Dairy Industry

William Cash Excerpts

Thursday 13th September 2012 Westminster Hall

[Thomas Docherty]

The hon. Gentleman is correct. I will touch on the role that the groceries code may play in that process in the future. I did not say that I necessarily agreed with the assertions about Devon, but they have been forcefully made on more than one occasion.

I say well done to those retailers who have belatedly got on board, but why did it take them so long? The actions of the House and the dairy industry forced the retailers to take those steps. Members on both sides of the House will look to the Minister to hold all elements of the supply chain to account. We all want the groceries code and the voluntary code to work, but it is vital that he takes the lead on pushing through these issues.

On the specific case of the adjudicator, the previous Government gained cross-party support for a supermarket ombudsman to ensure a fair deal for farmers and food producers from the major retailers. Following a Competition Commission inquiry in 2008, Labour introduced a new groceries supply code of practice in August 2009, which came into effect in February 2010. The Competition Commission also recommended the creation of an ombudsman to enforce and monitor the code of practice.

This Government presented their Groceries Code Adjudicator Bill in the House of Lords before the summer recess. However, the Bill grants only limited power to the adjudicator to tackle the issues in the dairy industry. It will be limited to tackling the direct supply between the processor and the supermarket, or the farmer if they have a direct contract with the supermarket, and will not be able to deal with a three-party contract. I hope that the Minister will reflect on that and listen to the Select Committee’s cross-party advice.

[Mr William Cash (Stone) (Con)]

It would be highly desirable, would it not, if the milk that is used in the Houses of Parliament came from UK sources at a fair and sustainable price? Does the hon. Gentleman agree that if we gave a lead in the Houses of Parliament, it would send out a big message?

[Thomas Docherty]

The House of Commons Commission has urged the catering and retail services to ensure that we operate within the European rules—I am conscious that I am now setting off a whole new avenue for the hon. Gentleman—but perhaps the Minister will set out what steps he will take to ensure that all Departments buy their milk from British farmers.

The issue that we have faced time and again during this dispute is that retailers have argued that the cuts on farm-gate prices were being implemented by the milk processors and not by the retailers. The reality is that, as the hon. Member for North Cornwall (Dan Rogerson) mentioned earlier, the downward pressure has come from the supermarket shelves, and that pressure is passed on to the milk processors, who then pass it on to the producers.

We have urged Ministers in the Lords to keep open the option of extending the powers of the groceries code adjudicator. I hope that when the Bill comes to the House of Commons, the Minister will consider talking to his colleagues in the Department for Business, Innovation and Skills about the potential of extending the GCA’s powers if necessary.

In closing, I have a few questions to put to the Minister.

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[Jeremy Lefroy (Stafford) (Con)]

I congratulate the hon. Member for Dunfermline and West Fife (Thomas Docherty) on securing this debate.

Staffordshire is one of the UK’s leading dairy counties. Dairy farming is important to my constituency; let us not forget how important it is to so many others. Some 70 trades and suppliers, possibly more, are estimated to depend on each 400-acre dairy farm.

Another almost unique feature is that Staffordshire has kept its county farms, which were set up after the first world war. Half of Staffordshire’s county farms, some 50 of them, are in my constituency of Stafford. Those farms provide a route into dairy farming for young people, which is essential because the average age of farmers is between 55 and 65, depending on who we listen to.

Last Friday, I attended a meeting at Church farm, Coppenhall, at the invitation of the Madders family, with many dairy farmers and the National Farmers Union. We discussed the problems they face. As time is brief, I will highlight three or four areas.

Clearly, the first area is milk prices and fair treatment. The common refrain was, “Give us the highs in prices and we’ll take the lows.” It is often said that the processors and supermarkets are quick to put down the prices paid to farmers but are slow to raise them when the market goes up, and the market will surely go up because dairy production figures across Europe in August 2012 show that in Germany production was 0.3% down, in France production was 1.7% down and in the UK production was 3.7% down. Those figures reflect a combination of the weather and low milk prices. So there will surely be price rises, which must be passed on to farmers.

The second vital area is marketing. Many of my constituents are already taking up the challenge of adding value—Bertelin Farmhouse Cheese in Ellenhall, for example, which was previously in the constituency of my hon. Friend the Member for Stone (Mr Cash), who will no doubt know the farm—but there is much more potential. I have recently had to start buying lactose-free milk, for which there is a huge market in the UK, yet the milk I buy is made in Denmark by Arla.

[Mr Cash]

Does my hon. Friend agree that there are also enormous export opportunities for dairy farmers? I have just come back from India, from where people will shortly be coming to see Staffordshire dairy farmers precisely to try to develop joint ventures. Is that not a great opportunity?

[Jeremy Lefroy]

As so often, my hon. Friend is a prophet. I was just about to say that.

The previous Minister, my right hon. Friend the Member for South East Cambridgeshire (Mr Paice), who has rightly been applauded, was in China on a trade mission and saw no British dairy products, despite there being many from the Netherlands, Germany, Denmark and so on. We must do more, and the industry must do better.

Supermarkets, too, can do more. On a holiday in the Republic of Ireland a few years ago, I entered a Tesco that was festooned with Irish tricolours promoting products processed or produced in the Republic of Ireland. I welcome that great idea. I want to see far more Union flags in UK supermarkets promoting British foods.

The UK Government, too, can do more, but, first, a word of praise from the farmers. They say to me, and I do not know whether hon. Members agree, that the Rural Payments Agency has improved considerably in the past two or three years, and due credit should go to the RPA and the ministerial team.

As the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) said, the current EU negotiations are vital. I am concerned to hear that British representation is not as strong as sometimes it should be. In a debate last year, I stressed the continued importance of single farm payments, particularly to the small farmers who continue to be the backbone of the UK dairy industry. The UK and Portugal are currently the only countries applying voluntary modulation from pillar one to pillar two. The concentration on environmental measures has clear benefits, but we should not go any further in that modulation if it puts us at a competitive disadvantage to our European neighbours.

I want to allow time for others to speak, so I will conclude by saying that I welcome this debate. The time is right for fair prices. I worked for many years in the coffee industry, in which I saw the impact of fair trade and fair prices. I would like to see a similar approach in the dairy industry, based on the voluntary code of practice, with supermarkets, processors and farmers working together.

Finally, I pay great tribute to those dairy farmers who work day in, day out, week in, week out, rising before dawn and going to bed late at night, to put those products on our tables.

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[Mr William Cash (Stone) (Con)]

I congratulate my hon. Friend the Member for Tiverton and Honiton (Neil Parish) and the hon. Member for Dunfermline and West Fife (Thomas Docherty) on securing the debate, which is essential.

As my hon. Friend the Member for Stafford (Jeremy Lefroy) said, Staffordshire has one of the largest dairy farming industries in the country. I used to be the Member of Parliament for Stafford—now I am the Member for Stone—but I remain a Staffordshire MP. Dairy farmers work incredibly hard, and I was pleased to meet my dairy farmers at the Central hall rally a few weeks ago. I have had several meetings with them over the past few weeks and I entirely agree with all their arguments, which extend not only to the cost of milk and the price that they get for it but to TB and how, as a result of the legal decision in the High Court this week, we will be having further progress on that shortly. I also regard the ombudsman in the Groceries Code Adjudicator Bill, which I am glad that the Government have brought in, as important.

It must be 10 or 15 years ago that I spoke to the Office of Fair Trading, calling for fair competition in milk prices, so I have some history on the issue. As long ago as 1984, the by-election that got me into Parliament for the first time was completely dominated by milk and that has lived with me ever since. I have had great pleasure working with dairy farmers, who are wonderful people and work incredibly hard.

I congratulate the Minister, whose constituency of Somerton and Frome includes the villages that my wife’s family comes from, and the Secretary of State for Environment, Food and Rural Affairs, my right hon. Friend the Member for North Shropshire (Mr Paterson), on their new posts. I welcome them to tricky problems on such things as nitrate vulnerable zones, as mentioned by my hon. Friend the Member for Tiverton and Honiton, or the potential for compulsory codes and various other European Union measures—people will be familiar with my concern over those. It is one thing to hope, as in the notes that we received today, that people might be able to amend grassland derogation, to promote the principles of better regulation and to deal with and reverse the nitrate vulnerable zones, but there is only one way of reversing them—as my hon. Friend the Minister will acknowledge—which is by negotiating, which might be almost impossible, or by applying the notwithstanding rule, the use of which I have advocated for many years to override European legislation. That is what the National Farmers Union is calling for, which I am pleased to commend, because we have reached a point at which much European legislation—the call for federation and all the rest of it—has now become utterly absurd. There is also the question of public procurement contracts. I said that it would be a good idea if we in Parliament ensured that we paid a sustainable and fair price, because that would give a lead, and would demonstrate our commitment to our dairy farmers.

I believe strongly—and I commend my hon. Friends the Members for Shrewsbury and Atcham (Daniel Kawczynski) and for Stafford for joining me—in encouraging the prospects for dairy farming activity in export markets, and joint ventures. In India, I met an Indian businessman who is running a company called Milky Moo. He is coming over to see Staffordshire farmers, and I am happy to invite my hon. Friend the Member for Stafford to join us if Milky Moo needs experience and knowledge. Believe it or not, its milk production includes contracts with 10,000 farmers, and it expects that to rise to 100,000 farmers in that part of India in a few years. It is a huge business, and we can offer a lot of expertise. Some of the briefings we received contain sound advice, and the naming and shaming of those who are not prepared to co-operate in the new voluntary code is an important aspect of where we need to go.

That is all I need to say. I agree with so much that has been said by hon. Members on both sides of the House. This is a very good demonstration of the fact that Parliament is working very hard for the dairy farming industry, and the fact that so many hon. Members have turned up is a great tribute to their determination to do the best for their farmers.

[Mr Charles Walker (in the Chair)]

We are making fantastic progress. If we maintain discipline, I hope that we can get all hon. Members over the line.

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[Huw Irranca-Davies (Ogmore) (Lab)]

This has been a tremendous debate. If my arithmetic is correct and I include the Front-Bench speakers, we will have had 26 contributions, plus interventions. That is quite something. We have heard from all parts of the Chamber, and there has been a large degree of consensus on the way forward, on how to learn the lessons not only from this summer but from where we have been before, especially at the producer end, and on how to reach a long-term solution. I thank all Members for that, especially my hon. Friend the Member for Dunfermline and West Fife (Thomas Docherty) and the hon. Member for Tiverton and Honiton (Neil Parish) who introduced this debate.

I want to say something that no one has said so far—milk is a fantastic and delicious product. I know that from having three boys who are all mad keen on rugby and football. It is their after-training drink, so it is not only delicious but nutritious. Perhaps we should resurrect that old saying, “Drink a pint of milk a day.” We should also find an equivalent saying for yoghurt, cheese and all the manufactured products that we should be producing in the UK as well.

[Mr Cash]

I raise my glass because it did have milk in it until I was told by the policeman outside that I could not bring it in. Downstairs in the cafeteria, a small glass of milk costs 70p.

[Huw Irranca-Davies]

Perhaps the Administration Committee will look at the rules and allow us to bring in good UK products. I thank, too, the Select Committee for its recent and long-standing work. The detail and forensic analysis that it has applied to the subject will be of help to us and to the Minister. I welcome the new Minister to his position and tell him that we want to work with the Government to strengthen future policies. I hope that he will be open to some of our suggestions.

This is a welcome opportunity to debate the industry, especially after our dairy farming sector—I apologise to hon. Members for saying this in the Chamber—took on a slightly French flavour. We had protests, blockades and threats of direct action that were not carried through. The hon. Member for Brecon and Radnorshire (Roger Williams) said that the former Agriculture Minister fronted up a very heated session in the Methodist hall, which he did. He did what a Farming Minister should do, which is to front up the debate and earn his salary. It was an immensely difficult and confrontational meeting, but he earned his stripes. Although not everything he said was welcome, he really earned his salary that day and, as a Minister, he did the right thing—he did not hide.

We now have a very good chance to examine not only what has been going wrong, but more importantly what can be done to resolve the situation. In fact, I returned this morning from a meeting with farmers just outside Corby. That is no coincidence; people will probably know that we have a tremendous Labour candidate there, Andy Sawford, who was with me today. We were out meeting people, but we discussed in detail some of the issues that arose from the dairy crisis and the long-term solutions that are needed for the future.

I have already welcomed the new Minister to his portfolio, but I also pay tribute to his predecessor, the right hon. Member for South East Cambridgeshire (Mr Paice). He and I did not agree on everything. If we had, not only would he be a Conservative but I would be a Conservative, or perhaps a Liberal Democrat—I am not sure. I regard him as a very decent man who wanted to do the right thing for agriculture. Reshuffles are a brutal affair, and his successor, the new Minister, will want to strive to avoid any dairy crisis in the future, as we all do, and we will try to work with him to prevent another crisis.

Let me put on the record some of Labour’s bottom lines. We want a fair deal for farmers, food manufacturers and retailers, but we should not forget consumers. We want a fair deal for them, too—a point made by the hon. Member for Thirsk and Malton (Miss McIntosh), the Chairman of the Environment, Food and Rural Affairs Committee, in her contribution to the debate. We want a competitive and equitable supply chain that delivers not only profitability all along that supply chain, but affordability for the shopper. That is not a lot to ask, although sometimes this summer it seemed like a huge task to achieve. To that end, we welcome wholeheartedly the dairy coalition’s 10-point plan. We want the consultation on the EU dairy package to be carried out this autumn without fail, so that producer organisations can gain formal recognition.

It is perhaps not surprising for a party that was born from one parent within the co-operative movement that Labour wants to see more producer-based organisation within the dairy sector. However, that is not simply about strengthening bargaining power—bargaining power has been referred to repeatedly today—or seeing some new imbalance that might be to the detriment of the consumer. It is vital not only that farmers can balance power in the supply chain, which is not in equilibrium, but that dairy producers come together, transfer right up the value chain by investing in food production, as well as food processing, and develop higher-value products for both the domestic and export markets. We should not forget the export market, although it has not had much attention today.