§ Albert OwenTo ask the Secretary of State for Environment, Food and Rural Affairs what percentage of the increase in price noted in her Department's milk price survey raw milk producers will receive; and what steps she has taken to ensure that raw milk producers receive a fair share of this increase. [154890]
§ Alun MichaelThe milk price survey run by the Department records the price paid by the purchasers of raw milk to raw milk producers. Therefore, by definition, all of the increase in price recorded by this survey is received by raw milk producers.
The Office for National Statistics also produce data on the retail price of milk. Transmission of changes between retail and farmgate prices is more complex. This issue was looked at in depth by London Economics for KPMG its report on "Prices and Profitability in the GB Dairy Chain", which was commissioned by the Milk Development Council. London Economics examined the UK milk market for the period from January 1995 to December 2001. On the basis of a rigorous statistical analysis, it concluded that adjustments to retail prices for liquid milk were fully passed back to the farmgate price, although there was a lag of five months before the retail price change was fully reflected in the farmgate price. There were no differences in the impact of retail price increases and decreases on farmgate prices, both were fully transmitted. In contrast a 1 pence increase in the farmgate price resulted in only a 0.6 pence increase in the retail price of liquid milk whereas a 1 pence decrease in farmgate price reduced the retail price by 0.7 pence.
London Economic also looked at the market in cheddar cheese. They found some evidence of a widening gap over the seven year period to 2002 between the retail price and farm gate price on a milk equivalent basis.
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