Parliament in Perspective 21st November 2014

The crisis facing dairy farmers was the topic of a special Westminster debate this month, Catherine Paice reports

Thousands of dairy farmers in the UK say they are now being paid less for their milk than the cost of production. Protests and industry action have provoked the attention of MPs, including a debate led by Welsh MP Simon Hart (Con, Carmarthen West and South Pembrokeshire), which was attended by 26 MPs from all parts of the UK. Linda Riordan (Lab, Halifax) was in the chair.

The industry recognises that overproduction is a problem and affects price, and that demand is influenced by changing buying habits in China and Russian sanctions, Mr Hart said. “Fluctuating prices, tensions between farmers and processors, and criticism of retailers, especially supermarkets, are nothing new in agriculture,” he stated. “But what is completely unsustainable is the long-term prospect of [farmers]having to sell milk for less than the cost of generating it in the first place, and the extraordinarily short notice that some producers get of significant price changes, about which they can do nothing but sit back and take the pain.”

Confusion is added, Mr Hart said, by the fact that there are so many different contracts for so many different things, written in so many different ways, making it difficult to find any body of farmers of any significant number who have a consistent contractual relationship.

Mark Williams (Lib Dem, Ceredigion) alerted MPs to the fact that the dairy sector in Wales accounts for a third of all agricultural output. “The introduction of the voluntary code last year was welcome, but there is concern that those who comply with the code are at a competitive disadvantage, and that some are cherry picking parts of the code,” he said. “Farmers should have a fair balance of power with their milk purchasers, and contracts should be formed in a way that means milk prices cannot be dropped with little notice.”

Jonathan Edwards (Plaid, Carmarthen East and Dinefwr) called for the code to be strengthened to give dairy farmers better protection, and said it was “a matter of urgency” that the Welsh Government do more to support the industry. “With the ongoing Russian import ban, the end of milk quotas next year, along with the push for increased milk production in Ireland, Welsh dairy farmers are increasingly being exposed to more price volatility,” said Mr Edwards. “The Welsh Government needs to hold urgent talks with retailers to ensure those who use milk as a loss leader do so out of their own profit margins rather than take it from the pockets of farmers.”

Proposed solutions included identifying and exploiting new markets; accessing more EU funding to help with promotion; greater deregulation and collaboration between farmers; and better food labelling and procurement policies.

The MPs also debated the role of the groceries code adjudicator, Christine Tacon, with Mr Hart proposing that she look at the paper trail between retailers and processors, which “could result in a minimum of 3p per litre back to the producer”.

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