HC Deb 16 April 1981 vol 3 cc224-5W
Mr. Nicholas Baker

asked the Minister of Agriculture, Fisheries and Food if he will make a statement about prices for liquid milk.

Mr. Peter Walker

The Government have been considering the level of liquid milk prices and the present system of price control within that sector of the dairy industry in the light of the detailed recommendations made by an independent firm of accountants, Binder Hamlyn, regarding the basis on which the dairy trade's costs are measured.

The Government's basic conclusion is that the present arrangements have been of value to producers, distributors and consumers in providing a stable frame-work for the; liquid market and in particular for the maintenance of the doorstep delivery system, to which it attaches great importance. It has therefore decided that in England, Wales and Northern Ireland those arrangements should continue to apply broadly as at present with statutory maximumprices being set at wholesale and retail levels.

At the same time, the Government believe that certain detailed changes suggested by Binder Hamlyn should be made in the way in which the dairy trade's costs are measured and taken into account in determining the distributive margin. In particular, it accepts Binder Hamlyn's two major recommendations that wholesale sales should be included within the costings system and that it would be right in principle to determine the dairy trade's target rate of profit by reference to the industry's return on capital employed. Discussions are continuing with the dairy trade and other interested parties regarding the detailed application of these and other recommendations made by Binder Hamlyn, and a further statement will be made as soon as possible.

In the meantime, the Government have been considering the level of the maximum prices to apply this summer. They will be keeping the level of the retail price under review, but they have no plans at present to make any increase. However, they have decided, after consultations with both sides of the dairy industry, that the maximum wholesale price of milk in England, Wales and Northern Ireland for the period commencing this month should be reduced by 0.660p per litre so as to reflect lower costs of milk production in the summer months and changes in the costs of processing and distribution. Orders giving effect to these changes will be laid before Parliament as soon as possible.

My right hon. Friend the Secretary of State will be making a separate statement about the arrangements and prices to apply in Scotland.

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