Examination of witness (Questions 754
- 759)
TUESDAY 23 NOVEMBER 1999
THE RT
HON NICHOLAS
BROWN
Chairman
754. Minister, welcome back. It was only a week
ago that we were interrupted by a division bell.
(Mr Brown) It is always a pleasure.
755. I know, and you are such a great witness,
Minister. We really appreciate that you are giving your time so
freely to this Committee. We have just had an extremely useful
session with the Secretary of State for Trade and Industry which
I think the Committee found very valuable. If I may, I would like
to begin this morning by asking you a general framework question
and to state MAFF's policy on farmer cooperatives.
(Mr Brown) As you know, I regard myself as a sponsoring
minister for the whole of the food chain, not just the producer
part of it. I have always been a supporter of farmer cooperation.
I believe that, where it is appropriate, as it clearly is in the
dairy industry, working cooperatively together farmers can gain
from all the obvious economies of scale and the general benefits
of cooperation, probably particularly important in a product like
milk which requires intensive capital investment at the producer
end, the distribution end, in retailing as well and of course
in processing.
756. I agree with that and indeed I welcome
what you were saying in your consultation document of August,
"The New Direction for Agriculture", where you talked
about the merits of farmers collaborating.
(Mr Brown) My view on this has always been very clear
and it has been stated so often now.
757. It is nice to restate it on this occasion
as you give evidence for our inquiry. Do you understand that there
are those in the world of farming who have taken the decision
on Milk Marque as being an indication that regulatory authorities
will not accept that level of vertical integration which you and
I both agree is desirable in farming?
(Mr Brown) I do accept that. I am not responsible
directly for the competition authorities. They report to the Secretary
of State for Trade and Industry alone. It is not a shared responsibility
within industry but the Secretary of State is a Cabinet colleague
and I have the opportunity to discuss these matters with him,
but these are his decisions. The Milk Marque response to the competition
authority's report was the right response and indeed I think the
leadership of Milk Marque, Mr Christensen and his colleagues,
has behaved admirably and is deserving of my support. They most
certainly have it.
758. Paragraph 1.24 of the consultation document
I referred to earlier says that levels of collaboration remain
markedly lower than elsewhere in continental Europe. For example,
the financial turnover of the French cooperative movement is about
seven times that of the United Kingdom. You would like to see
us moving closer to the French model?
(Mr Brown) No, I would not put it like that. I am
a supporter of collaborative arrangements, but we also have to
be mindful of the need for real competition in the industry. There
is a distinction to be drawn between the arrangements we have
in the United Kingdom, whereby Milk Marque not only had ambitions
to become a more extensive processor of dairy products but was
also by far and away the largest supplier of raw milk, and the
continental model, where the norm is for the cooperative to use
its own raw milk and then process into dairy products, but not
to be an external supplier of raw milk.
759. For example, I think it is common ground
between us, looking at a different sector, that one of the problems
of the pig industry is it is too fragmented and it faces very
highly integrated, very large cooperatives on the continent. You
and I would like to see the pig industry become more integrated.
(Mr Brown) Although it is slightly by the by in an
inquiry into the dairy industry, I have done my best to pull the
pig sector together. I am committed to dealing with their affairs
and I am doing everything I legally can to get them through what
are the most intractable of circumstances.
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