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Session 1999-2000
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Delegated Legislation Committee Debates

Draft Milk Development Council (Amendment) Order 2000

First Standing Committee on Delegated Legislation

Thursday 9 March 2000

[Mr. Jonathan Sayeed in the Chair]

Draft Milk Development Council (Amendment) Order 2000

4.30 pm

The Minister of State, Ministry of Agriculture, Fisheries and Food (Ms Joyce Quin): I beg to move,

    That the Committee has considered the draft Milk Development Council (Amendment) Order 2000.

The main purpose of the draft order is to permit the Milk Development Council, a non-departmental public body, the activities of which are wholly funded by a statutory levy on all milk sold by dairy farmers, to engage in the generic promotion of milk. By generic promotion, I mean the marketing of milk to a wide audience without reference to origin or brand.

The draft order does three things: it provides for the widening of the council's statutory remit to include generic promotion; it increases the maximum rate of statutory levy by 0.03p per litre from 0.05p per litre to raise funds for such promotion; and it clarifies that the maximum rate of levy is exclusive of value added tax. The changes are intended to apply to England, Scotland and Wales. The council does not operate in Northern Ireland, where different arrangements apply.

Approval for the proposal has been sought from, and given by, the European Commission, because raising funds in that way is considered a state aid. Incidentally, that is why we cannot permit the levy to be spent on promoting the ``Britishness'' of our milk. However, The majority of liquid milk produced in this country is consumed here. So the proposal will bring much benefit to British milk. Hon. Members will understand that the perishability and sheer volume of the fresh product does not lend itself well to our exporting or importing it.

The order will allow the council to approach Ministers for an increase in the levy—currently 0.04p per litre—within the new maximum rate, to raise funds for an advertising campaign. The dairy processing companies have voluntarily agreed to match dairy farmers' contributions pound for pound. The latest estimate is that £6 million is likely to be raised each year, which will initially fund an 18-month campaign; the scheme's success will then be reviewed. Research commissioned by the Milk Development Council and the National Farmers Union has shown that such a spend should have an impact in the marketplace.

While companies are able to promote branded goods, some dairy products—primarily liquid drinking milk—do not lend themselves easily to brand promotion. That is why a generic campaign supported equally by producers and manufacturers can bring benefits. Competition from soft drinks and changes in life style have contributed to a fall in liquid milk consumption in Great Britain at a rate of 1 per cent. year on year. That has implications for our children's health and physical development. It is widely accepted that the risks of osteoporosis in later life are increased, especially for women, if there is insufficient calcium intake in the early and teenage years.

For those reasons, Ministers welcomed the proposal to extend the council's remit, which has been supported by all parts of the dairy industry. The council was established in 1995 to continue the valuable work of research and development, education and data collection previously performed by the milk marketing boards. At that time, however, there was no demand for its remit to include generic promotion. As a result, apart from some work funded primarily with European Union grants, generic promotion has almost ceased. Since 1995, the MDC has carried out excellent work within its statutory remit. That was recognised by the Government, who, as a result of a formal review undertaken in 1998, extended the council's remit until 2003.

Mr. Ben Bradshaw (Exeter): The Minister spoke of health benefits and of osteoporosis. Heart disease is a big killer in this country; has any research been done into heart disease being caused by full fat milk?

Ms Quin: That issue has been considered primarily by the Department of Health. Guidance is issued by the Department about the fat content of foods, including dairy products, and advice is given about the relative benefits in terms of different sectors of the population. The Department of Health has responsibility for that, but it and MAFF consult and co-operate on many issues, because it would not make sense for separate Departments to issue different messages.

We recognise that the dairy sector has suffered a significant fall in income because of the drop in the farmgate milk prices. That is a negative consequence of the strength of the currency and other factors. I know that the additional cost of generic promotion will impose a further burden on farmers. It is therefore important to repeat that we are doing this at the request of representatives of that sector. In many ways, we would have preferred a voluntary levy to be raised, but after careful consideration of the representations made to us we accepted that it would be fairer, and it would be seen to be more fair, to impose a statutory levy. Nevertheless, we wanted to be convinced about our decision, so a poll of all producers was undertaken last autumn. A clear majority—more than 75 per cent—of those who cast a vote were in favour of the proposal—[Interruption.] That was an unusual form of intervention, Mr. Sayeed.

We must act in compliance with European Union public procurement rules, and all interested parties need to take that into account. The draft order was presented to the National Assembly for Wales on 9 February and I am pleased to report that it received the unanimous support of all Members of the Assembly then present. The order also responds to the report of the Select Committee on Agriculture, which called for early implementation of the legislation necessary to impose the levy.

The draft order is important, and it has the support of all parts of the industry, of the Welsh Assembly and of the Select Committee on Agriculture. I commend it to the Committee.

Mr. Geoffrey Clifton-Brown (Cotswold) rose­

Mr. David Heath (Somerton and Frome): On a point of order, Mr. Sayeed. Is it conventional for someone representing the Opposition Front Bench to enter the Room and immediately rise to speak, without having heard the Minister's explanation of the reasons for the order?

The Chairman: It is in order.

4.39 pm

Mr. Geoffrey Clifton-Brown (Cotswold): I must apologise to you, Mr. Sayeed, to the Minister and to other hon. Members for my late arrival. I was late because I was attending another Committee, which has only just completed its business.

I am grateful to hear the Minister's explanation—

Mr. Heath: You did not hear it.

Mr. Clifton-Brown: I heard a part of the explanation. I am grateful to the hon. Lady for her explanation, and I hope other hon. Members are, too.

As the Minister said, the Opposition welcome the order, which was recommended by the Select Committee on Agriculture. It was the subject of a poll of milk producers, who, by a large majority, recommended its implementation because, even though it would involve higher charges, it would lead to a greater sum being given to the generic promotion of milk.

The order is a fine example of producers co-operating in an attempt to improve their plight. They are in difficult circumstances now, because the Government agreed at the Helsinki summit that the milk quota should be reallocated. Our milk producers were thereby put at a disadvantage. We are now only 85 per cent. self-sufficient in milk, yet our milk producers were put at a further disadvantage when the Irish were given a larger milk quota. Under those circumstances, it seems a thoroughly worthwhile effort by the milk producers to agree to spend more on the generic promotion of milk.

Milk is becoming an international commodity; with new production techniques, the possibility of milk being traded internationally is becoming greater by the day. It is important that our producers should be able to compete in that market. What this country wants—I hope the Government will encourage it—is a net trade surplus in milk. However, unless the Government give our producers greater support, particularly in our negotiations in Europe, that day will become more distant.

As hon. Members know, we have a substantial trade deficit in the milk sector. We have some of the best-producing grazing land in the world, and the country is more than capable of fulfilling its own requirements. To have a trade deficit in milk seems utter nonsense. Although we welcome the order, and although it goes a little way to achieving our aims, it is not nearly enough. Our dairy farmers need further Government assistance. I might be out of order, Mr. Sayeed, but it would be helpful if the Government could give the dairy sector other assistance. For example, why was the calf subsidy abolished? It seems relevant to discuss how else the dairy sector might be helped, that would have been one method by which it could be.

I hope that today's order the first of many, but it may not be enough, and I wonder what the Government will do if that is so. Will they have another poll of producers? It would be unreasonable to impose further charges on the industry without further polls. The Minister needs to explain the Government's thinking. Is it her belief that this is as much as we need to do for the time being, or does she believe that it will be necessary to introduce further orders in the near future? Perhaps she will answer that question in the context of the trade deficit in milk.

With those few brief remarks and my apologies to you, Mr. Sayeed, for being late for the Committee, I shall resume my seat and look forward to hearing the Minister's reply.

4.45 pm

Mr. David Heath (Somerton and Frome): May I say what a pleasure it is to serve under your chairmanship for the first time, Mr. Sayeed.

I am grateful to the Minister for her careful exposition of the reasons for the order, which we broadly welcome. It is very important that we resume the generic promotion of milk for several reasons, some of which have already been mentioned. I certainly do not accept the fact that the loss of milk sales has been occasioned solely by the Government's attitude at the Helsinki summit and the quantity of quota made available to the Republic of Ireland. The process has been going on for at least 10 years. Research suggests that it has been accelerated by the break-up of the milk marketing boards and the cessation of generic promotion in 1994.

 
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