Dairy Industry

Lord Bishop of St Albans Excerpts

Thursday 17th September 2015 Lords Chamber

[The Lord Bishop of St Albans]

My Lords, I, too, am grateful to the noble Earl, Lord Shrewsbury, for raising these important issues today. I declare an interest as a beneficiary of the Church Commissioners, who own 11,500 acres of land which is used by dairy farming tenants across the country, and as part of a church which serves more than 8,000 rural parishes across England and Wales, many of which are intimately connected to the farming community.

Both my parents worked in the dairy industry, and I know from my work on rural affairs that the UK dairy industry is a great British asset which forms an important cornerstone of our wider social and economic infrastructure. British dairy is at the forefront of farming research innovation.

The farming industry is different from other industries. The primary duty of government is to make sure that the population is fed. Just as global markets have meant that prices have collapsed, there will come a time when they will suddenly rise dramatically. That is how markets work. The point about milk and dairy is that you cannot simply turn it on again. You cannot keep cows tucked away somewhere just in case. It is vital that we make sure that we continue to have a basic ability to produce food.

With that in mind, I start by welcoming the Government’s show of commitment to supporting the British dairy industry in the long term. I am particularly encouraged by Her Majesty’s Government’s commitment to source local food for public services and central government. Indeed, I would welcome an update from the Minister on what progress has been made on that front.

However, many of the Government’s initiatives are inevitably long-term endeavours, but farmers are facing an immediate crisis that currently threatens the industry and is causing great concern, heartache and anxiety. To this end, the emergency European aid package for farmers agreed last week is most welcome, as it has given the UK Government much greater flexibility over how they respond to the immediate needs of dairy farmers. Perhaps most significantly, the EU Commission has acceded to UK requests for extra flexibility on the rules surrounding direct payment under the basic payments scheme, ruling that on-the-spot checks will not need to be completed before payments are made. There are still question marks over whether that flexibility will be enough to ensure that direct payments can be made on time, or whether the Rural Payments Agency will be able to take advantage of early payments from mid-October. Making sure that farmers are given a clear and accurate timeline of when they can expect payment is essential to their planning.

The EU Commission has already confirmed that Britain will be receiving €36 million in targeted aid, and that member states have been granted scope to provide additional aid to support farmers facing cash-flow problems. I look forward to hearing how Her Majesty’s Government plan to use that targeted aid and whether they will provide further state aid for struggling farmers. The case for state aid is a good one, particularly if early October direct payments will not be possible.

Something that the EU Commission did not do, despite requests from many farming unions and European Governments, is to announce a review of the current intervention prices. I know the complications and arguments about that; they have been well rehearsed. I understand that the EU Commission has its reasons for resisting such a review and that the UK Government supported the Commission’s position. However, at 16p a litre, the current intervention price is patently too low to offer any real protection to farmers. Such protection is important: as I said, the nature of milk production is such that it cannot simply be turned on as soon as demand increases. Can Her Majesty’s Government indicate whether they are willing to consider their position on the intervention price should the current position extend, say, into the new year?