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Biofuel Industry

3. Dr. Ashok Kumar (Middlesbrough, South and East Cleveland) (Lab): If she will make a statement on the biofuel industry. [37690]

The Minister for Climate Change and the Environment (Mr. Elliot Morley): The UK is on course to achieve our target of 0.3 per cent. use of biofuels by the end of 2005. A renewable transport fuels obligation will be introduced to require 5 per cent. of UK fuel to come from a renewable source by 2010. Biofuel processing plants are being established in the UK, which will include feedstocks sourced from the UK.

Dr. Kumar: I thank my hon. Friend for that reply and add my congratulations to the Secretary of State for all the efforts that she has made at the United Nations conference on climate change. I also give great credit and praise to the Department for reducing carbon emissions.

Will my hon. Friend consider the Australian model of bringing the biofuel industry, oil companies, petrol retailers, car manufacturers and consumer groups together to give greater focus and attention to meeting our targets in 2010? That represents a great opportunity, and I hope that he will consider setting up such a body.
 
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Mr. Morley: I very much welcome my hon. Friend's interest in biofuels, and the fact that Teesside appears to be developing as one of the centres of biofuel production. I have looked at the Australian model. It is worth saying that the prime reason for setting up the Australian committee was that there were problems with consumer confidence in biofuels, particularly ethanol. That is not the case in the UK, where the mix of 5 per cent. is accepted by all car companies. However, it is important that we look at ways in which we can encourage the uptake and development of a biofuel industry in the UK, and I will give my hon. Friend's suggestion serious thought.

Mr. Philip Hollobone (Kettering) (Con): Biofuels are the great hope for British arable farming. Farmers in my constituency are keen to grow biofuels but tell me that the economics are not yet right. What encouragement can the Minister give them that the Government will address this issue properly?

Mr. Morley: An obligation of 5 per cent. on the oil companies is a considerable driver in relation to the demand for biofuels and the opportunities for supplying them from the domestic market. I should point out to the hon. Gentleman that farmers are allowed to grow biofuel crops on set-aside land, for which they already receive a payment. They get a payment for the set-aside and a payment for the crop, and there is also the encouragement of a 20p per litre discount.

Nia Griffith (Llanelli) (Lab): Will my hon. Friend have urgent talks with Treasury colleagues in order to restore the tax concessions on biodiesel that is made from vegetable oil collected from restaurants and canteens, which represents an even better use of the world's resources than biodiesel directly derived from plant sources?

Mr. Morley: There has been no removal of tax concessions for biodiesels from crops or recycled cooking oil. The problem is whether the biofuel fulfils the quality standard to qualify for the discount.

Mr. Richard Benyon (Newbury) (Con): With biofuels responsible for only 0.25 per cent. of road fuel sold, how is the Minister's target for 2010 of 5 per cent. of road fuels sold progressing?

Mr. Morley: The current target is 0.3 per cent., which we met in 2005. The target of 5 per cent. will be ramped up from 2008 onwards. I have no doubt that we can meet that target. We need a stepped approach to avoid simply sucking in large quantities of imports. It is inevitable that imports will account for some of the market, but the Government want a viable industry in this country involving local growers and processors.

Milk Prices

5. Mr. Jim McGovern (Dundee, West) (Lab): What recent discussions she has had with dairy farmers on the price of milk. [37692]
 
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The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Mr. Ben Bradshaw): Provided that competition law is respected, the Government do not get involved in discussions about price. However, issues around the state of the industry are regularly discussed in the dairy supply chain forum, which is chaired by my noble Friend Lord Bach.

Mr. McGovern: I thank my hon. Friend for that response. Notwithstanding that, with milk prices low and dairy farmers struggling, will he assure dairy farmers that today's statement on bovine TB will not have a detrimental effect on milk prices and producers?

Mr. Bradshaw: The measures that we have announced this morning—we also have an urgent question on the matter later—will help the dairy industry. There will be no quick fixes in the measures on bovine TB, but they will make a difference in the medium and long term.

Sir Nicholas Winterton (Macclesfield) (Con): Does the Minister share my concern and unhappiness about the fact that several efficient long-standing milk producers in my constituency have gone out of dairy production? Is he worried that the dairy trade and the superstores exercise too much influence? They make huge profits while dairy farmers, who manage the land that is so important to this country, are forced out of business by the price that they receive.

Mr. Bradshaw: I agree that it is worrying when efficient dairy farmers go out of business. Many may choose to do that for commercial or other reasons. However, farm-gate milk is at its highest level since October 2001 and there is also the dairy premium. It is important to consider all the issues, including the role of supermarkets, which, as the hon. Gentleman knows, is constantly reviewed by the independent competition authorities.

Mr. Brian Jenkins (Tamworth) (Lab): We all recognise the problem with the milk industry. It is not on the farmers' but the purchasers' side. We have an oligopoly in Britain, with large supermarkets exercising their purchasing power. Does my hon. Friend feel frustrated that while the Department is trying to knit together deals with farmers and supermarkets, other Departments are considering ideas to strengthen the position of supermarkets by extending the hours and taking out further competition?

Mr. Bradshaw: If the issue to which my hon. Friend refers is the suggestion that Sunday opening hours may be extended, he has an ally in me as a member of the Union of Shop, Distributive and Allied Workers. I have already dealt with the question about milk in my reply to the hon. Member for Macclesfield (Sir Nicholas Winterton). The independent competition authorities constantly review the role of the supermarkets.

Dr. William McCrea (South Antrim) (DUP): The Minister says that the Department will not get involved in determining the price of milk, yet in Northern Ireland, at the most recent auction of United Dairy Farmers, which is the largest processor, it fell by more
 
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than 10 per cent. We believe that that happened as a result of the recent common agricultural policy reforms. Does the Minister believe that there will be a viable milk industry in the United Kingdom if the Government succeed in achieving another major reform of CAP?

Mr. Bradshaw: Yes, I do. Those who know our dairy industry and our climate all recognise that the United Kingdom, including Northern Ireland and my part of the world, is extremely well suited to dairy farming. We could do extremely well if the common agricultural policy were reformed even further, as our dairy farmers would flourish.

Mr. Michael Foster (Worcester) (Lab): Further to the point made by the hon. Member for Macclesfield (Sir Nicholas Winterton), the retail price of a litre of milk in 1996 was 63p. In 2004, it was 62p—a fall of 1p. But the price that farmers are paid for a litre of milk has fallen by 7p over that same period. Somebody else is making 6p a litre more, and I think that we know who that is likely to be. May I urge my hon. Friend to use his good offices to introduce a more co-operative approach between the retailers and the dairy farmers, before irreparable damage is done to the dairy industry?

Mr. Bradshaw: I can assure my hon. Friend that we will do that. My noble Friend Lord Bach and the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for South Dorset (Jim Knight), are meeting fellow Ministers in the Department of Trade and Industry shortly to discuss the supermarket code of practice and competition matters affecting the dairy sector.

Bill Wiggin (Leominster) (Con): We have heard about the parlous state of dairy farming from hon. Members on both sides of the House. According to the statement today, the costs to dairy farmers are going to increase further because of the cost of the pre-movement test. Why will the Minister not insist that vets should not charge farmers more than they charge DEFRA for those tests?

Mr. Bradshaw: If the Conservatives are suggesting that there should not be a fair balance of costs between the taxpayer and the industry, that is very interesting. We think that it is right that if the Government are introducing measures that will benefit the dairy industry through reducing the levels of bovine tuberculosis, the costs should at least be fairly shared.

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