§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Mike Hall.]2.20 am
§ Mr. Tim Collins (Westmorland and Lonsdale)
A little over 12 hours ago, I met a number of my constituents who had come to London as part of a national demonstration by dairy farmers about the state of their industry. Members of Parliament from all parties were present during the demonstration, recognising the scale of difficulties facing the industry.
I congratulate those who organised the demonstration, which began with four farmers sitting around a kitchen table in Kendal, in my constituency. They had in mind the idea of trying to create an agricultural analogy to the Jarrow march of the 1930s when there was great despair in certain communities in our country. It is not wrong of us to recognise that some of our agricultural communities face despair, bleakness, lack of hope and fear for the future that parallel the experiences of some communities in the 1930s.
On a personal note, I should say that my parents were dairy farmers. I no longer have a direct family connection with dairy farming, but I take a personal interest in it. While mentioning family links, I welcome the presence of my hon. Friend the Member for Eddisbury (Mr. O'Brien), whose connections with south Cumbria mean that he holds that part of the world as dearly in his heart as I do in mine. I also thank my hon. Friends the Members for Cotswold (Mr. Clifton-Brown) and for Mid-Worcestershire (Mr. Luff) for their presence. Both strongly support the dairy industry.
I can reassure the Minister of State, Ministry of Agriculture, Fisheries and Food by saying that I do not intend to make a series of partisan points. I accept, of course, that the problems of the dairy industry did not spring instantly into being on 1 May 1997. Some pre-dated the general election, and we accept that the Government have no magic wand. No one who came to London today to demonstrate believes that the Government have it within their gift simply to solve all the problems of the dairy industry. Nor did any of them seriously question the good will of the Minister of Agriculture, Fisheries and Food. I welcome the fact that he met some of the demonstrators, including some of my constituents. I applaud his generosity in making his time available.
That said, the Minister of State will recognise that the scale of the problem cannot be understated. The National Farmers Union has provided me with a brief that states, in its very first sentence:British dairy farming is facing meltdown.The crisis is not minor or temporary. Nor is it analogous to anything that we have seen for decades. Its scale is without parallel in recent history.
I commend the Select Committee on Agriculture on its second report on the marketing of milk, which was published earlier this year. It provides useful material for the House, and I shall press the Minister on some points that arise from it.
480 The issues raised by many of the farmers who came to the demonstration today will not be unfamiliar to the Minister, but they bear some repetition. Farmers find it extremely frustrating that they sell milk at sometimes less than half—even no more than a third—of the price of bottled water in some supermarkets. It is impossible for any farmer, however efficient and however much he or she bears down on costs, to break even when the milk price is so low. Farmers feel strongly that they are asked to meet, and succeed in doing so, the highest milk quality standards in Europe. Yet they receive the lowest reward of any farmers in Europe. The United Kingdom is bottom of the European milk price league. On some comparisons, the milk price is lower now than it has ever been. They feel that the issue of agrimonetary compensation needs to be addressed seriously by the Government.
We recognise that it is not an easy issue, and the Minister will know that previous Governments have not found it easy to address it—in some ways, the Government have been more generous than their predecessor on the issue—but she will also recognise that the scale of the difficulties facing the industry are greater than they were under any previous Government. Therefore, I hope that the Minister and her colleagues will be able to give serious consideration to the issue. As she knows, the money has to be claimed by April, or the opportunity to claim it will disappear.
Today, dairy farmers raised with a great deal of passion and feeling the issue of what they regard as the truly absurd Monopolies and Mergers Commission report. That report was crazy, crackpot, damaging, slipshod and quite simply the worst piece of official documentation presented for many a long year. The idea that the fundamental problem affecting the milk market is excessive producer power driving up the milk price is so far at variance with the reality that farmers are having to experience that it beggars belief that anyone could have put it down on paper.
I recognise the fact that the Secretary of State for Trade and Industry did not simply accept that report, but felt the need to reflect on it. However, the outcome has been that we are moving towards a situation in which Milk Marque is breaking itself into three. As the Minister will recognise, the Secretary of State said in his evidence to the Select Committee that that was highly likely to lead to a further fall in the farmgate price of milk, which will only make the problems that we are talking about today even worse. Again, I accept that that is not direct Government responsibility, but that report was extremely damaging and should have been binned, rather than, in some ways, being implemented.
We have to move on to deal with the world as it is, rather than the world as it might have been. I should be interested in anything that the Minister has to say, particularly on a point that the Agriculture Minister himself discussed with my constituents and others today: the possibility of finding some means of bringing together—perhaps in a forum, which, in its report, the Select Committee itself mentioned—all the players in the dairy industry, perhaps with the Government playing an enabling role, so that all the parties sit down and put aside the petty jealousies, back biting and spiteful fighting that has gone on for many years in the industry, and recognise that they have a collective interest. The dairy industry is a £3 billion industry, which is a significant part of the United Kingdom economy. Anything that the Government 481 can do positively to encourage co-operation and the recognition of common interests would be much welcomed by dairy farmers.
There is the issue of quotas. I do not want to detain the Minister long on that, but she will know that many dairy farmers feel that the deal that was done last year by the Government was not a great one for the United Kingdom. The United Kingdom's quotas were frozen for six years, while Ireland—which produces about four times its consumption requirement—received additional quotas.
Dairy farmers raised another issue and—although there are perhaps only a limited number of spheres in which the Government could provide immediate assistance—they asked me specifically to press the Minister on it: the issue of increasing the price in the over-30-month scheme, and reconsideration of phasing out the calf-processing aid scheme. We know that none of those actions is likely to provide a panacea, but it would be helpful if the Minister could say whether the Government are prepared at least to consider them.
§ Mr. Stephen O'Brien (Eddisbury)
I congratulate my hon. Friend on initiating this debate, which is of key interest to my constituents in Eddisbury—which, as the Minister will well know, shares with North Shropshire the honour of being Europe's largest milk field. I have not only large dairy farmers, but small dairy farmers. However, the economies of scale that one would expect to be a differentiating factor between them simply no longer exist. That is a major plight that is affecting all dairy farmers.
In addition to sharing the sentiments expressed about south Cumbria—to which I have a fond attachment—I should like to mention that, when I met my constituents at today's lobby, there was a great sense of dismay about the absence of Government support for immediate action on the Food Labelling Bill, which the Minister and I had a discussion on just over a week ago, in this very place. It is yet another matter on which Government action really must be focused.
§ Mr. Collins
I am grateful to my hon. Friend. As he knows, I strongly support his proposed legislation and I hope that the Government think again on that.
As the Minister will recognise, perhaps the most disturbing aspect of the agricultural situation is that even a year ago—certainly two years ago—dairy farmers and farmers in any agricultural sector would say that things were grim, but in six months' time they would be better. They said that six months after six months until six or nine months ago. As the Minister will probably acknowledge, sadly, farmers are no longer saying that—they have endured so many knocks, so many hopes have been dashed, and so many chances that there was light at the end of the tunnel have proved fruitless.
An entire generation of farmers believe that they will be the last. The average age of farmers is something like 57. Many fewer farmers' sons and daughters expect to follow their parents into farming than was the case before. As a result, many farmers who are still in business do not expect to hand over to the next generation, something that has been a great incentive to invest and produce for the future, but are simply carrying on, waiting for the opportunity to get out of the industry and retire. That is very sad.
482 It is allied to the point that was made to me by Matthew Robinson, one of my constituents who came down to London for the demonstration earlier today, that they way in which the financial constraints are biting is hitting the new, younger, possibly more technologically sophisticated and more efficient farmers who are at the start of their careers, have heavy borrowings and are perhaps most vulnerable to a financial shock. Older farmers, who may have paid off their mortgages and loans, are more likely to keep going for a few more years, hoping that things will get better, because they will have built up some fat on which they can depend.
The Select Committee stated at paragraph 43 of its report:sadly, there are likely to be more casualties before any real recovery is felt.We should not kid ourselves that only the less efficient, older producers will be forced out by the present circumstances. It may well be the next generation who are knocked out and, if we are not careful, the industry will have no future at all.
My final point relates to the nature of farming in my constituency. I represent a large chunk of the lake district. The Minister will recognise that a large number of the farmers there—both dairy and otherwise—are hill farmers. Consequently, they are on the margin of the margin. In many cases, the dairy part of their farming was the diversification strategy, alongside sheep. Now they find that the sheep market and the dairy market are down. Some of them depend on farming incomes of only £2,000 or £3,000. Many of them are on family credit and are really at the margin of viability.
Paragraph 44 of the Select Committee report specifically addressed the fact that those small family farms are important to the industry because of what they bring to the environment, the social life of the area and rural communities. It stated:The benefits currently provided by small and remote dairy farms can only be retained in the prevailing circumstances by a Government policy which recognises the environmental and social rationale for assisting them … We recommend that the Government commission research into the implications for the rural economy and the environment of further structural change in the dairy sector. We further recommend that the Government identify areas where small farms are at risk as priority areas for help under rural development measures.I hope that the Minister will say something about that. There is a general problem across the board for the dairy sector, particularly in my part of the world, where the only significant alternative employment is in tourism. Frankly, tourists come to the lake district to see not blasted heath and wilderness but a man-made landscape. Without the small dairy farmers, we will not have that landscape and the pit prop of the whole underpinning of the economy in large tracts of Cumbria and elsewhere will be knocked away.
Inevitably, it is not possible in such a short debate to raise all the problems facing the industry, but I hope that the Minister will say that the Government recognise the scale of the problem, that they accept that there should be a strategy to keep a significant dairy industry viable and that they will address specifically, perhaps in the context of the Prime Minister's farming summit on 30 March, the need to provide targeted assistance for the dairy industry and to help small dairy producers in particular.
§ The Minister of State, Ministry of Agriculture, Fisheries and Food (Ms Joyce Quin)
I congratulate the hon. Member for Westmorland and Lonsdale (Mr. Collins) on securing this debate. I would have wished him better fortune in the timing, as it is an important subject and it is a pity to discuss it at such a late hour; but it is timely in that it is taking place on the day when dairy farmers have reached London in their campaign to increase public awareness of their serious plight. I am conscious that the march started in the hon. Gentleman's region, the north-west, in Carlisle, so it is suitable for him to have introduced the subject.
I am grateful for what the hon. Gentleman said about my right hon. Friend the Minister of Agriculture, Fisheries and Food and his willingness to meet members of the delegation today and to engage in discussions with them, examining the very difficult issues that face the dairy sector. The industry is important nationally. It is the largest and arguably most economically important of all the agricultural sectors.
The industry is also important regionally, as the hon. Gentleman said. He represents a constituency in which dairying is very important. I understand that Cumbria has the second largest breeding herd, exceeded only by Devon's. The hon. Member for Eddisbury (Mr. O'Brien) also referred to the importance of the industry in his area.
I share something in common with the hon. Member for Westmorland and Lonsdale, as one branch of my family comes from his constituency—and they were farming folk.
We recognise the severity of the problems. The hon. Gentleman is right to say that there is a variety of factors in the current situation. The most dramatic aspect is the fall in the price of milk, which has several causes. The hon. Gentleman referred to the fact that milk is less expensive than bottled water. One might also say that it is less expensive than some not very healthy fizzy drinks that we have been encouraged to drink in preference to milk. Indeed, we dealt with that subject in a Standing Committee last week, and at least one Conservative Front Bencher here tonight was there then.
The price has fallen especially dramatically in the United Kingdom. Prices are low in some other European countries, but there are some particularly British aspects to the crisis. Obviously, as the hon. Gentleman recognised, the strength of sterling against the euro is an important factor affecting agriculture and the dairy industry in two ways: not only the familiar problem of the high price of exports but the fact that the European Union support price is set in euros and its value falls as sterling appreciates. As the hon. Gentleman knows, that represents the market of last resort and provides a floor in the commercial market. That is an important factor, but at the same time the level of sterling is an incentive for imports into the UK and makes for problems with exports. It certainly adds very much to the competitive pressures on our producers.
I was not surprised that the hon. Gentleman also mentioned several issues concerning the marketing of milk. We know that the main deregulation took place in 1994, and at that time everyone in the industry was in a new and perhaps alarming situation. However, the second stage has involved the results of last year's Monopolies and Mergers Commission report into the marketing of 484 milk. That is an issue that the Agriculture Committee considered closely in its recent report on the marketing of milk, and I welcome that. In this short debate, it is not possible to go into all the different aspects of that report.
Despite the difficulties and frustrations involved in the whole process, I welcome the fact that Milk Marque chose to act positively and decisively to meet some of the criticisms in the MMC report. The successor organisations are in the process of getting up and running. Obviously, we want them to bring a new dynamism to the market and to have a positive effect on returns, even if only in the medium term, rather than the negative effect that many people worry will result.
§ Mr. Collins
The Minister will know that one of the issues for the successor bodies to Milk Marque is whether they will be allowed to go into processing. That is dependent on a decision that rests with the Secretary of State for Trade and Industry, who in turn has to wait for advice from the Director General of Fair Trading. The Select Committee was told that that would arrive some time near Easter. Does the Minister have any further information on an issue about which the dairy industry is waiting desperately to hear?
§ Ms Quin
I understand the anxiety of the dairy industry and dairy farmers about that matter, but the hon. Gentleman pre-empted my reply. The timetable is as he describes, and I cannot add anything to that this evening.
Government action has taken place on several fronts, despite the limitations on the Government, especially in terms of price setting and other forms of intervention. I am glad that the hon. Gentleman recognised those limitations. Some issues have had an effect on the dairy sector. When I first became an Agriculture Minister, dairy and cattle farmers were very worried about the impending introduction of cattle passports. We have alleviated that burden by deferring payment for the passports for two and a half years, and that will save a significant amount of money.
We have also undertaken to provide help to make it possible to have a generic promotion campaign for milk. That is important, because it is a long time since we have had such a campaign. All of us will remember the effectiveness of campaigns such as "Drinka pinta milka day", the bottles of milk dancing on to the doorstep and "Milk has gotta lotta bottle". They had an effect. I do not underestimate the potential of that, and I am glad that the processing side of the industry is committed to matching the sum raised by producers, so that a sizeable promotional campaign can be mounted. Clearly, we shall monitor that closely to see how effective it is, but Ministers are very committed to a project that has been welcomed by hon. Members of all parties.
The Government also support the continuation of European Union school milk scheme. That has been under threat, as the European Commission is looking to reduce its budget in all sorts of ways. The EU school milk subsidy came in for especially close scrutiny. My right hon. Friend the Minister spoke strongly about the matter in the Agriculture Council and received support from other Ministers. The plans to abandon the subsidy have 485 been shelved for the moment, although we must remain vigilant and continue to build alliances with other countries to try and ensure that the scheme can survive.
The hon. Gentleman specifically mentioned the importance of trying to get people in the dairy food chain together, and we agree. The hon. Gentleman will be aware of the food chain initiative that my right hon. Friend the Minister set in motion. It involves senior figures from MAFF, the National Farmers Union, the Food and Drink Federation and various retail groups, and its report showed that it is conscious of the importance of trying to get the various parts of the food chain working together.
The tensions and difficulties that exist between sectors were very well documented in the report from the Agriculture Committee. We shall study that report's recommendations in detail, but we also want to build on the momentum of the food chain initiative to achieve greater understanding of the pressures and constraints on each part of the food chain.
It is not true that there is no passing on of lower prices at the retail end, but there is a time lag in what is a slow and modest process, and I understand the frustrations of farmers who suffer as a result.
The investigation by the Competition Commission is also relevant and, when the elements of the food chain appear not to be co-operating, the commission is available to help. I can assure the hon. Gentleman that the Government are keen to make progress on both aspects of the food chain.
486 The hon. Gentleman also asked about the rural development regulation, and about how that might relate to small dairy farms. We hope that the various measures announced last December by my right hon. Friend the Minister as part of the rural development regulation and its implementation in this country will help the dairy sector.
I was pleased that the recent round of marketing awards under the agricultural marketing development scheme went to some innovative projects from the dairy sector. That justifies the way in which we have built on the agricultural development scheme in the rural development regulation to address some of the issues that the hon. Gentleman mentioned.
The hon. Gentleman also mentioned quotas. Our long-term approach in the European Union is for an orderly end to the milk quota system. We believe that the British dairy industry can compete in Europe. It has several natural advantages, such as good-quality pasture, and it has a good record with regard to quality standards.
However, many of the recommendations on marketing of product in the Select Committee report are well worth considering. I was also interested to hear some of the comments on the radio this morning from the president of the NFU. He spoke of the need for better organisation in the industry—
§ The motion having been made after Ten o'clock, and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at ten minutes to Three o'clock.