Milk Marketing Schemes (Hansard, 15 March 1994)

The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe)
My Lords, the Government have not set out to delay the implementation of new milk marketing arrangements. The England and Wales MMB has recently submitted amendments to its scheme of reorganisation and has recognised that it is no longer feasible to aim for a vesting day of 1st April. The timetable for vesting is linked with the flotation of Dairy Crest and the MMB has sensibly allowed for the possibility of flotation in October. It has therefore proposed 1st November as vesting day. I understand that the Milk Marketing Boards in Scotland and Northern Ireland have agreed that vesting day for them will also be delayed beyond 1st April 1994.

§ Lord Mackie of Benshie
My Lords, I thank the noble Earl for his excuses. Does he not agree that the question of Dairy Crest has been under discussion for some years and that the Milk Marketing Board is going to divest itself of these manufacturing interests? It has been in consultation with the Government over the past two or three years on this matter. When the MMB put forward its proposals the Government objected and said that they did not sufficiently fulfil the terms for competition. Will the Minister reject the notion put about by some people that the Government are delaying this matter in order to spread confusion among the farmers and thereby withdraw contracts and please the manufacturing side of the industry as against the producers?

Earl Howe
My Lords, the best answer I can give to that suggestion is to quote from the recent House of Commons Select Committee report which says: Since the submission of the board's scheme we consider that MAFF has behaved entirely correctly … in its conduct of the consultation exercise and in subsequent discussions. We also consider that MAFF's guiding philosophy, that it is more important to get the arrangements right than to get them in place quickly, is the most sensible approach".

§ Lord Carter
My Lords, is the Minister aware that we had a perfectly good system of milk marketing before the Government decided, for purely ideological reasons, to scrap it? If we can supply only 80 per cent. of our requirements for milk and milk products from home production because of milk quotas, and farmers are now being assured by buyers that the price to them will increase because the market is under-supplied, can the Minister tell the House how the consumer is supposed to benefit from the scrapping of the milk boards?

Earl Howe
My Lords, the noble Lord's views on the Government's actions are on record. From the Government's point of view the significance of the reforms which we have put in place cannot be overstated because for the first time since the 1930s there will be genuine diversity and competition in the market place. Statutory constraints on two generations of farmers will be swept away. Producers will be able to choose between competing offers for their milk and they will be free to market their products themselves. That is not just in the producer's interests but in the national interest as well.

§ Lord Carter
My Lords, if the price of milk to farmers increases, and there is an under-supplied market because of quotas, how is the consumer supposed to benefit?

Earl Howe
My Lords, I cannot make any predictions about what the price of milk will be in the shops after these reforms are in place. It will be for retailers to set their prices in the light of their costs and the demand for milk.

§ Lord Mackie of Benshie
My Lords, the noble Lord has cited the heaven that awaits farmers when they are free to sell their milk to any manufacturer without a milk marketing board. I am aware of the Minister's age, but is he aware that in that golden era in the 1930s the price of milk was driven down to an extent where the primary producer was severely disadvantaged, to put it mildly? Will the Minister now consult constantly with the Milk Marketing Board on the launch so that we do not arrive at 1st November and further delay the process?

Earl Howe
My Lords, I am well aware of the circumstances which led up to the statutory arrangements being put in place in the 1930s. But the world has moved on a good deal since then. I can only tell the noble Lord that officials of my department are in regular touch with those at the MMB. We are confident that the target date proposed by that body appears achievable.

§ Lord Cledwyn of Penrhos
My Lords, is the noble Earl aware that the world has moved on to a position where in some shop milk is sold at 46p a pint and in other shops nearby at 23p a pint? How does the Minister justify that and what is he going to do about it?

Earl Howe
My Lords, that illustrates one aspect of the current marketing arrangements for milk. It is for retailers to price their products accordingly and for the consumers to go where they perceive the best deal to be.

§ Lord Dixon-Smith
My Lords, no doubt the Minister is aware that many milk producers were in fact relieved when the Government rejected the original proposals coming from the Milk Marketing Board. Can I have an assurance from my noble friend that the Government will take into consultation not only the Milk Marketing Board but also milk producers, many of whom are at present losing money because the new arrangements are not in place?

Earl Howe
My Lords, as far as producers are concerned, at present the board must be taken to represent their interests although at a later stage, once Ministers consider a scheme which is put forward, the interests of producers are among the sets of interests which Ministers must take into account before approving any scheme.

§ Lord Wade of Chorlton
My Lords, does my noble friend agree that over the past 60 years of its existence the Milk Marketing Board has done more to reduce choice and opportunity for the consumer and to reduce the opportunities for the milk producers than any other institution we have ever had? Does he further agree that the best thing for the agricultural industry is to get rid of 104 the Milk Marketing Board and the quicker that we are able to agree the Milk Marque proposals the better for the whole of the industry?

Earl Howe
My Lords, I associate myself with the remarks of my noble friend except to say that we do not want to belittle the achievements of the milk marketing boards over the past 60 years. They have stood us in good stead over that time, but the time has come to move on. It is a very different market place now from the one which existed in the 1930s.