UK Dairy Sector

Nick Smith Excerpts

Wednesday 20th April 2016 Westminster Hall

[Nick Smith (Blaenau Gwent) (Lab)]

I thank the hon. Member for Ceredigion (Mr Williams) for introducing the debate and the many colleagues who have intervened and made contributions this afternoon. Time is short, so I cannot mention everyone, but the hon. Gentleman certainly gave a great cri de coeur for dairy farmers throughout the country, as well as for the steel industry in Wales—I thank him for that.

With the global market in flux and farm-gate prices on the floor, the UK dairy industry is in danger. Some farmers are being paid less than the cost of producing the milk, which is unsustainable. Only last month, thousands of proud farmers felt that they had no other choice but to march on Whitehall and ask for change and for support. The Government must listen to that call. Bodies such as Dairy UK are saying there are no quick fixes, although the Government recognise that a package of support is needed to help save the industry from collapse. However, despite promising much in the face of pressure from the industry, there is still no sign of respite.

The Environment, Food and Rural Affairs Committee report listed many recommendations that I hope the Government will make good on. It talked about a futures market for dairy. Will the Minister make it clear when such a market will be established properly?

The British public have consistently proven that they back a “buy British” principle, but dairy in the UK still lacks country of origin labelling. The Farming Minister has been unable to get the EU to bring that forward, despite the EU approving similar branding on a vast swathe of other products. Meanwhile, he has written to supermarkets to encourage them to display the British flag on British dairy products. That code, however, is voluntary.

On exports, sector leaders such as Dairy UK have called for the development of new markets where we can showcase the quality of British products. It looks as if there may be good news on red meat and the USA this week, but will the Minister detail the results of talks with other countries about their importing our dairy products? All such suggestions are long-term goals, and that is understood, but where is the progress on those key issues?

The NFU and farmers have joined Labour in calling for the Groceries Code Adjudicator’s powers to be toughened up. The Environment, Food and Rural Affairs Committee has published a report calling on the Government to consider extending the GCA’s remit. The Committee wants it to incorporate both direct and indirect suppliers. Will the Minister confirm that those concerns will be taken into account when the GCA is reviewed later this year?

[Jonathan Edwards]

As the hon. Gentleman is aware, in Wales many of the powers relating to Government intervention are devolved and, to date, the Welsh Government have decided to pursue a voluntary code of practice in this sector. Does he agree that it is about time that the Welsh Government began to look at statutory intervention, and not just leave it on a voluntary basis?

[Nick Smith]

That may be helpful and I certainly think it is worth looking at.

The problem of delayed payments has come up too, with the high-profile failure of the Rural Payments Agency system this year. That money is a vital lifeline, given the struggles in the dairy marketplace, yet a Public Accounts Committee report revealed a payments fiasco. The Government must accept their part in a failing IT project that may have landed us with a £180 million annual fine from the EU. Money that could have gone to British agriculture will now be thrown away. The NFU says that that the RPA should be making 90% of payments by the end of December each year. Will the Minister give assurances that that target will be met in future years?

Finally, I welcome the deep analysis done by the NFU on the implications of a UK exit from the EU. The analysis showed that every Brexit scenario resulted in a large drop in income for farmers. Will the Minister join me in recognising that for dairy farmers, staying in the EU is vital for the trade and support that it provides to the industry?

[Simon Hoare]

The situation is worse than the hon. Gentleman seems to suggest. Right hon. colleagues on my side of the House—although not on my side of the European debate—told us last week that all the money we spend on the EU would be spent on the national health service. My reading of that was that that equals no subsidy and no support to agriculture anywhere in the United Kingdom.

[Nick Smith]

I need to move on to allow the Minister to come back on the problems and issues that colleagues around the Chamber have raised.

The UK Government have recently failed to support an important EU funding stream for our dairy industries, so I would like the Minister’s response on that issue.

In conclusion, the Government must make good their promises on a futures market for dairy and country-of-origin labelling, give a proper boost for British dairy exports and put the RPA on track. They must speak with one voice about the value of the single market and the value of EU funding for British dairy farmers.