Dairy Industry (Hansard, 14 March 2000)

§ The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Hayman)
My Lords, the Government recognise the considerable problems currently facing the dairy industry, where a combination of factors has reduced milk prices and had a consequential effect on incomes in the sector over the past two years.

§ Lord Geraint
My Lords, I am sure that the Minister is well aware that dairy farmers in this country receive less for their milk than any other producer within the EU. She will be further aware that milk prices in this country will go down as low as 7p per pint to the producer and we, the consumers, will pay anything up to 40p for that same pint of milk. Will the noble Baroness admit that that is either the Government's fault, the supermarkets' fault or both? Will she give an assurance to the dairy farmers of this country that she will do everything in her power to ensure that they get the agrimonetary compensation and will lift the ban on the calf export scheme?

§ Baroness Hayman
My Lords, the noble Lord raises a number of points. We have taken action already that will help the dairy sector in terms of the moratorium 1438 on cattle passport charges. We are looking at supporting initiatives to find new markets for surplus calves, either for sale as veal or in the processing sector.
In the debate on agriculture last week, we had a long discussion about agrimonetary compensation, which is under consideration at the moment. As I said then, agrimonetary compensation for the dairy sector is not free, nor is it European money per se; 85p in every pound is paid for by the British taxpayer.
The noble Lord is right: the price of milk has fallen. There are variations in prices within this country and there are also variations within Europe, and we are at the bottom of the league. I am not sure that that is the fault of either the Government or of the supermarkets. It is the fault of the market in milk and, in particular, of the effect that the strong pound has had in determining price. A variety of issues have dramatically affected the market in milk and caused the restructuring in the dairy industry that has been going on for a long time. I do not underestimate the problems that dairy farmers have at the moment.

§ Baroness O'Cathain
My Lords, I agree that there are an awful lot of problems in the dairy sector. Could not the Minister use whatever charm and influence she has on the Chancellor of the Exchequer? Unless we find a way of paying these agricultural compensatory amounts to the dairy farmers, we shall have an even more serious problem than we have at the moment. We are told constantly how brilliantly the economy is doing and that the Chancellor has a war chest. As we are not talking about an enormous amount of money, such help—I put it in the simplest terms—could be the difference between life and death for dairy farmers.

§ Baroness Hayman
My Lords, I understand the passion with which the noble Baroness speaks. But I am not sure whether my passion would be put to best account in the way she suggests. Of course agrimonetary compensation is one possible use of public funds if they can be found within the agriculture industry. Today we are talking about dairy farmers. However, we have to look across the board. If the money went into agrimonetary compensation, there are other sectors—I am thinking in particular of the pig sector—which would not benefit. We cannot spend money twice. There are issues of priorities and, unfortunately, not only the dairy sector but a large number of other sectors in agriculture are having problems at the moment.

§ The Lord Bishop of Hereford
My Lords, does the Minister agree that there is a fundamental injustice in the fact that each company owned by United Kingdom dairy farmers is restricted to no more than 25 per cent of the wholesale market—which, of course, relates to the break up of Milk Marque under the previous government—whereas continental farmers are allowed a much greater degree of freedom and a much greater market share? I believe that in the case of the Danish firm MD, it is up to 95 per cent of its own market. Does she further agree that this commercial distortion, this prevention of our own dairy farmers 1439 from helping themselves in the ways and on the scale that they would like, added to the other disadvantages they are under because of high welfare standards, traceability and so on—which are welcome in themselves but are not being followed by farmers in some of our competitor countries—place the UK dairy industry in a very unfavourable position? Are the Government prepared to see the recreation of something like Milk Marque in order that value can be added by dairy farmers, who are anxious to market their produce in the most efficient way and to add value? Does the noble Baroness agree that we need something on that scale in order to make that possible?

§ Baroness Hayman
My Lords, given the recent report on Milk Marque and the MMC finding that prices were higher than they should have been as a result of its selling system, it would be wrong of me to suggest to the right reverend Prelate that it would be easy to recreate either a Milk Marque or a Milk Marketing Board in the form that they were before. As he will be aware, there will be three successor bodies to Milk Marque. We hope that they will be innovative and will be able to help in terms of marketing. Specific issues regarding processing are being investigated at the moment, and I understand that the competition authorities will be reporting to the Secretary of State for Industry by Easter.
The right reverend Prelate is right; there are large, vertically integrated co-operatives on the Continent. However, it is not only a matter of the scope of the organisations but the way in which they operate, and making sure that that does not go against—

§ Lord Davies of Coity
My Lords—

§ Baroness Miller of Chilthorne Domer
My Lords, does the Minister accept—

§ Lord Peyton of Yeovil
My Lords—

§ Lord Davies of Coity
My Lords, my noble friend is aware of the concern of dairy farmers about the incidence of TB. Can she advise the House of the progress that is being made to reduce and it is to be hoped eventually eradicate this problem?

§ Baroness Hayman
My Lords, the problem of TB in cattle affects dairy farmers considerably. We hope to announce two extra triplets in the culling trial on TB later this week. We are looking specifically at the issue of going over quota, which occurs when cattle movements on dairy farms are restricted.

§ Baroness Miller of Chilthorne Domer
My Lords, does the Minister accept—

§ Lord Peyton of Yeovil
My Lords—

§ The Lord Privy Seal (Baroness Jay of Paddington)
My Lords, I find it very difficult to fulfil this role. I think it is the turn of the Liberal Democrat Front Bench to ask the next supplementary question.

§ Baroness Miller of Chilthorne Domer
My Lords, the Minister said that the processing sector is a crucial part of the industry. Does she accept that if farmers received more help from the Government they would be able to turn milk into other finished products and we would then see a greater variety of yoghurt, cream and cheese on supermarket shelves? Can she assure the House that farmers will receive the training and help that they have been denied in the past?

§ Baroness Hayman
My Lords, the training element in the rural development regulation will help. Equally, there have been four specific initiatives funded under the £1 million aid for marketing innovative dairy projects which it is to be hoped will help dairy farmers and farmers generally to add value to their produce.

§ Lord Peyton of Yeovil
My Lords, will the noble Baroness attempt to drum in to her not always sensitive department the fact that the present plight of the dairy industry is likely to leave havoc in its train in the countryside? Is she aware that a typical, efficient dairy farmer with a modest-sized herd in Somerset today receives a milk cheque for the same number of cows as he received six years ago—which represents half the amount of income? That means a cut in living standards and makes it impossible for him to remain in operation. After several generations he is being forced to sell out.

§ Baroness Hayman
My Lords, I understand what the noble Lord says. I appreciate the effects on individuals and families. It is no comfort to the noble Lord, know, for me to say that dairy farming is not the only sector that is affected in this way. We know from the data on farm incomes that although incomes doubled between 1990 and 1995, they have been reduced by about 60 per cent since then. That is why the Government have taken a range of measures to help the various sectors in agriculture.

Noble Lords
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