Oral Answers to Questions

Stephen Phillips Excerpts

Thursday 5th May 2016 Commons Chamber

[George Eustice]

My hon. Friend makes an important point. I recognise the specific challenges in parts of the edge area, notably in Cheshire, and we have therefore introduced much more frequent—six-monthly—testing in Cheshire to get on top of the disease, which has been a success. We have also increased the use of the more sensitive interferon gamma blood test as a supplement to the skin test to ensure that we can remove infected cattle from herds more quickly.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

7. What recent assessment she has made of the effect on the farming community of delays in payments by the Rural Payments Agency.

[The Secretary of State for Environment, Food and Rural Affairs (Elizabeth Truss)]

All farmers in England have received their full payment or a bridging payment of half their expected claim. Overall, 90% of eligible farmers have received full payment.

[Stephen Phillips]

I am grateful to my right hon. Friend for that answer. I am pretty sure that colleagues with rural constituencies will have numerous examples, as I do, of problems with Rural Payments Agency delays. I wish to raise the particular case of my constituent, Mrs Musson, who has been left in severe financial difficulties this year due to her payment being delayed, and has had extraordinary difficulty contacting the RPA, as far too many farmers do. The response I had from the RPA was that the payment would come “in due course” and that my constituent should call the agency for hardship assistance, yet that is precisely what she has been unable to do. What assurances can my right hon. Friend give me and my constituents that farmers will not be left in such dire straits in the future, that the relevant help will be more easily available and that the RPA will be more easily contactable?

[Elizabeth Truss]

I thank my hon. and learned Friend for his question. All eligible farmers should have received a bridging payment by the end of April, and if this is an ongoing issue for his constituent I would be happy to assist directly. This has been the first year of implementation of the new common agricultural policy system. All payments need to be made within the payment window between December and June, and all payments will be made within that window. I appreciate that farmers are struggling with cash flow because of this year’s low commodity prices, which is why we have put in place bridging payments for those final few farmers who have not yet received payments. All that data are now on the system, so 2016 will be much more straightforward and we should be able to pay farmers much earlier in the payment window.

Oral Answers to Questions

Stephen Phillips Excerpts

Thursday 17th March 2016 Commons Chamber

The hon. Member for Gainsborough, representing the Public Accounts Commission, was asked—

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

4. What assessment the Commission has made of the value for money of the National Audit Office.

[Sir Edward Leigh (Gainsborough)]

The Public Accounts Commission, which I have the honour to chair, sets a strategy and budget for the National Audit Office. We assess the NAO’s performance against a range of measures. To highlight just three, the NAO’s work results in large savings for the taxpayer; in 2014, its work led to externally validated savings of £1.15 billion, which is £18 for every pound it costs to fund the NAO. Secondly, it has done this while at the same time reducing its own costs by 27%. Finally, the NAO is itself subject to annual value-for-money studies by its external auditor.

[Stephen Phillips]

As my hon. Friend says, for every pound we spend on the NAO, the NAO saves the taxpayer £18. The Comptroller and Auditor General has been very pessimistic in his budget estimation for next year in seeking to reduce his budget. Does my hon. Friend agree that, given that we get £18 back for every pound we spend on it, we should spend more on the NAO, not less?

[Sir Edward Leigh]

I am grateful to my hon. and learned Friend for that question, but the Comptroller and Auditor General and I are very mindful of the economic situation and of advice given to us by the Treasury, although I should say that as a body the NAO is entirely independent of the Treasury, about financial pressures. Above all, we believe that the NAO should practise what it preaches. I have assured the Comptroller and Auditor General—I say this to my hon. and learned Friend who asks a very serious question—that if extra work comes his way, such as auditing the BBC, I will not stand in his way to getting extra resources to do the job on behalf of this Parliament.

Oral Answers to Questions

Stephen Phillips Excerpts

Thursday 29th January 2015 Commons Chamber

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

2. What discussions she has had with the Secretary of State for Business, Innovation and Skills on promoting pork exports.

[The Secretary of State for Environment, Food and Rural Affairs (Elizabeth Truss)]

I discussed this issue early this week with my right hon. Friend the Business Secretary. Since 2010, we have opened 600 new overseas markets and UK pork exports reached £309 million in 2013, up 26% from 2010. I am committed to boosting this even further and we made major progress on my recent visit to China.

[Stephen Phillips]

As my right hon. Friend rightly says, and as regular watchers of “Have I Got News for You” know, she has recently been to China. Lincolnshire has first-class pig farmers. Will she update the House on her discussions in China to open up that market to my pig farmers?

[Elizabeth Truss]

It was fantastic to have representatives from major pork companies, such as Tulip, which has a plant in my hon. and learned Friend’s constituency, and from Cranswick, which sells great Norfolk pork, on my visit to China. We made progress on inward inspections—getting items such as trotters approved, which will open up more produce in this country—and we were also able to announce the appointment of our first ever food and agriculture counsellor, based in Beijing, Karen Morgan, which will help to drive further business. This is vitally important, because China will be the biggest importer of food by 2018.

Oral Answers to Questions

Stephen Phillips Excerpts

Thursday 24th January 2013 Commons Chamber

[Richard Benyon]

The Marine Stewardship Council has not delisted mackerel; another organisation downgraded it. It is certainly still right to buy British-landed mackerel—it is still a sustainable stock—but, as the right hon. Gentleman will know, we have serious worries about the activities of the Faroe Islands and Iceland in declaring a unilateral total allowable catch and not being willing to negotiate. We are working very hard to try to bring them back to the table, and we will use every measure we can. This is the most important stock for the United Kingdom industry, and most of all we want to protect it for the future.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

T1. If he will make a statement on his departmental responsibilities.

[The Secretary of State for Environment, Food and Rural Affairs (Mr Owen Paterson)]

DEFRA’s focus remains on growing the rural economy, improving the environment, and safeguarding animal and plant health. As well as responding to events such as the flooding that affected the west and south-west of the country over Christmas, we continue to explore new ways of ensuring that we are able to deliver DEFRA’s priorities more effectively, placing our economy and environment on a sustainable footing. This ranges from triennial review of our delivery bodies—the Environment Agency and Natural England —to a new integrated system for common agricultural policy payments. We must strive for better outcomes through greater efficiency, integration and innovation.

[Stephen Phillips]

Given the devastating impact that bovine tuberculosis continues to have on our farmers, will my right hon. Friend update the House on the most recent assessment he has made with regard to the deployment of a vaccine in cattle?

[Mr Paterson]

Last week I met Commissioner Borg, the EU Health Commissioner, to agree a way forward for developing a workable cattle vaccine. A provisional timetable has now been agreed, and a copy of the letter outlining this to me has been placed in the Library this morning. It acknowledges the UK’s leading role in pressing forward on a cattle vaccine. and for the first time recognises that we are on course to deploy a vaccine. The legal and scientific process could take up to 10 years. In the meantime, we will continue to use all the tools at our disposal to check the progress of this terrible disease.

Oral Answers to Questions

Stephen Phillips Excerpts

Thursday 25th October 2012 Commons Chamber

[Richard Benyon]

I am only mildly piqued that I have not been offered a bribe. I can assure my hon. Friend that this Government are serious about offering encouragement. For years, Ministers have been telling the farming community that it has to diversify its business, but then, in other directions, they have been putting up barriers to that. We are doing that work with highly focused grants, such as the ones I have described. We are also providing broadband, which is a key deliverer, and support across a range of other measures to ensure that businesses precisely such as the one that my hon. Friend describes can function and are economically effective.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

8. What research his Department is conducting on the means by which honey bees are exposed to agricultural pesticides.

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon)]

The Department for Environment, Food and Rural Affairs fully appreciates the importance of honey bees and other pollinators. We need to understand the possible threats in order to tackle them. To that end, we continue to fund a number of research projects on the potential impacts of pesticides. That will enable us to develop the way in which such risks are assessed and regulated. In addition, DEFRA contributes to the insect pollinators initiative, which supports research into the main threats to insect pollinators.

[Stephen Phillips]

My hon. Friend will know that research at Stirling university has recently found that exposure to even low levels of neonicotinoid pesticides can have a serious impact on the health of bumble bees. Given the importance of bees, both to our farmers and to all those who are interested in pollinating crops, does the Minister agree that his Department needs to look again at the use of these pesticides?

[Richard Benyon]

Yes I do, and we are. The Health and Safety Executive’s chemical regulation directorate, along with the Advisory Committee on Pesticides and the European Food Safety Authority, have looked in detail at Stirling university’s research. They believe that it is interesting and adds to the debate, but that on balance the risks do not require a ban of neonicotinoids. However, in DEFRA we have commissioned further research, through the Food and Environment Research Agency, using expertise from Stirling university, which provided the original piece of research, because we want to make absolutely sure that we are getting this right.

Oral Answers to Questions

Stephen Phillips Excerpts

Thursday 5th July 2012 Commons Chamber

[Mrs Spelman]

I thank my hon. Friend for that observation, which underlines the point about the need to ensure that the evidence is robust and to balance the needs of all those who require access to our marine and coastal waters, but who have at heart the health and welfare of our seas. We need to ensure that the evidence base is robust.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

4. What steps her Department is taking to support food producers in Lincolnshire.

[The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)]

The Government are determined, as I have already described, to support British food and farming. Much of our support for businesses in Lincolnshire, including food producers, will be available through the local enterprise partnerships in the county and, of course, through the rural development programme. As I said earlier, the Government will do all that we can to encourage such businesses to export their excellent products.

[Stephen Phillips]

My right hon. Friend will be aware of the application for protected geographical indication status for Lincolnshire sausages. The application has overwhelming public support, particularly in Lincolnshire, but it has recently been rejected by his Department, despite the acceptance of similar applications for Cornish pasties and Melton Mowbray pork pies. There is an appeal, for which new evidence has been submitted. I hope that my right hon. Friend can reassure me and the people of Lincolnshire that our compelling case for the Lincolnshire sausage will now be recognised.

[Mr Paice]

Obviously, I am aware of the disappointment throughout Lincolnshire at the application’s rejection. However, given my hon. and learned Friend’s expertise, I am sure that he knows it was on valid grounds.

First, the sausages have been made outside Lincolnshire for more than 20 years. We found—[Interruption.] This is all on the public record. We found considerable variation in the recipes being used and a large proportion of so-called Lincolnshire sausages are made outside the county. If the appeal brings forward new evidence, that, of course, will be properly taken into account. I will write to my hon. and learned Friend with the final decision.

Littering and Fly-tipping

Stephen Phillips Excerpts

Tuesday 22nd May 2012 Commons Chamber

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

The simple fact is that Mrs Prosser and others should not have to undertake such activities, but at least while they do have to I hope that my hon. Friend will join me in congratulating her and all those in my constituency who clear litter from the verges on the valuable work they do.

[Richard Benyon]

I entirely agree with my hon. and learned Friend and thank the volunteers in his constituency who do that, and I resent, in almost equal measure, the people with such little regard for our communities and countryside that they throw the litter in the first place, thereby requiring those volunteers to perform the selfless act that he describes.

Let me set out to the House the Government’s plans for good-quality local environments and the actions that we are taking to tackle littering and fly-tipping. We know from repeated public surveys that the appearance of local neighbourhoods matters greatly to people, ranking alongside or above concerns such as global climate change or rising fuel prices. Poor quality environments can destroy neighbourhood pride and create a climate of fear and neglect. These are therefore important issues, and it is right that we take a close interest in addressing them. Local authorities are on the front line of dealing with littering and fly-tipping. They have the duty to clean up public land and the powers to take enforcement action to fit local circumstances. Although most fly-tipping on public land is handled by local authorities, the Environment Agency also has a role in investigating large fly-tipping incidents, in particular those involving hazardous waste or organised crime. As my hon. Friend the Member for South West Bedfordshire said, on private land the responsibility for dealing with fly-tipping rests with the landowners—often at great cost to them and their businesses—although many local authorities offer advice, guidance and, in some cases, help.

Water White Paper

Stephen Phillips Excerpts

Thursday 8th December 2011 Commons Chamber

[Richard Benyon]

I have the highest respect for the Environment Agency. The people who work there are true professionals and are absolutely committed. I have had no indication from them that they are unable to deal with water quality issues, as described by the hon. Gentleman. I agree with him that the main river flowing through our capital city is in a disgraceful state. Not only should it be our ambition to see it cleaner, but we have to comply with international treaties. It behoves us to take the tough decision to restore its quality. However, that will not happen with the exclusion of other rivers that are also suffering quality problems.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

Lincolnshire, where my constituency sits, is one of the driest counties in the country, somewhat counter-intuitively. Water is therefore of great importance to my constituents and in particular to those who farm. Will the Minister assure the House that there are no proposals in the White Paper that will adversely affect the farming industry?

[Richard Benyon]

One of the core principles that motivates us in DEFRA is food security. We are deeply indebted to the farming community for the innovation that it has shown and for its ability to cope with changing weather patterns, while continuing to produce quality food. During the drought last year, we engaged with abstractors, many of them from the farming community. We found that the Government have many tools at hand to deal with the problems now. There was some very innovative work by the Environment Agency, the National Farmers Union and other organisations on that. The White Paper addresses the urgent and available methods, but also considers a new, changeable abstraction scheme for the long term that encourages farmers to continue to produce food.

Wild Animals (Circuses)

Stephen Phillips Excerpts

Thursday 23rd June 2011 Commons Chamber

[Andrew Rosindell]

No, I will not.

We have the Animal Welfare Act 2006—a brilliant piece of legislation from the last Government, which we supported—and it can be used when cruelty occurs, but I appeal to the House: do not go with the crowd, look at the facts, do not wrench those creatures away from the life that they are used to and have grown up in. If you do that, you will be more cruel than leaving them where they are, with the people and in the environment that they are used to.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

Will my hon. Friend share with the House his views on whether third-generation slaves in the United States, born into slavery, were content with slavery, more so than those who were enslaved in the first place?

--- Later in debate ---

[Mr Paice]

No. I will finish with the legal matters before giving way again.

Obviously I cannot tell the House that there would be a challenge, or what the result would be, but we do have to note the advice. The Radford review concluded in 2007 that no scientific evidence existed to show that circuses by their nature compromised the welfare of wild animals. It was on that basis that it concluded that a ban on the grounds of welfare would be disproportionate in the absence of evidence that welfare was compromised.

There are two further risks from that action: the cost to the taxpayer and the risk that a court might agree to suspend the ban until legal proceedings had concluded. In other words, although the law itself might have been passed, nothing would have changed for the animals themselves.

[Stephen Phillips]

On that point, will the Minister give way?

[Mr Paice]

This is in comparison with a licensing system that would be in place by the end of the year.

[Mr Paice]

I am well aware of who wishes to intervene.

I turn now to the European aspects of the legislation. The European legislation would apply whether we use primary or secondary legislation to implement a ban. My right hon. Friend the Secretary of State, in her statement on 19 May, informed the House of the error in referring to an action currently before the Courts in the European Union, and I repeat our regret over that error. Nevertheless, I can inform the House, as has already been stated, that as I predicted on the same day, a case has been laid by Circus Krone against the Austrian Government in the Austrian constitutional court. We know not the outcome, but the fact that that case has been laid supports the legal advice that we have previously reported to the House, namely that a wholesale ban may well be counter to section 16 of the EU services directive, and that any subsequent legal challenge would have the same consequences that I have described.

[Stephen Phillips]

I am extremely grateful to the Minister for giving way, and it is well known in the House that I do not often give free legal advice. He refers to the advice that he has received, and I have no doubt that that is the advice he has received, but I have to tell him that in my opinion that advice is wrong, and that, having seen the quality of some of the advice that the Government receive from the European Scrutiny Committee, it is about time that outside legal advice was taken.

Dairy Farming

Stephen Phillips Excerpts

Tuesday 7th June 2011 Westminster Hall

[Dr Poulter]

My hon. Friend makes a good point. I want to focus on milk, but others may wish to discuss other milk commodities and derivatives. Many retailers do not pay our dairy farmers a proper price for the commodities that they produce, as she has said so eloquently, but I shall focus on milk because, for producers throughout the UK, milk is the main produce of the dairy farm. None the less, I accept that the price that those farmers receive for yoghurts, cheeses and other milk-based products is a problem.

There has been increasing coverage of dairy farming issues over recent months, and I am sure that the Minister is aware that a key problem is the contracts that dairy farmers are tied into with the retailers. Before going into that aspect, however, it is worth setting out the background to the problem.

There is increasing concern that the milk industry is in crisis. Milk is a perishable product, as we all know, and farmers have little choice but to enter into contracts that often feature exploitative terms and conditions. These contracts contain no certainty about the price that will be paid from month to month, and producers are locked into contracts with notice periods of 12 or 18 months and with penalty clauses from the moment that they announce that they wish to move to another retailer. Such penalty clauses often include a section on price, which adversely affects the farmer.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

I congratulate my hon. Friend on securing this debate. Both he and the Minister know that this matter is close to my heart, and I hope that my private Member’s Bill will receive his support on Friday—I am sure that it will.

My hon. Friend has mentioned contracts. Does he agree that the major problem faced by the dairy industry is that retailers regard milk as a loss-leading product, and that they use their superior position in the market to drive down the price in a way that has made dairy farming unsustainable for many producers? The Government need to tackle that issue.

[Dr Poulter]

I thank my hon. and learned Friend for his intervention. The point is that the framework around those contracts has helped to keep the market subdued. As I have indicated, Britain is third from bottom in the league table of what farmers are paid for their milk in Europe.

The average European Union milk price in March 2011 was 29.72p per litre, but it was only 26.59p in the UK. For most farmers, over an average year that 1p a litre amounts to between £80,000 and £100,000. On average, British farmers are being paid £300,000 less than the European average, which is unacceptable if we wish to support a thriving dairy industry. We need to drill down into why British farmers are not paid a fair price for milk, whereas a much higher price is paid by European retailers to their milk producers.

Various narratives are put forward by retailers and suppliers on what they pay our dairy farmers. They say that they pay a fair price, but according to the European average they do not. They say that consumers are under financial pressure and that they need to keep the cost of milk down, and there is some truth in that. Yes, we are in difficult economic times, consumers are under financial pressure, and we want the cost for consumers to be as low as possible. However, although the price of milk in the shops over the past few years has risen considerably—by 70% or 80%—the increase paid to the farmer has been disproportionately lower. There has not been the necessary knock-on for farmers, so although retailers and suppliers are benefiting from a rise in the price of milk in the shops, our milk farmers are not. That is not fair, and it is not beneficial to the dairy industry. If we do not support our dairy producers, more farms will go out of business, which will be bad because it will impact adversely on consumers given the perishable nature of milk.

The other argument often put forward by retailers and suppliers is that milk must be resourced exclusively from the UK. We all want to see retailers supporting British farmers, backing honest food labelling and buying from them whenever they can. However, given the perishable nature of the product, and given that unlike many European countries we have a particular market for fresh milk, British retailers and suppliers have no option but to buy from British producers. That is another spurious argument put forward by many retailers and suppliers, and it is not a good reason for them not to pay our British farmers a fair price for their milk.

I am pleased that the European Commission has identified the significant imbalance in bargaining power between farmers and dairies and the lack of certainty and control over the price that farmers receive for their milk. It has recognised that the problem lies with the contracts and has proposed a number of ways in which national Governments can address it.

As the Minister will be aware, the Commission’s proposals to improve the position of dairy farming include allowing member states to introduce minimum legal standards for milk contracts, which would include the price to be paid for the duration of the agreement and a proper arrangement for the termination of those contracts. At the moment, when a farmer seeks to end a contract, they have to wait 12 or even 18 months before it can be terminated, but the penalty clause kicks in immediately, which means a lower price for the milk that they produce. That does not seem to be a fair contract, and it should be investigated.

The EU has talked about permitting producer organisations to be established, which would allow dairy farmers to come together to improve their negotiating power with dairy companies, and that would be a good thing. It has also discussed introducing greater market transparency into the dairy supply chain.

The EU has identified a number of issues with the contracts, which, as my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) has said, are at the crux of this matter. The majority of milk contracts offer dairy farmers no certainty or clarity about the price they will be paid from month to month. They allow the milk buyer to make unilateral changes to milk prices, which often take place at very short notice. Dairy farmers have great difficulty exiting such contracts. All those issues imbalance the contractual relationship between the dairy farmer and the milk buyer.

I hope that the Minister will tell us that the Government support a fair code of practice and that they will give us a little more clarity over the role of the ombudsman. Unless we improve the current situation between milk producers, milk suppliers and retailers, more and more of our dairy farms will go out of business.

It has been a pleasure to flag up these key issues, and I look forward to hearing from the Minister and my colleagues.

--- Later in debate ---

[The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)]

I congratulate my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) on securing this debate. It was widely discussed when I was at the Suffolk show last week, so I was given plenty of notice that I would be grilled on these issues. I also thank my hon. and learned Friend the Member for Torridge and West Devon (Mr Cox). I am not sure whether he was appearing for the prosecution or the defence, but his speech not only contained the gravitas that we expect but correctly conveyed the huge importance that the dairy and beef sectors attach to the issue of bovine TB, to which I will refer in a few moments. Finally, I thank the hon. Member for Glasgow North East (Mr Bain). As he has said, there is probably agreement among the parties about where we need to go.

I will address some of the points made by my hon. Friend the Member for Central Suffolk and North Ipswich. He said that our food production is 40% of our total food supplies; it is actually well over 50%, and we could produce more than 70% of our food indigenously. I do not want him to think that things are worse than they are, although I want to improve both positions.

It is worth making the point that we are the EU’s third largest milk producer, well ahead of the only country that we might reasonably say could do better than us, Ireland, which has the temperate climate and conditions to grow grass for more of the year and more effectively. With the exception of Ireland, we should be competing effectively with every other country in the EU.

My hon. Friend and others are entirely right that the industry is under huge pressure. Members who watched “Countryfile” on Sunday evening will have seen yet another auction of a large dairy herd by a farmer going out of business. However, we have a slight conundrum. Although the number of dairy farmers is decreasing significantly, by an average of 5% a year over the past decade, there has been no such dramatic reduction in the number of cows or in the amount of milk that we produce. In fact, milk production in the UK increased by 500 million litres last year, and it is now almost back to the level of three years ago. That is due to the expansion of herds by many farmers, as well as to genetics, better feed and so on, which cause individual cows to produce more milk. From the Government’s perspective, we are faced with a dilemma. Are we interested in supporting individual dairy farmers or the industry and this country’s ability—to return to the issue of self-sufficiency—to produce the milk that we need at home? It is a conundrum, and I do not pretend to have the answer.

The state of the UK market is easily clarified in some round figures. Roughly 50% of UK consumption of milk and dairy products is liquid milk, almost all of which is domestically produced—as my hon. Friend has said, carting liquid milk overseas is not common. Another 25% of the market is milk products such as cheese, yoghurt and so on processed from British milk. The other 25% is processed products imported from abroad. It is fairly easy to divide the market into those three.

To return to my point about the European market and competition from elsewhere, there is no doubt in my mind that we should be able to compete much more effectively with other countries, with the possible exception of Ireland, in the 25% of the market that consists of imported processed products. My hon. Friend made a great deal of the prices being paid by our supermarkets. I am not saying that supermarkets are without fault, but the real issue is the price being paid lower down the chain at the processed end.

The latest milk prices—they are published weekly, so this is open information—say that the highest price being paid for milk is 29.01p in the dedicated supply chain for Marks and Spencer through Dairycrest. The second highest is in another dedicated pool, for Sainsbury’s, through Arla. The lowest, at 23.8p, or more than 6p a litre less, is paid by North Milk Co-op. A little above that, the supplier First Milk pays 24.2p. The table that appears in the farming press each week simplifies things slightly, but the top half of prices mainly go to the liquid trade, while the bottom half go to the processed trade. There are exceptions, but that is a general point. Increasing the price paid for processed milk would improve the overall situation for everyone.

As my hon. Friend has said, the retail market is important. The average farm-gate price in March was 26.57p a litre, which is 10% higher than the year before, although, as several people have said, costs have rocketed proportionately or by even more. However, the retail price of a 4-litre carton of milk is about 55p a litre, which means that the processor and retailer take 28.5p a litre—that is more than the dairy producer, the guy who keeps the cow for 365 days a year, takes—just to bottle, distribute and retail the milk. There is no doubt, as the Dairy Council and others have shown, that the share of the overall retail price taken by the farmer has stayed the same or even fallen, the share taken by the processor has stayed roughly the same and the share taken by the retailer has rocketed. There are questions to be asked about that, and I will come back to them in a moment.

I will discuss the shape of the industry to demonstrate to my hon. Friends that the issue is not only about liquid milk or about supermarkets. Much has been said about the European package, particularly about contracts. The first thing to say in response to the hon. Member for Glasgow North East is that we are a long way from any decision, because we do not have the European Parliament’s decision yet. That is a post-Lisbon treaty event that involves the European Parliament. I will come back to the other points, but we support the issue of contracts as presented by the Commission. We support the proposal that individual member states should be able to make contracts compulsory in their own country, if they so wish. As far as England is concerned, I have already said publicly that, if that is what the end version looks like, we will consult the industry about whether to have compulsory contracts, but I have not hidden my view that I do not think that they will achieve what people believe they will.

That is the point that I want to address, because my hon. Friend the Member for Central Suffolk and North Ipswich paid great attention to the issue of contracts. Let me make it clear that, in the UK, virtually all farmers have contracts, which takes us back to what is in them. The main reason why this matter features so highly in the European dairy package is that most dairy producers in other countries do not have contracts, so for them it would be a great innovation. Although this is a devolved issue, it is relevant to the UK and, as far as England is concerned, it is clear that the proposal as it stands—we do not know how it will end up—does not allow individual member states to lay down minimum standards or terms in the contract. It says that the contract must address the issue of price, either by setting a price or a formula, but it does not allow the member state to set it. It will be open to negotiation between the producer and processor to decide the price or formula by which the price is arrived at.

Similarly, the contract must address the issue of duration, but it does not allow the member state to lay down a minimum duration. Some, including the National Farmers Union, seem to think that the contract should include a lot more. We can argue about whether it should, but it does not. The proposition from the European Union does not allow member states to lay down detail on standards, which some seem to believe that it should. That is why I do not think that it is the panacea that some have made it out to be.

[Stephen Phillips]

Given that, as the Minister has said, the package is not the solution to the problem, and given that he has identified the discrepancy between what is paid for liquid milk to, on the one hand, those who supply it as liquid milk and, on the other, those who process it, is the solution not for the Government to bite the bullet and set a minimum price for dairy products, at least in England? Will the Government therefore support my private Member’s Bill, which will receive its Second Reading on Friday?

[Mr Paice]

My hon. and learned Friend must be aware that it would be contrary to EU law for us to set a minimum price. The whole common agricultural policy has—with, I think, cross-party support—moved away from the idea of Government setting prices, whether at a member-state or EU level. That has been the big reform of the CAP over the past 15 to 20 years, and it is right that we move in that way. I do not think that the answer is to set a minimum price. The Government’s role—I will return to this in a moment—is to try to make sure that the market is working properly. There is parity of power, wherever possible.

Let me turn to an issue raised by the hon. Member for Glasgow North East. We fully support the proposition in the European dairy package that producer organisations should be allowed, although we are concerned about a point of detail regarding how big they will be allowed to get. However, the only two significant co-operatives in this country—Milk Link has about 13% of the market and First Milk has about 10%—are light years away from what we believe should be the maximum, namely 25%, or the EU proposal of 33%. To be honest, that upper limit is relatively hypothetical at the moment, because we are nowhere near it. Even if the two merged—it was once proposed that they should merge; the merger was approved by the Office of Fair Trading; but they decided not to—they would still not be up to the maximum. I need to make it clear, therefore, that nothing today prevents groups of dairy producers from getting together to become a producer organisation. Indeed, the Secretary of State, in her speech in Oxford, and I have frequently said that we strongly encourage them to do so. However, Government cannot force farmers to work together, and it is for them to do so.

The final point on the package concerns transparency, to which the hon. Gentleman referred. We strongly support a transparent marketplace. Obviously, there is a limit in terms of regulation and bureaucracy on how much information it is sensible to demand, but we support the principles of transparency in the package.

I am in the unusual position of having a bit of time to respond to the debate, so let me now address some other issues. The supermarket adjudicator takes us back to my point about parity of power. The Government have published their Bill, and I was interested to hear the Opposition’s concerns. I am not too clear on all of them, but one related to the adjudicator’s powers to impose fines and other sanctions, although I am not sure what they are. Let us be clear that the Bill provides the option for the Secretary of State to give the power to provide fines. In other words, if we find the adjudicator’s initial power, which might be described as the name-and-shame approach, to be inadequate, the Secretary of State can provide it with the power to impose fines. I do not think that we in this Chamber necessarily understand the relative import of that. The big retailers assure us that that is totally unnecessary, that they do not break the code, that there is no need for an adjudicator and that they are all doing the job properly. I am sure that they have assured everyone present of that. They all pay a huge amount of attention to their reputations. They want their good name to be known and seen. If we say, “We’re going to fine you instead,” what level of fine would make any difference to one of our big retailers? That is the question. The level would not be £10,000. I do not even want to guess what would actually influence their behaviour, but it would be many times that. We therefore have to consider whether that is really a sensible way forward, commensurate with all the other issues of fines, levels of fines and penalties throughout the country. I think that we underestimate the power of damaging somebody’s reputation in that way.

The hon. Gentleman also referred to incentives for innovation and development, particularly in relation to energy saving. He referred to the industry road map. I am not sure whether he or any other colleagues were present when I launched the industry road map a few weeks ago, but one of the most telling charts in the document—I do not take any credit for this, but it is worth making the point—shows that the dairy producers who had the highest margins also had the lowest carbon footprint. Fiscal incentive, to which the hon. Gentleman referred, is therefore built into the system. Of course, we can provide fiscal incentives from the rural development plan for England, but the real incentive is that it is profitable to conserve energy, which the report clearly shows

We are putting in place other things and taking action on them. My hon. and learned Friend the Member for Torridge and West Devon is looking at me with beady eyes—I have not forgotten his remarks. We hope that the Government buying standards will be published shortly. They will lay down particular criteria, so that the Government will lead by example. The Macdonald taskforce on regulation made a number of proposals about nitrate vulnerable zones, which are hugely important to the dairy sector. We are taking those forward as fast as we can. Indeed, at the outset, I was able to announce that we could accept one or two areas relating to NVZs immediately. I am looking across the whole of that issue and am considering how we can reduce its impact and cost.

I am trying to reinvigorate and revitalise the dairy supply chain forum, which was set up by the previous Government. I want to ensure that the only people who come to that forum are chief executives or board member equivalents and that it has an important role because, at the end of the day, the real future of our dairy industry lies not in the hands of the Government, but in the hands of the industry. I am trying to ensure that the retailers, the processors—whether they are bottlers or processors into commodities—and the producers are all around the table and that they are working together to iron out the problems and take things forward. Price is important and I wholly understand the dairy farmer who says, “I need more for my milk.” However, the Government’s job is to ensure that the whole chain is working. If we can do things to take costs out of the system, it would be equivalent to a price rise, although it may not be so readily seen as that.

On income other than that derived from price, let me refer to the two big groups that I have mentioned, First Milk and Milk Link. They are nothing in European terms but, in UK terms, they are pretty substantial producer-owned organisations. They got off to a rocky start, and there were big problems with paying low prices and members having to put up large sums of money. Of course, the third group—Dairy Farmers of Britain—fell by the wayside a couple of years ago. However, those two organisations are now making progress and have chief executives who understand the new world in which we are operating. For example, the chief executive of First Milk has opened up a global pool, whereby when the price of skimmed milk powder on the world market is equivalent to 33p a litre, farmers can say, “Why aren’t we getting it?” They can get that price, although perhaps it will not be quite as much as that. There will be a pool of milk targeted at global price commodities. Of course, there is a downside, because if global commodities collapse—they have done so in the past—so will the pool price. However, such an initiative allows that issue to be addressed and is an ingenious and innovative approach.

Milk Link—I hope First Milk will follow—is paying dividends to its farmer members, which is important. People who have invested in shares and through their commitment to a farmer-owned business are entitled to receive a dividend—a share of the profit. That is just as important to them as the price of their milk, and it is part of the return to their business. From what I have been saying, colleagues will not be surprised to learn that I am an enthusiast for farmer-owned businesses and think that they are the way forward. However, there is a limit to what the Government can do. We will exhort all we can, and if there are any barriers in the way we will do our very best to lift them, but we cannot force farmers to work together.

Finally, I come to the issue of tuberculosis. I am grateful for the words of my hon. and learned Friend the Member for Torridge and West Devon about my personal commitment to the matter, which is completely and utterly undiminished. However, as he has said, we must get things right. A number of his presumptions about why we have not yet been able to make any final decision were accurate. We launched our consultation in September, and it concluded before Christmas. As I have said repeatedly in public, that consultation threw up some serious issues that must be dealt with because, as he rightly presumes, we would almost inevitably be faced with judicial review if we were to decide to go ahead with the badger cull. Several of those issues have taken some tackling. We are working with our own lawyers, and we have retained QCs to advise us. As he will know from his own eminent career, they have raised all sorts of issues to which we must have answers in the courtroom if the situation arises.

I can tell hon. Members that we are getting to the position whereby a decision can be announced and, as my hon. and learned Friend has rightly said, there will be an overall package of measures. This has been a good debate and I do not want to raise the politics of the matter too much but, apart from the issue of badgers, my other big criticism of the previous Government is the piecemeal approach that they adopted to tackling TB. They should have grasped the issue by introducing a comprehensive package and used every available tool in the toolbox, as many people in the industry have said.

I can tell hon. Members—this is not what my hon. and learned Friend wants to hear at this stage—that we hope to make a full announcement before the House rises in July. That will comprise a decision on the issue of badger culling as well as a wider package of measures. He picked up the point that I have been reported as implying that we might not be going ahead with a cull. As a lawyer, I am sure that he fully understands that if one has not made a decision, there has to be a question mark in both directions over what that decision might be. I say to him and hon. Members that, as I expect is blatantly obvious, that decision is not just for me, but for my right hon. Friend the Secretary of State and, indeed, the Cabinet to make. Such a major decision is hugely important, and we must get it right. We need to ensure that the whole Government support the final decision, whatever it may be. As I have said, I assure hon. Members that the decision will be announced before the House rises in July.

As you have rightly said, Mr Hollobone, this has been a tremendously good and very important debate. I am grateful for the opportunity to take a little longer than usual to elaborate on some of the issues. I hope that I have impressed on hon. Members the Government’s determination to tackle a number of these issues and to move forward. As I have said, it is not all in the Government’s hands, but what we can do, we will do. I pay respect to my hon. Friends’ commitment—those who are here now and those who have been in and out of this Chamber during the debate—and to that of my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski), who is sitting behind me. He was the founding member of the all-party group on dairy farmers, but now he cannot discuss the matter, because he is acting in another guise. Many hon. Members rightly feel very strongly about the importance of our dairy sector. It is the biggest sector of British agriculture and long may it remain so.