Recommendations
The way forward
1. Given that the
major opportunities to tap into increasing world demand for dairy
will arise outside the EU in China, Russia and Africa, the need
for a strategy for greater export is clear. Defra must explore
with the industry practical steps to ensure that export opportunities
are identified for the industry to tap into.
(Paragraph 12)
2. We welcome the
commitment given by the Secretary of State to explore with farmers
the creation of Producer Organisations. We agree with the Government
that it is a matter for farmers themselves whether they see opportunity
in combining to increase their collective bargaining power and
influence. We note the reluctance that exists among farmers and
their representative organisations, and recommend that the Government
identify reasons for that caution and the barriers that may exist
to prevent farmers taking this course.
(Paragraph 19)
3. We recommend
that Defra seek a commitment from the EU Agriculture Commissioner
Phil Hogan that the current intervention price for milk of around
17 pence per litre be reviewed before the ending of milk quota
arrangements in April 2015, and ask the Secretary of State to
work with counterparts to keep under regular review thereafter.
(Paragraph 23)
4. We strongly
support the Secretary of State in seeking clearer EU regulation
on labelling of 'country-of-origin' products. Country of origin
should imply that the raw materials contained in a product were
born or grown within that country, and not simply processed there.
(Paragraph 25)
The voluntary code
5. We recommend
that the dairy industry code of best practice remain voluntary
in order to retain the flexibility and scope it presently offers.
The current crisis affecting dairy farmers is, however, a significant
test for the arrangements introduced after the 2012 price crunch.
The code is subject to annual review and we expect the 2015 review
to take full account of the lessons learned from the present market
conditions.
(Paragraph 30)
6. Neither a statutory
nor a voluntary code can set or regulate prices in an open market.
None the less, the instability of current pricing within the dairy
industry in general and for milk in particular implies that closer
attention is needed in the next review of the code to the damage
that sharp and rapid shifts in price do to the industry, not least
in forcing the exit of producers for whom short-term market fluctuations
may prove fatal. Greater guarantees of likely future income are
required if farmers are not to continue to depart.
(Paragraph 33)
The Groceries Code Adjudicator
7. We believe that
the terms under which the Groceries Code Adjudicator may operate
are too restrictive and that a means must be found to protect
suppliers of products to major retailers whether or not they are
direct suppliers, as under the current arrangement. We note that
the Government is committed to review the operation of the GCA
in 2016 but we recommend urgent consideration of how the GCA remit
can be extended to incorporate suppliers throughout the supply
chain. (Paragraph 38)
8. We repeat the
recommendation we made when the Groceries Code Adjudicator was
created that she should be able to accept complaints from indirect
as well as direct suppliers. (Paragraph
39)
9. We note that
the GCA has not yet conducted an investigation. Following our
own pre-legislative scrutiny of the Bill which created the Groceries
Code Adjudicator, we recommended that she should have the power
to launch pro-active investigations as well as respond to complaints,
and we repeat that recommendation now.
(Paragraph 40)
10. We find it
extraordinary that the Government has left the Groceries Code
Adjudicator for more than a year with no practical ability to
use her legal powers. We recommend that a statutory instrument
setting out the level of fine the Groceries Code Adjudicator may
levy be laid within the remainder of the present Parliament. We
seek a clear explanation of why the GCA has been left so long
without the teeth she needs to do her job.
(Paragraph 42)
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