Examination of Witnesses (Questions 60-64)
9 FEBRUARY 2004
MR DAVID
HANDLEY AND
MR MIKE
HASKEW
Q60 Mr Breed: So you did actually have
some debate and discussion with the processors?
Mr Handley: Very much so.
Q61 Mr Breed: So they were aware that
when you took that action it was something that may happen to
them because they had failed to respond to this situation where
you felt that the full 2p was not being properly passed on and
therefore farmers had no alternative, in a way, but to protest
and demonstrate in that way?
Mr Handley: That is correct. One
point, Mr Chairman, that has been raised earlier is this issue
of transparency. We have continually over the last three years
asked the industry for transparency, to open their books up for
independent analysis so that we can all see where the transparency
is. As Mr Jack rightly put earlier, we are very good at giving
out everything that we do—in fact I think we are too free
with it—but it would be very interesting to see true and
actual transparent documentation of where the money goes, where
their cost of production lies, so that we can all have a good
look at that and then maybe, as an industry, find where the problems
are and bring them together.
Q62 Mr Breed: I hope that as part of
this inquiry we may be able to search out some of that information
as well. If we can, I am sure it will be welcomed by you. Do you
think that perhaps taking direct action like you did might undermine
the wider public support for farmers? I think they were certainly
getting a sympathetic ear by many people who began to understand
the economics, as such. Do you think direct action might undermine
that wider support?
Mr Handley: I would like to give
you a comment that was put to me by the ex-president of the Scottish
NFU during some of the action that was taken. He said that he
could not quite understand how the FFA had managed to put so much
national debate on both radio and television over the dire straights
that the industry was in. That is what direct action achieved.
Certainly, in my role as Chairman of the FFA, I meet with a lot
of consumer groups—we try and talk to as many people as
we can—and we got the exact opposite reaction that a lot
of people said we would get. In fact they were delighted to see
that farmers were getting up off their rear end and doing something
about the critical situation that faced their industry. Also,
a lot of consumers do not realise the implications of what will
happen when the dairy sector—if it carries on the way it
is—does collapse. We have done some research recently to
show that there are a minimum of 30 families associated in the
rural environment with one dairy farm. What we are facing here
in the future is, I think, the loss of an industry that is needed
by consumers, but also there are a lot of other things that are
tagged on to that from which the consumer also benefits which
they are going to lose as well.
Q63 Mr Breed: I think many of us agree
with you, particularly the whole aspect of food security generally.
Finally, I think you gave an indication last week that there may
be some further direct action in the not too distant future. Can
you give us any update on that situation?
Mr Handley: If you ask others
in the room to put their fingers in their ears, I would probably
give you the date and the time. We had very protracted discussions
with the processing sector on the liquid side following the increase
in the price of cheese milk. It was indicated to us that because
we had closed the gap between cheese milk and liquid, there was
definitely room for manoeuvring in an upward direction of liquid.
We were told that that would hopefully happen in January. The
reason for the comments in the farming press last week were purely
and simply that, having discussed it again with them at the end
of January, nothing had happened, and with the same excuse as
to why it has not happened as we got pre the Christmas period,
we have decided to tell them, "Unless you move very quickly
. . ." What we have got here at the moment is a retail sector
that we are meeting with on a regular basis telling us that if
they come in and ask for justification for it, it will be paid,
but they are not going in asking; and the reason they will not
go in and ask is, as Mike rightly showed just now, they are all
petrified that they are going to lose market share. The first
one that goes in, somebody else will come in and take that business
away. That, I think—if ever there was anything needed—says
that we need a body to watch what these people are doing.
Q64 Chairman: The other suggestion you
have come up with is this idea for an industry watchdog, very
much an equivalent of Ofwat. The problem with this industry though,
as the three sessions so far have demonstrated to us, is that
it is a complex industry. If it was just the liquid milk, one
could see that if there were people taking unfair advantage, exploiting
others, it would be fairly straightforward, but part of the problem
here is you are not dealing with like with like—you know,
cheese, buttermilk. All these different parts involve different
prices to different parts of the industry: so who is going to
actually be capable of delivering the regulatory powers without
it being taken, if you like, back to pre-1994?
Mr Handley: One of the things
that the Office of Fair Trading indicated to us about a milk agency
(which they liked) was the fact that they saw some self-regulation
within that, because it gave any form of watchdog an opportunity
to be looking at one marketing outlet although all the other co-ops
and quota holding groups would continue to trade as normal, but
the agency would almost be acting as a regulator. Again, in the
written evidence we have stated, quite clearly, we think this
industry has been made complicated. It suits certain people to
have it complicated. At the end of the day, we have got a product
called milk. It is diverse in what can be done with it. Why then
is it unique to the UK that we have all these problems? I think
you will find that if the industry was turned inside out, if it
was streamlined, if it was brought up to the year 2004 being run
by people bred to do that job, then I think, as I said earlier,
we have seen with Milk Link—where we have some extremely
good corporate people—what you can do with milk and there
is no necessity to make it very complicated. So I think the industry
again has to look at the whole system and why it has made it as
complicated as it is. I can remember the Milk Marketing Board,
and it was never complicated then. It is in the last 10 years
that it has been made complicated.
Chairman: Okay. We hear what you have
to say very clearly. As I have said with previous sessions, what
you have said cannot be unsaid, but there may be supplementary
evidence from the other parts of the industry that you may wish
to comment on. Can I thank you on our behalf for coming along.
Could I ask Milk Link, who have been mentioned on numerous occasions,
to now come and sing for their supper.
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