Select Committee on Environment, Food and Rural Affairs Appendices to the Minutes of Evidence


Memorandum submitted by The Royal Association of British Dairy Farmers (A13)

  On behalf of the Royal Association of British Dairy Farmers I respond to the Committees inquiry into the future of UK Agriculture. Clearly the main focus of this Association is the dairy sector but many of these remarks can be related to farming as a whole.


  It is recognised that agriculture and particularly livestock production systems have reached a crossroad. In a rapidly changing industry farmers currently face confusing options of specialising, retiring, diversifying, or producing to niche or commodity markets. It is also recognised that society will greatly influence the shape of farming systems and that Governments too via WTO and international pressures will have a long lasting decisive influence.


  In terms of the dairy farming sector, the numbers of producers have declined steadily at about 3-4 per cent per year for many decades. A greater decline can now be expected due to lower milk prices and generally lower returns. There is evidence that sons and daughters of farming businesses are leaving the land to pursue other careers in worrying numbers, and there is real shortage of skilled workers needed for more technical and business driven farms.

  Over this same period the industry has had to respond to a number of key milestones; introduction of production quotas in 1984, de-regulation in 1994 followed by the enforced fragmentation of Milk Marque. BSE, foot and mouth disease, currency changes have all had, and will continue to have, an influence on the structure of the industry. It should also be pointed out that most of these issues were driven by Governments and all cases were outside the control of farmers.

  The number of registered producers in the UK is currently in the region of 28,000. Many forecasters will argue that by 2010 the figure could well have fallen to nearer 15,000 with the majority of milk supply coming from less than 10,000 producers. The result will be more business-like, market driven dairy farmers but they will increasingly be subject to overseas competition from the worlds dairying countries.


  It should again be stated that subsidies were introduced not to "featherbed" the farming industry but to avoid shortages and ensure a plentiful supply of relatively cheap food to UK consumers, in other words, a consumer subsidy. Quotas were put in place to regulate markets and to meet the above aims. It should be argued that subsidies are designed to follow farmers to produce and sell their products in some cases below the cost of production. I add that in the case of dairy farming, during the last two years the costs of production including subsidy have for many been greater than total returns, clearly an unsustainable position.

  The Inquiry must recognise that subsidy in the UK is relatively transparent. It is not always so in other competing countries such as the USA for example, where there are various means of supporting agriculture such as weather payments, some direct payments as well as various import tariffs.


  Most dairy farmers would be prepared to accept removal of production subsidies but with a number of assurances. There is much talk of "level playing fields". It is recognised that such equality will never fully be achieved but UK farmers will continue to be at a disadvantage if the US and other countries continue to support their sectors whilst other EU member states have less transparent support (cheap loans, exit programmes).

  From a position of food standards and safety as well as competitiveness, there is surely a need for imported foodstuffs to have been produced to the same standards of welfare and general farm assurance as food produced here. Appropriate and meaningful labelling is an essential requirement.

  There is also a need to ensure that within the UK the various segments in the food chain are not allowed to exploit their positions. Currently dairy processors and food retailers hold stronger positions in the market than do producers. Government interference in market operation varies; the enforced break up of the farmer owned Milk Marque resulting in fragmentation does not appear to have been matched with similar challenges to the retail sector nor to other recent market mergers.

  Further trade liberalisation and enlargement of the EU are seen as inevitable and are issues about which UK farmers can again do nothing. The UK Government has declared its intention to remove the constraints of milk quota, which is seen by it as a barrier to viable dairy farming. Controlled removal of quotas, whilst not pleasing all dairy farmers, would be manageable as market requirements, and to some extent processing capacity, will ultimately control the raw milk supply. It is, however, unrealistic to expect UK dairy farmers to compete with producers from overseas with few constraints and cheap, if any, paid labour.


  It is not always clear what is meant by "stewardship of land". It could be interpreted as maintaining an attractive and pleasing countryside or simply producing a countryside dominated by set aside or arable stubble. Policies which remove large areas of land from farming, will result in desolation. An attractive countryside is likely to be the more acceptable to the public but it can only be achieved in the future if agriculture is profitable. Incentives to, and not controls on, farming businesses and others that have a stake in the countryside best assure good stewardship of the countryside.


  One of the main points of this submission reflecting the main difficulty of planning for a future without subsidies, is that Government does not have a strategic or business plan for agriculture. Historically, Government has been responsible for regulating the market and now to abruptly withdraw and leave the industry to market forces is unacceptable. The RABDF argues that government has a responsibility for overseeing the various chain links within food production built from a science base, where safe imports are assured, labelling is standardised, retailers do not exploit their positions and that biosecurity runs the length of the chain. Farming must be allowed to be competitive.

  If such responsibilities are not adopted, agriculture will see the development of factory style livestock units with downward pressure on welfare. It is likely that large areas of land will not be farmed. Such developments could have a negative effect on land values, house prices in rural areas and rural employment. The recent outbreak of foot and mouth disease clearly demonstrated the importance of agriculture to tourism and the rural economy generally.

  UK producers have the ability to produce high quality, safe food and implement good countryside stewardship, but not if exposed to cheap, supported, lower quality imports. A strategic plan for UK agriculture, with a proactive government department, would aid the creation of an efficient agriculture and rural economy. It would include promotion of the best of British to overseas markets and help create a prosperous agriculture. To do so would not conflict with the principle of subsidy removal.

  A prosperous agriculture is fundamental to continuing the supply of quality, safe food, ensuring good stewardship of land and provision of a basis for a healthy rural economy.

  The Royal Association has no objection to this submission being made public and would be pleased to assist the Inquiry further with provision of oral evidence if so required.

The Royal Association of British Dairy Farmers

14 December 2001

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