§ 81. Mr. Awbery
asked the Secretary of State for the Colonies what quantity of milk has been thrown away since the milk dispute in Malta began; what negotiations took place between the Government and the milk producers; and what steps are being taken to bring the dispute to an end.
§ Mr. J. Amery
The Government of Malta have been concerned for some time about the high level of milk subsidies which, in recent years, have been running at about £500,000 (including the cost of operating the Milk Marketing Undertaking, which amounts to about £210,000 per annum).
In December, 1958, the Government appointed an Official Committee to inquiry into the Dairy Industry whose report is now being considered. At the beginning of October the decision was taken that this very large milk subsidy would have to be reduced. It was necessary to take a decision then because at this time of the year the prices for winter milk have to be fixed and new contracts entered into with the producers.
The producers' representatives were informed of the Government's decision, which was to the effect that quotas of milk would, in future, be fixed on the basis of a liquid milk consumption of 3,900,000 gallons per annum and that the price paid for milk within this quota would be 4s. 10d. per gallon (which is the price that has been paid for all milk purchases during the last 12 months). Any milk surplus to that quota would be purchased by Government for cheese and butter making etc., at the rate of 3s. per gallon, this sum being reduced to 2s. per gallon in the spring. At this price the Government would still incur a heavy loss on surplus milk. It should be noted that in fixing the quota of 3,900,000 gallons a generous allowance was made over and above actual market requirements.
Producers' representatives were also told that Government would negotiate a price for next summer and next winter 153W (the latter to he higher than the former) during the coming months and that both prices would be announced simultaneously, so that farmers could plan accordingly, with the particular aim of reducing the surplus yield in the summer and having a more even flow of milk. During the winter months there is very little surplus above the requirements for liquid milk and at the present time, until at least January, any such surplus would be negligible, thereafter rising slowly until the spring and summer flush period. The total production of milk at present is estimated to be about 4,700,000 gallons per annum.
Before the new policy was due to come into force it was made quite clear at several meetings to the milk producers' representatives that Government was determined to reduce the amount of milk subsidy. It was pointed out that the time was opportune for a change because the new policy, owing to the absence of surplus milk now, would not affect the herdsman's income from milk sales before the spring, thus giving him time to plan his milk production accordingly During these interviews the producers' representatives repeatedly said that they were not so much concerned with the price paid for surplus milk, but with securing an increase in the price for the quota of milk used for liquid consumption from 4s. 10d. to 5s. 2d. a gallon. This was quite unacceptable to the Government as it would mean further increase in the subsidy.
It is the contention of producers' representatives that 4s. 10d. is not an economic price and they hold strongly that the Government have based their prices on an average yield of cows' milk which is too high. On the other hand, the Government's contention has always been that the very fact that at a price of 4s. 10d. per gallon herdsmen have increased the size of their herds and the amount of milk produced is clear evidence that the dairy business is very profitable.
The farmer ceased to supply milk to the Milk Marketing Undertaking on 15th November. Daily production of milk at this time of year is about 11,000 gallons, but the actual amount of milk thrown away is considerably less than this because the feeding level has been reduced during the stoppage and some 154W herdsmen are making cheese. Since supplies of fresh milk ceased reconstituted tinned milk, of which there are ample supplies, is being distributed to all areas. It is Her Majesty's Government's hope that the dispute will be settled by negotiation with the producers.
§ Mr. J. Amery
I am consulting the Governor of Malta and will write to the hon. Member as soon as possible.