireland, and particularly those in Strangford, which is one of the major milk-producing areas in Northern Ireland. I look forward to the Minister’s response.