department for Environment, Food and Rural Affairs

Mark Williams Excerpts

Tuesday 17th July 2012 Commons Chamber

[Mr Mark Williams (Ceredigion) (LD)]

I return to an issue that colleagues raised a little earlier: the dairy sector, its critical importance to the economy, and the crisis that it faces. Last week, there was a gathering of 2,500 milk producers in central London; 300 of them were Welsh dairy farmers. There is understandably enormous strength of feeling on the part of the farming industry, following the latest round of cuts. We have heard from other hon. Members, and it is not an overstatement to say that the price cuts threaten the very future of many of the family farms that we represent, not just in Wales but across the United Kingdom as a whole. Indeed, the shortfall from that round of cuts will cost the Welsh dairy industry alone an estimated £80 million per annum—a huge sum of money that will put many dairy farmers out of business. The right hon. Member for Delyn (Mr Hanson) discussed the hit that businesses would suffer—£40,000, £50,000, or £60,000—and that would drive many struggling family farms out of business.

Although the price cuts have been set by milk processing companies, there are things that Government can do to assist our dairy farmers. The Government have commendably introduced the Groceries Code Adjudicator Bill, which is going through the other place, and I share the farming industry’s eagerness to put that law in place as quickly as possible. I am relieved that, after so long, legislation is coming our way, as it will restore some confidence in the industry and enable consumers to make real choices between the practices of different supermarkets, allowing them to choose which ones they shop from. It will provide, I hope, an adjudicator with real teeth, but it will not guarantee farm incomes.

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

Asda has said today that it will put its prices up by 3p for direct sales for farmers, but in 2010, it dropped the price of milk for four pints from £1.50 to £1. Does my hon. Friend agree that that brought about the drop in milk prices across the piece?

[Mr Williams]

My hon. Friend graphically illustrates the inconsistent role of some supermarkets. Along with the groceries code adjudicator, we need to look at how we can bring about fair contracts, to which everyone who has spoken has alluded, to stop the exploitation—an emotive word, yes, but that is the perception on the farms that I represent, as well as that of the National Farmers Union and the Farmers Union of Wales. The contracts that farmers are required to enter are simply unfair, as they are required to give 12 months’ notice or more to pull out of them whereas, as we have heard, processors can change the price they pay for milk at a few days’ notice, or quite literally overnight.

The Government are right to move towards a voluntary code. Like other Members, I look forward to an update from the Minister but I hope that if necessary, the Government will proceed with regulation. As Lord Plumb said in another place, rule books without referees generally have limitations. We all agree in the House that farmers deserve to receive the production cost for their milk, but Robert Wiseman Dairies has announced that from 1 August it will pay 24.73p per litre for milk. Arla Foods milk price will fall to 25p a litre, and the First Milk price to 24.35p a litre—5p less than the cost of production. Any situation in which farmers have to accept less than the cost of production is unsustainable. I commend Waitrose, Sainsbury’s, Tesco, and Marks and Spencer on the positive work that they have undertaken, but we need to ensure that those agreements are made across the board, from retailers to processors, with all major buyers of milk and dairy products agreeing to commit to a sustainable purchasing strategy.

[Helen Goodman]

Does the hon. Gentleman not agree that there is a problem with milk imports from countries with lower animal welfare standards and costs, and that those imports are not labelled in the UK?

[Mr Williams]

The hon. Lady served in the previous Parliament when, to be fair, the issue of labelling rose to prominence. It is critical, because it enables consumers to make informed decisions.

Given the feelings in the farming community about the recent price cuts, compounded by difficult weather conditions and rising input costs on-farm, the Government need to make it clear to processors and supermarkets that their failure to deliver fair prices may lead to severe disruption to the supply chain with dire implications not just to farmers but ultimately to us as consumers.

It is always worth remembering that the losses in the dairy sector will have a huge—I do not use that word lightly—impact on the broader rural economy. Welsh Assembly Government statistics indicate that, as my hon. Friend the Member for Brecon and Radnorshire (Roger Williams) said, the number of dairy farms has reduced by 800 over the five years from 2006 to 2011. The number of dairy farmers in Wales alone halved in the past 13 years. This figure will rise if we do not take action over the current price slash and unfair contractual obligations, because they will mean many job losses across the industry among suppliers.

Next week the Welsh farming community, in its widest sense, will gather for the Royal Welsh show in Builth Wells in the constituency of my hon. Friend the Member for Brecon and Radnorshire (Roger Williams). We will see there the breadth of the farming community. The supermarkets, the farming unions and the Young Farmers will be there, as will the machinery contractors, the feedstuff merchants and the farming families from Wales and beyond. I make this prediction: whatever the weather, the sheer number of people there will illustrate how important the industry is to rural Wales. The stakes are high.

It is election time in Ceredigion, when we have hustings with the farming unions—the FUW and the NFU. Before elections, I am always asked this question: “Would you encourage a young farmer, the son of a farming family, to go into the industry and continue with the family farm to earn a living and contribute to the broader rural community?” With hand on heart, if things do not improve and we do not have action, I would hesitate about whether I could say yes to that question.