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27 Jan 2010 : Column 268WH—continued

There have been some glimmers. I congratulate the Minister on ensuring that Wales has received a fair distribution of the £25 million EU rescue package,
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which, as far as I can tell, was calculated on the proportion of dairy cattle rather than on the Barnett formula, and I pay tribute to the Assembly Government for their role in that. I share a constituency with the Minister who has responsibility for rural affairs, and I pay tribute to her for the work that she has done. However, I should like some clarification on future emergency spending. If we need such spending again-I hope that we do not-will it be allocated according to relative need rather than population?

Jim Fitzpatrick: We are currently consulting on how to distribute the €29.26 million, which is the UK's share. I am sure that the hon. Gentleman has already made a submission, but if he has not, he may want to reinforce that.

Mark Williams: I thank the Minister for that. I am also taking consultation from the Welsh Assembly Government. There is sensitivity about the matter. During the foot and mouth scare in 2007, there was concern from the devolved Administrations about the extent to which DEFRA funding came to Scotland and Wales.

I am pleased that the Government have finally agreed to a supermarket ombudsman. I appreciate that such a matter is not directly within the Minister's portfolio, but it is crucial to the farming sector.

Mr. Alan Reid (Argyll and Bute) (LD): I agree with my hon. Friend that the ombudsman is vital. Does he not think that the Government should give powers to the ombudsman so that they can be proactive in carrying out investigations? It is no good just waiting for complaints to come in. Many people in the sector are concerned that if they make a complaint, their products could be boycotted, so it is important that the ombudsman has strong proactive powers.

Mark Williams: I thank my hon. Friend for raising that matter. The hon. Member for Preseli Pembrokeshire made a fair point when he said that the ombudsman will not be the solution to all problems, but expectations are high. If this is to be an ombudsman without teeth, it will be costly lip service and will fail at the first hurdle.

We have a job of communication to do with our constituents. When Mr. and Mrs. Average go into a supermarket and purchase their milk for a couple of days, only a tiny share of that milk price actually finds its way to the producers. Prices may have gone up a bit, but they have still been low over the past couple of years. They have gone up from 18p a litre to 23p. People do not understand-the farmers understand-why a greater share of the price is not finding its way back to the farmer. This is about not just the supermarkets and the monopolistic control that they exercise, but the relationship with the processors, which needs to be considered as well. NFU Scotland says that there has been evidence of some upward movement on prices paid by processors, but given the increased profits of the likes of Wiseman's, Arla and Dairy Crest, it is disappointing that the rise has not been steeper. Figures from DairyCo show that, between February and October last year, the price of bulk cream rose from £750 a tonne to £1,700. It has slipped back now to £1,130. There is still a feeling that not enough of that money is finding its way back to the producers.

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The purchasing power of supermarkets is a fundamental concern. Again, I welcome the announcement that the ombudsman issue is to move forward. Some supermarkets treat farmers more fairly than others and they should be rewarded for their support by not allowing others to cut corners, thereby restricting the ability of producers to make a living.

Some contracts are linked to production costs. Those are welcome and contribute to keeping farmers in business, but much more needs to be done. One of the first jobs of the ombudsman is to establish whether the price of milk has been kept artificially low, which is what we suspect.

Mr. Crabb: Does the hon. Gentleman agree that the dedicated milk contracts that all the major retailers have are, by and large, a positive thing? They have not led to an across-the-board increase in farm-gate prices, as some of us had hoped, but they are good for the farmers. What would be positive now is for those dedicated contracts to expand into the cheese markets, so that we have dedicated cheese contracts as well. That would help many other farmers.

Mark Williams: I agree. As the hon. Gentleman said, it is the scale of those contracts rather than the principle itself. He mentioned dedicated contracts in the cheese industry. We have present not only the chair of the all- party group on dairy farmers, but the chair of the all-party group on cheese, my hon. Friend the Member for North Cornwall (Dan Rogerson), who has done a lot of work on promoting the cheese sector. Pembrokeshire, like Ceridigion, has many cheese producers who need support. It is in that spirit that the regulator is to be welcomed. I am glad that the Government have listened to our concerns. Organisations such as the Farmers' Union of Wales have been talking about a regulator for 10 years or more, and I am glad that it is now happening. I should also pay tribute to the hon. Member for Ynys Môn (Albert Owen) who, as promoter of the Grocery Market Ombudsman Bill, will be pursuing the matter as well. I would welcome assurances from the Minister that the code of practice will be legally binding and that the ombudsman will be given powers to sanction supermarkets when they transgress.

The issue of bovine TB is fundamental and needs to be addressed. It has been partially addressed, and I pay tribute to the Welsh Assembly Government for the brave, but immensely regrettable, decisions that they have taken.

There have been difficulties recently with milk collections, and getting milk to processors. The dire weather we have had recently has forced some farmers to throw away their milk. Moreover, there has been concern over Milk Link's decision to ban the use of plastic roadside containers when tankers are unable to reach the farms. That has been a real issue across much of rural Wales. Some disruption was understandable, but surely we should do everything we can to ensure the distribution of milk. Steel storage tanks being required by Milk Link are not affordable for many farmers, who are already operating on very tight margins. They do not have the money to invest in any capital infrastructure.

Lastly, let me turn to the point about healthy food. Like me, the hon. Member for Preseli Pembrokeshire has praised the Assembly Government for what they are
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trying to do on the cull. I am sure that he would also like to praise them for the initiative that they took on milk in schools. Reinstigating free milk in schools sends a powerful message to both parents and the sector about support. The Assembly Government may be in a stronger position to pursue that matter, but they have done it and done it well.

The dairy sector is undeniably in a difficult position. None the less, there are a few glimmers of hope out there. Processors have shown that profits can be made in the dairy industry, and we now have a promise of a body that can at least assist in ensuring that those profits are fairly distributed. We now need action to make that a reality, so that the constant stream of people leaving the industry, with all the effects on the rural economy, can be halted.

10.18 am

Daniel Kawczynski (Shrewsbury and Atcham) (Con): I pay tribute to my hon. Friend the Member for Preseli Pembrokeshire (Mr. Crabb) for securing the debate. He is one of the most active members of the all-party group.

When I was first elected in 2005, Mr. Jones, a dairy farmer near Shrewsbury, explained to me the seriousness of the situation facing the dairy sector. It was his lobbying that convinced me to go to see supermarket bosses. In my naivety, I thought that as an elected Member of Parliament I could demand to see the chief executives and haul them into the House of Commons to speak to them. Some of them did send representatives to speak to me and discuss my concerns, but they were very arrogant. They said that they were doing all that they could and that any regulation would be unviable. They tried to do all they could to deter me from pursuing the matter.

That is why I set up the all-party group on dairy farmers. That is the way we do things in the House of Commons: we work together on a cross-party basis to lobby Government on issues that are of importance to us and our constituents. I am very pleased to say that the all-party group on dairy farmers is one of the largest all-party groups in the House of Commons, with more than 120 Members of Parliament. The leader of my party, my right hon. Friend the Member for Witney (Mr. Cameron), is a member of the all-party group and should he be elected to the office of Prime Minister I will ensure that I keep reminding him of the fact that he joined the group. If any hon. Member here today has not joined the all-party group on dairy farmers, I would ask them to see me after the debate, to ensure that they join.

I very much welcome the report from the Conservative party, saying that, if we are elected to office, an ombudsman-regulator will be appointed to regulate the supermarkets. I will hold a Conservative Government to account on this issue and ensure that they make the appointment in a very speedy way. I will also ensure that, as the hon. Member for Ceredigion (Mark Williams) has suggested, the ombudsman-regulator has proper teeth and specific guidelines, so that they can help dairy farmers in their discussions and negotiations with these all-powerful supermarkets.

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The all-party group on dairy farmers issued a report in the autumn of 2006 and we presented it to the then Secretary of State for Environment, Food and Rural Affairs, who is now the Secretary of State for Foreign and Commonwealth Affairs, and to the then shadow Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for East Surrey (Mr. Ainsworth). The main thrust of that report was to seek to have a regulator or ombudsman for supermarkets. Our group has been pushing for that appointment for the past three years. Initially, I was told, "Impossible. You're never going to get a regulator for supermarkets. It's totally unrealistic, a pipe dream. Just forget about it." So it just shows that if someone perseveres, feels passionately about an issue, never accepts a no and keeps plugging away, ultimately-hopefully-success will come.

The all-party group on dairy farmers visited the European Parliament on a cross-party basis to meet the European Commissioner for Agriculture and Rural Development, Mrs. Fischer Boel. She said that she felt that part of the problem was that we had too many milk processors in the United Kingdom. She also said that a certain amount of consolidation within the United Kingdom market would not be a bad thing. I would like the Minister to note that she said that the European Union would not interfere if there were certain consolidation in the dairy sector. In her own country, Denmark, Arla has 80 per cent. of the milk processing. She said that that was one of the most important factors in Denmark; the strength of Arla in its discussions and negotiations with supermarkets. Therefore, that is something that I would like to promote.

My hon. Friend the Member for Preseli Pembrokeshire and others have spoken about bovine tuberculosis. Bovine TB is absolutely devastating in Shropshire and it has increased at a massive rate in the past few years. My hon. Friend talked about the emotion of this issue and that struck a chord with me. I have sat with some of the farmers in my constituency. I will mention one, Mr. Chris Bulmer of Snailbeach. We basically sat together at his kitchen table, having tea, and I have to say that we both got rather emotional about the issue of bovine TB. I am not prone to being overtly emotional with constituents, but this was an extremely emotional matter. People such as Mr. Bulmer live for their farms and their animals, and when they see the extraordinary suffering and wanton slaughter of their animals that has to go on, it is very upsetting.

One of the most difficult things that I have had to do in my constituency is speaking to the Shropshire Wildlife Trust, addressing 500 of its members. The first question to me was, "Well, Mr. Kawczynski you horrible chap, why do you want to kill all those lovely badgers?" Of course, the emblem of the Wildlife Trust movement is a badger and so passionate are the members of the Shropshire Wildlife Trust about badgers that they have even taken my wife and me to look at a badger sett in my constituency. They gave my daughter a cuddly badger soft toy, which I think was a bribe to encourage us to think nicely of badgers. The problem is that, although we all like badgers, badgers themselves suffer terribly as a result of this disease.

I have to say that the next Conservative Government must tackle this issue of badgers and I expect to see a limited cull of badgers, should a Conservative Government be elected to office. I make no bones about saying that,
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because I am absolutely convinced that culling must be part of the process of controlling badgers, no matter how controversial it is.

I just want to talk very briefly about the Rural Payments Agency. I must say that I am still trying to sort out problems with the RPA on behalf of various constituents. Some dairy farmers are still grappling with this issue, on top of bovine TB and the low prices they receive for their milk. I will mention to the Minister one of my constituents, Mr. Hamer of Longden, who is still having terrible problems with RPA payments and I very much hope that he can help Mr. Hamer with those problems.

Lastly, the all-party group on dairy farmers will be meeting shortly. Among those coming are representatives of the Farmers' Union of Wales, the Dairy Farmers of Scotland and the Royal Association of British Dairy Farmers. I must say that sometimes when we have these meetings, not enough Members of Parliament attend, because of their other commitments. So I will be sending every MP who has attended this debate notification of the next meeting of the all-party group on dairy farmers. As I have said, we have a lot of representatives of different farming organisations coming and I would be grateful if Members of Parliament who are here today attended the next meeting of the all-party group.

Dr. William McCrea (in the Chair): I will be commencing with the speeches from the Front-Bench spokesmen at approximately 10.30 am, but I want to call Roger Williams before then.

10.26 am

Mr. Roger Williams (Brecon and Radnorshire) (LD): Thank you, Dr. McCrea. I will try to be brief.

Much has already been said about the plight of dairy farmers. Indeed, in my own constituency, I think that we are down to fewer than 10 dairy farmers at the moment and that is in the biggest agricultural constituency in England and Wales. So we have suffered. However, one of the remaining herds in my constituency has 350 cows, showing the way that the industry has gone.

With all the farmers who have gone out of the industry, we are left with a small number of farmers, but they must be the most efficient farmers in the whole farming industry. Even so, they are struggling to survive with these milk prices. Therefore, we get some idea of the consequences of low commodity prices.

However, we should not be surprised about these difficulties. The point that I will make, which I do not think has been made by any other hon. Member, is that when we went into the single farm payment scheme it was on the basis that we would be competing not only within Europe but within the world on a commodity basis. The single farm payment was to compensate farmers for a drop in commodity prices. Not much liquid milk is traded, but huge amounts of dairy products, including generic cheddar cheese, are traded throughout the world. That has been the problem that has pulled down milk prices in Britain. We should consider the fact that milk production in Britain has only fallen from 13 billion litres to 12 billion litres, despite the number of people who have gone out of the dairy industry.

Of course, the reason that commodity prices have fallen is that we are doing away with intervention buying, which kept up prices within the European Union, we
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are doing away with import tariffs, which discouraged cheaper imports from being brought into the country, and we are doing away with export subsidies, which allowed surplus product in this country to be exported and dumped on the world market. So it is not surprising, in a way, that we have lower commodity prices.

Many important issues have been raised, such as the ombudsman, TB and various other issues. However, the really important question is this: what will the common agricultural policy look like in 2013? I do not think that anyone has really addressed that issue.

We know what the CAP should look like; it should give a commercial return to farmers and a guaranteed supply of products at reasonable prices to consumers. However, what does it look like in detail and in principle? The National Farmers Union has given us some indication. It has said that the future CAP, with regard to milk and other products, should be:

The final indication of what the CAP should look like-but not what it will actually be like-is that the NFU says it should be:

The NFU recommends no co-financing or co-funding but a straightforward common agricultural policy.

In the last 30 seconds available to me, I must say that the experience of the dairy industry, and indeed of some of the arable sector at the moment, is that with great dips in commodity prices, the farming community and industry still need direct payments. Yes, some payments are pillar 2 and fund public goods, but if we are to have a vibrant agricultural industry in this country, direct payments such as the single farm payment will be necessary if we are to survive in a cut-throat global competition for commodities.

10.30 am

Tim Farron (Westmorland and Lonsdale) (LD): It is a great pleasure to serve under your chairmanship, Dr. McCrea. I pay tribute to the hon. Member for Preseli Pembrokeshire (Mr. Crabb) for securing this debate and starting it off so admirably, and for his commitment to the sector, not just in his own constituency but across the country. My hon. Friend the Member for Brecon and Radnorshire (Mr. Williams) said more in four minutes than many of us are capable of saying in 40. If I just endorse everything that he said, I can knock about five minutes off my speech in order to allow others more time to wind up.

I was at the Castle Green hotel in Kendal two weekends ago for the Cumbria Young Farmers annual general meeting and jamboree. It was a wonderful evening and a great opportunity. I listened to all the speeches made and sat there with my notebook writing down all the jokes-as a Liberal Democrat, I am a keen recycler, and that extends to my speeches and jokes as well-but at some point during the evening, I realised that there was absolutely no context in which I would ever be able to use one of the jokes and get away with it.

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