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Mr. Andrew George: Further to the point raised by the hon. Member for Stroud (Mr. Drew), does my hon. Friend agree that, under the terms of the Competition Act 1998, from March next year Milk Marque will not hold a dominant position in the market, as it will have a share of less than 40 per cent. of the liquid market. It should not be affected by the Act as it is not in a dominant and monopolistic position.
Mr. Tyler: That is true. I am grateful to my hon. Friend. Since we are relatively near neighbours, he may be reading my mind. I shall come to that point shortly. I wish to deal first with the Agriculture Act 1993.
I regret that the right hon. Member for Skipton and Ripon (Mr. Curry) is not in his place, although I had a
conversation with him yesterday on this matter. He was the Minister when the Agriculture Act went through the House. He said in Committee:
I do not believe that the case that has been made by the MMC stands up to scrutiny. I have spent a great deal of time reading it in the past 24 hours. The definition of a monopoly in this context is not relevant and I do not believe that an abuse has been demonstrated.
Let us take a comparable situation. I understand that Express Dairies has recently announced the purchase of Glanbia's liquid milk business, giving Express a potential 30 per cent. share of the market. Will that be referred to the competition authorities? It certainly should be. Will the Minister insist that while the matter is being examined, Express Dairies is not permitted to continue recruiting farmers who produce milk and taking them away from Milk Marque?
Our experience since the Agriculture Act 1993 has been deplorable. Milk Marque now markets less than 40 per cent. of Great Britain milk production. That is much less than at the time of the report. It is likely to be as low as 36 per cent.--a point made earlier by the hon. Member for Mid-Worcestershire (Mr. Luff), the Chairman of the Select Committee--in the forthcoming selling round. The MMC did not adequately examine the traumatic events of the summer 1998 and spring 1999 selling round. It is not in the report. I have been through it and there seem to be some quick references to it, but despite the delays in publication, the MMC has not taken that into account.
As hon. Members will know, in both selling rounds, the buyers effectively held the producers to ransom. They have used their monopoly power twice in the past 12 months. The cartel was in place over those few days. The buyers were able to prevent the proper market from operating. The report is stuck in the early or mid-1990s. It has not taken into account the later 1990s. I see hon. Members on both sides of the House from agricultural constituencies agreeing that that is the case. The Secretary of State for Trade and Industry must acknowledge when he returns to the Chamber that the report is in a time warp.
The experience of those two selling rounds has convinced Milk Marque that there must be some attempt to address the full extent of the market power of the buyers, which is now held by a very small number of major dairy processing companies. Milk Marque has rightly recommended to us that the way forward must be to develop the sale of milk on more one-to-one contracts--a much more direct contractual basis--and on normal commercial terms. That would allow farmers to invest in the necessary processing capacity, and prevent milk from having to be exported, as it was in spring 1999, simply because there was insufficient manufacturing capacity in this country.
Of course it is true that the market in raw milk is naturally limited by time and transport--it is a commodity that cannot be hung about with--but it was folly for
the MMC and the Government to ignore the importance of the EU-wide milk processing market in this context. The two are linked. If there is a surplus in the raw milk market, the milk that goes for processing, which is now Europe-wide, if not worldwide--
Mr. Richard Livsey (Brecon and Radnorshire):
Will my hon. Friend give way?
Mr. Tyler:
I must make progress because I am conscious of the fact that the Labour and Conservative Front-Bench spokesmen took more than an hour and I want to leave time for other hon. Members to get in.
A large factor in the collapse of daily farmers' incomes has been the strength of sterling, to which proper reference has not been made today. However, that is an additional reason--I do not want to divert attention from the critical structural problems of the industry--for the Minister to come to the aid of this sector. The considerable gap that has opened between the retail prices for milk and the prices paid to producers must be addressed now; otherwise, more dairy farmers will go to the wall.
The Minister gave some figures, and it is true that there have not been as many bankruptcies--thank God--as one might have anticipated. One reason is that the amalgamations have proceeded at such a pace that there are, frankly, fewer people in the industry, so there are fewer to go bankrupt. However, I give this warning. If the indecision that is likely to follow this report for many months continues, and if there is no clear signal from both Departments that they take seriously the deterioration in the situation since the report was drawn up, there will be many more farmers whose bank managers will be dragging them into the office to say, "We know that you have hung on by your fingertips. You were waiting for the report, but frankly we see nothing in it which would give us the confidence to maintain your overdraft or borrowing requirement."
These farmers may have been able to hang on through the winter, but they will not be able to do so for much longer. As a result of the report, the likely selling price over the next few months in the selling round that is just about to start will be lower again, because of the lack of confidence in the market.
Frankly, I believe that the Secretary of State for Trade and Industry has fudged the issue of tackling the cartel behaviour of the buyers. I am sure that the Minister, who does his very best to represent the views of farmers, has done his best to influence the Department of Trade and Industry. I have to say that I wish we had been able to get to him earlier to strengthen his resolve and his arm.
In Committee, I made what I fear was an all-too- accurate forecast. I said:
I was delighted to hear the hon. Member for South Suffolk (Mr. Yeo) say on behalf of the Conservative party that he believes that Milk Marque was shackled. That is a retreat, or a U-turn, from the position of the previous
Government, but it is a recognition of the facts which I genuinely welcome. I hope that all parties will now address that issue.
I wish to make brief reference to the issue of bovine TB. As the Minister knows, my constituency is at the epicentre of one of the worst outbreaks of bovine TB, and has been for many years. It is an appallingly difficult problem with which to grapple. Having examined the issue from all sides for a long time, I believe that we are, as a result of the Krebs report, at last grasping the nettle--but what a tragedy that we have had to wait 25 years for that to happen. Successive Ministers, for political or other reasons, have left it late in the day.
We now know that the impact and the cost of TB on the industry continues to grow. Dairy herds are accounting for approximately 50 per cent. of the breakdowns. The National Farmers Union has estimated that, by 2006, the number of TB breakdowns will grow to nearly 4,000 a year. The annual cost of TB to the farms is expected to rise to almost £140 million. This is like the BSE crisis coming back and back again, without any sign of an end. I welcome what the Minister has said, and I hope that it will not be too long before we have a firm statement in relation to the representations made by the NFU on the issue, which cannot be left.
The right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) said that some fallout from BSE remains to be dealt with, notably in relation to cull cows and the end of the calf scheme. I hope that it will not be too long before we get an answer to those questions. August is not far away and, as the Minister rightly responded to the right hon. and learned Gentleman, that is when we ought to be clear that the 30-month scheme has outlived its usefulness.
That ought to be the case--unless the Minister suggests again that maternal transmission is potentially a real problem. If it is, let him be clear about it, and let him tell farmers. That will fill them with horror.
"Our job as Ministers is to ensure that the arrangements which are capable of asserting that Milk Marque will not overstep the mark are able to function effectively. If that happens, the sign up rate, whether it be 17 per cent. or 70 per cent., will be less of a material consideration."--[Official Report, Standing Committee F, 15 April 1993; c. 28.]
In other words, it is not whether one has a monopoly but what one does with it that is critical.
"The restrictions on the possible future of Milk Marque may prove to be its undoing. It will not be as effective, powerful or useful to producers as it might be."--[Official Report, Standing Committee F, 11 May 1993; c. 253.]
That is what the report has highlighted, and that is what we are debating.
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