| Previous Section | Index | Home Page |
Dairy Farming (South Gloucestershire)
Motion made, and Question proposed, That this House do now adjourn.--[Mr. Clelland.]
2.30 pm
Mr. Steve Webb (Northavon): This is a very appropriate time for this debate. We had a national report from the Agriculture Committee at the end of January that concluded:
- There is without doubt a crisis in dairy farming and, sadly, there are likely to be more casualties before any real recovery is felt.
The debate is also timely for me locally, as a constituency Member. Dairy farmers in my area have been expressing their anger. A couple of weeks ago, more than 250 farmers from my constituency and beyond met in Thornbury to protest about their situation, and about a third of them went on to protest outside a local dairy. There were remarkable scenes--I understand that the protest was very orderly--and at 11.30 at night the dairy management arrived and were willing to talk to the local farmers. I welcome that dialogue, but it is an extraordinary situation.
I was very struck by that demonstration, because it showed that the farmers felt that writing to me or to the Government or talking to the National Farmers Union might not achieve very much. They felt so frustrated at the worsening situation and the fact that no one seemed to be getting the message that they were driven to protest in a very visual way. It brought me up short and made me question whether I had been doing enough to represent their concerns. That is one of the reasons why I sought this Adjournment debate.
The farmers clearly want action. I attended Agriculture questions yesterday and noted the response of the Minister of Agriculture, Fisheries and Food to a question about the milk price. He took the view that it was a matter of market process, and he used the phrase "supply chain" two or three times. There is an element of truth in what he said, but it will not have heartened the farmers in my constituency. I hope that the Minister will tell us today what the Government can do and are doing to help my constituents.
I want to sketch out the national picture and to focus on the concerns of one farmer in my constituency. I visited Mr. Kevin Kingston, who explained to me that the three main sources of income for dairy farmers have all been hit--a triple whammy. First, cull cows, for which farmers might have got some value in the past, are now virtually worthless because of BSE, and the unrealistically restrictive weight limit on the over-30-months scheme is putting further pressure on farmers.
Secondly, there is now little or no market for dairy bull calves, which would perhaps have been exported in the past. There was Government assistance until last summer under the calf processing aid scheme, but that has now ended. Typically, a bull calf will now be shot at birth--often by the local hunt, apparently.
Thirdly, and perhaps crucially, the real price of milk is now about half of what it was 30 years ago. Farmers in my constituency are talking about a price of 8p a pint, which is clearly below even the cost of production.
Nationally, incomes in the dairy sector fell by 21 per cent. last year, but they have fallen by three quarters since the mid-1990s. I recognise that one can pick any very high base and show a big fall, but for those of us on secure salaries, having to cope with a quarter of what we had five years earlier is unimaginable--yet that is what farmers have had to do.
The factors behind the fall in the milk price are well known and are clearly not all under the direct control of the Government. I want to identify three, all of which suggest some possible response. The first is the strength of sterling against the euro, both its direct effect and--as the Minister remarked a day or two ago--the indirect effects, such as the price support mechanism.
The second factor is the weak position of the sellers in the market. Much comment has been made on the competition report on Milk Marque. Farmers give a hollow laugh at the suggestion that they were somehow terribly powerful in the milk market. Given the long-standing decline in milk prices, the idea that Milk Marque was a powerful factor in the market seems overstated. The third factor is that there has been a fall in demand for milk products in overseas markets such as Asia, the former Soviet Union and elsewhere.
That is the national background against which farmers are having to work. Locally, I wish to draw the Minister's attention to particular concerns. Dairy farming is important in my constituency, and yet it is in significant decline. I am aware that there is a national decline, but it seems to be quite marked in my area.
One farmer in Pilning wrote to me to say that, 15 years ago, there were 11 viable dairy farms within a one-mile radius of his farm. He expects that, by the end of the year, it will be down to one or two. A point made forcefully to me by farmers in my constituency is that it is not just the old who are retiring and going out of the business, and it is not just the inefficient who are being forced out. It is very often the most efficient and the best farms that are going under. Some of those which have invested and overstretched are most vulnerable to a downturn, to interest rate rises and so forth. It is not just the weeding out of the weak, but the collapse of the very businesses that we would want to keep going.
There is a fear that more is on the way within the local area. The chairman of Chipping Sodbury National Farmers Union, Mr. Michael Weaver, wrote to me this week saying:
It is clear that my constituents are talking not just about those who work on the farms, but those in the ancillary industries. Another farmer wrote to say:
Another local factor links to the demonstration that I mentioned earlier, which is the strengthening position of purchasers of farmgate milk. The Minister will be aware of the merger of Dairy Crest and Unigate, which gives them an important market share nationally. In addition, it has been estimated to me that, within the south-west, they may have as much as a 60 per cent. market share in milk; that is what the local NFU believes.
Given the Government's concern about fair competition, I am concerned that a 60 per cent. share in purchasing will do only one thing to farmgate prices--put further downward pressure on them. That is particularly acute in the south-west. The Prime Minister and other Ministers tell farmers that they want a stable, long-term framework, and clearly we are all of one mind on that. However, many, if not most, of those farmers will not be there in the long term, and short-term measures are needed as well. I want to touch on four very briefly.
Agrimonetary compensation is regularly mentioned, and I am aware from the Minister's comments of 48 hours ago that this is not free money. We are aware that there is a cost attached to it, and an issue of prioritisation. One farmer told me that that must be measured against the cost of unemployed farmers and the knock-on effect on the ancillary industries. There is a temptation to characterise this as a large sum of money and, obviously, only a part would feed through into the dairy industry. Clearly, there are savings from investing the money now, and I hope that the Minister can reassure me on that. I know that the Secretary of State said yesterday that it is still on the table, but the deadline is getting tight and farmers want to know. I hope that the Minister will offer some reassurance.
The second thing that the Government can do is, metaphorically, to bang heads together--they can get people round the table, such as the supermarkets, the dairies and the farmers, who, perhaps, have not always worked together effectively. The Government can encourage them to see their common interest in having a long-term secure supply of British milk to the British market. Government have a role to play in co-ordination and in emphasising the need to work together, and I hope that they will do more of that.
Thirdly, the Government should give farmers more freedom to work together in producing milk products. I have read the Minister's comments on that, but one of the advantages that has not been stressed enough is that if we could move milk output from the liquid milk market into milk products, we could affect the surplus in the overall market that is depressing the price. As well as assisting farmers in competition, co-operation in processing would also improve the milk price as a beneficial spin-off.
Finally, the Government should take measures to stimulate demand generally. The issue of free school milk was mentioned in the earlier debate in a negative context, in the sense that the Government are trying to stop a subsidy scheme being removed, but I hope that the Minister will talk to her colleagues in the Department for Education and Employment about extending free school milk. It is good for the health of our children and probably for their education, because well-nourished children study better. It is a win-win situation that would help the domestic dairy sector. I welcome the Minister's suggestion for generic milk campaigns, such as the "Drinka pinta milka day" campaign. I hope that she will say how much the Government will put into that and how long it will take to come on-stream.
Local farmers in my constituency have, regrettably, lost faith that anyone is listening to them. I have sought to be measured--I note that the earlier debate was measured, not hysterical--but I wish also to convey a sense of the anger and frustration that dairy farmers feel. I am aware that the Minister receives many invitations, but I invite her to visit south Gloucestershire to meet the farmers and to hear about the pressures they face, including the particular local factors that I have mentioned. I hope that she will be able to offer them reassurance that the Government understand their concerns and are taking action that will have an effect in the short term, as well as the long term.
I can do no more than conclude with a quotation from the group secretary of my local National Farmers Union, Mr. Robin Winfield, who wrote me a short letter in advance of this debate. He said:
I am at the sharp end of the industry and know that another price cut in milk will be the end for many producers, especially tenant farmers still paying high rents.
There is very much a local fear that what has gone on is set to continue; there is no sense that we have bottomed out yet. The milk price may be nearing the bottom--it probably could not fall much further anyway--but there is still a sense that there are many more closures to come unless urgent action is taken.
I've spoken to people in the ancillary trades, feed merchants, vets, auctioneers and they are all seeing their farming related business falling substantially and they are very worried about the future because many dairy farmers are considering packing it in.
I understand that a local firm manufacturing trailers closed a few months ago, and an agricultural engineering firm at Thornbury in my constituency closed only last month. That is a further local pressure that is causing concern.
with the price of milk forecast to drop even more, it clearly has reached an unsustainable level, and the flow of dairy farms that we have seen going out so far will, I feel, shortly become a flood.
I hope that the Minister will come and meet my farmers and tell them what she plans to do to ensure that that prophecy does not come true.
| Next Section
| Index | Home Page |