Agriculture: Dairy Industry

Lord Grantchester Excerpts

Monday 7th February 2011 Lords Chamber

[Lord Henley]

I am not sure that the noble Countess is in fact correct. The highest prices being paid for milk at the moment are coming from Wiseman Dairies with its direct contract for Tesco and the lowest current prices are from one of the farmers’ co-operative groups. I do not know whether the two are connected, but certainly it is a matter for individual farmers to decide whether they want to act together, not one for Her Majesty’s Government.

[Lord Grantchester]

We welcome and take encouragement from the fact that the Government are continuing with the previous Administration’s Dairy Supply Chain Forum as a mechanism to keep in close contact with the industry. Does the Minister agree that the dairy market is not dysfunctional, that the industry’s prospects are positive and that it is undertaking significant investment with a value added strategy? Price rises are feeding through what are now much better integrated relationships. Does he further agree that the problems facing dairy farmers are more the result of volatility in input costs rather than from supermarkets? I declare my interests in dairying.

[Lord Henley]

My Lords, I can agree with much of what the noble Lord has said. Obviously, individual dairy farmers are facing problems, and we saw a decline of 4.7 per cent in their number last year. But as the noble Lord said, prices are increasing somewhat at the moment, even though there is considerable volatility in the other prices dairy farmers have to face in terms of their milk production.