Milk Marketing Board (Hansard, 20 January 1995)

§ Mr. Ancram

The Agriculture (Northern Ireland) Order 1993 provided for the ending of the statutory milk marketing scheme in Northern Ireland. It enabled the milk marketing board for Northern Ireland to submit proposals for its replacement by voluntary arrangements, for the transfer of its assets to specified successor bodies and for the distribution of the value of those assets to milk producers.

The milk marketing board for Northern Ireland submitted reorganisation proposals to the Department of Agriculture on 31 December 1993. Following this, a wide-ranging consultation exercise was conducted when the views of the various parties with an interest were sought. Subsequently, and in the light of the responses to that consultation, the milk marketing board on 26 August 1994 submitted an amended reorganisation scheme and a further round of consultation was conducted.

In his statement of 21 December 1994, my right hon. and learned Friend, the Secretary of State commented on the milk marketing board's proposals. He said that those reorganisation proposals met the requirements of the Agriculture (Northern Ireland) Order 1993 and that subject to and contingent upon approval being given by the EC under articles 92 and 93 of the EC treaty in respect of the state aids inherent in the scheme; certain amendments being made to the scheme; and satisfactory arrangements being put in place to cover any liability upon the residuary board in respect of milk quota superlevy; the scheme submitted by the board was one that merits approval.

The milk marketing board has now submitted the formal amendments to its scheme, as required in my right hon. and learned Friend's statement, together with the necessary assurances in relation to payment of any milk quota superlevy. Formal state aid approval by the European Commission has now been confirmed. The scheme has therefore today been approved in accordance with the requirements of the Agriculture (Northern Ireland) Order 1993.

The order requires that the principles of the approved reorganisation scheme be made public. The principles of the scheme as submitted, and subsequently amended, by the milk marketing board for Northern Ireland were set out in the two consultation documents issued by the Department of Agriculture in January and September 1994. Although some further detailed amendments have been made by the milk marketing board to its scheme, the principles as set out in those documents are unchanged. Copies of the consultation documents, together with a note updating them in the light of the further detailed amendments, are available from the Department of Agriculture for Northern Ireland.

Under the approved reorganisation scheme, the existing statutory milk marketing scheme will be revoked on 1 March 1995—the "vesting date". As a result, producers will be free to sell their milk to whom they wish, whether to the successor co-operative being established under the board's reorganisation scheme, to agricultural co-operatives or other group marketing milk on behalf of producers, or direct to processors. The current joint 716W committee system of centrally negotiated pricing according to the milk's ultimate end use will end on the vesting date. The price of milk will be determined by contract between purchaser and supplier.

The milk marketing board for Northern Ireland will be succeeded by a producer co-operative, United Diary Farmers Ltd. and the board's commercial division, Dromona Quality Foods, will be incorporated as wholly owned subsidiary of United. The assets being transferred to United have been set at £18.003 million. Eligible producers who join United will receive shares in United proportionate to their milk production in 1992–93. Eligible producers who elect not to join United will receive redeemable loanstock bearing an interest rate at bank base rate plus a 0.5 per cent. premium. Loan stock will be allocated on the same basis as shares to joiners of United and will be redeemed not later than five years after the vesting date.

In view of the delay in the vesting date from 1 April 1994, as first proposed, to 1 March 1995, the milk marketing board has written to all milk producers who have already signed a contract with United to provide them with an opportunity to withdraw without penalty from that contract.