Dairy Farming

Dan Poulter Excerpts

Tuesday 7th June 2011 Westminster Hall

[Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)]

I am pleased to see that, despite the recess, a number of colleagues are arriving, and more will join us later.

It is important that we debate the future of British dairy farming. It is an important matter throughout the country, but especially so for East Anglia, and particularly for Suffolk and south Norfolk and for Waveney valley in my constituency. All Members here today would like to see the re-establishment of a thriving, profitable and sustainable agriculture sector in the United Kingdom. About 15 or 17 years ago, the country produced 70% of its own food, but we now produce only 40%. There is a strong case for supporting the development of much greater food security and food sustainability, and the dairy sector has an important part to play in that.

Milk prices affect dairy farmers from time to time, but the dairy industry has faced a particular crisis over the past few months and, as a result, at least eight farms in East Anglia close to my constituency are no longer in business. The key factor is the price that dairy farmers receive for their milk. There is a tension between the price paid by the consumer, particularly given the current economic climate, and the price that retailers pay milk producers. Nevertheless, if we want to maintain a profitable and thriving agricultural sector, we need to ensure that milk producers receive a fair price. At the moment, Britain is third from bottom in the European league table for the price that our milk producers receive, which is unacceptable.

I know that the Minister is familiar with a number of these factors as they affect Suffolk, having originally been with AtlasFram farmers, but the point of this debate is to focus on what the Government can do to support the British dairy industry over the next few years, particularly in the current crisis.

[Sarah Newton (Truro and Falmouth) (Con)]

I congratulate my hon. Friend on securing such an important debate. The future of dairy farming is important to people throughout the country, as we need greater food security and must produce more of our own food. Does he agree that it is about not only the supply of milk, but the products that are made from it? Those products are important to the economy of Cornwall. They include not only our famous clotted cream but our ice cream, cheese and yoghurt, which all depend on healthy supplies of milk. Many dairy farmers in my constituency, like those in my hon. Friend’s, face the prospect of having to give up that important part of their livelihood, along with their farming traditions.

--- Later in debate ---

[Dr Poulter]

My hon. Friend makes a good point. I want to focus on milk, but others may wish to discuss other milk commodities and derivatives. Many retailers do not pay our dairy farmers a proper price for the commodities that they produce, as she has said so eloquently, but I shall focus on milk because, for producers throughout the UK, milk is the main produce of the dairy farm. None the less, I accept that the price that those farmers receive for yoghurts, cheeses and other milk-based products is a problem.

There has been increasing coverage of dairy farming issues over recent months, and I am sure that the Minister is aware that a key problem is the contracts that dairy farmers are tied into with the retailers. Before going into that aspect, however, it is worth setting out the background to the problem.

There is increasing concern that the milk industry is in crisis. Milk is a perishable product, as we all know, and farmers have little choice but to enter into contracts that often feature exploitative terms and conditions. These contracts contain no certainty about the price that will be paid from month to month, and producers are locked into contracts with notice periods of 12 or 18 months and with penalty clauses from the moment that they announce that they wish to move to another retailer. Such penalty clauses often include a section on price, which adversely affects the farmer.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

I congratulate my hon. Friend on securing this debate. Both he and the Minister know that this matter is close to my heart, and I hope that my private Member’s Bill will receive his support on Friday—I am sure that it will.

My hon. Friend has mentioned contracts. Does he agree that the major problem faced by the dairy industry is that retailers regard milk as a loss-leading product, and that they use their superior position in the market to drive down the price in a way that has made dairy farming unsustainable for many producers? The Government need to tackle that issue.

[Dr Poulter]

I thank my hon. and learned Friend for his intervention. The point is that the framework around those contracts has helped to keep the market subdued. As I have indicated, Britain is third from bottom in the league table of what farmers are paid for their milk in Europe.

The average European Union milk price in March 2011 was 29.72p per litre, but it was only 26.59p in the UK. For most farmers, over an average year that 1p a litre amounts to between £80,000 and £100,000. On average, British farmers are being paid £300,000 less than the European average, which is unacceptable if we wish to support a thriving dairy industry. We need to drill down into why British farmers are not paid a fair price for milk, whereas a much higher price is paid by European retailers to their milk producers.

Various narratives are put forward by retailers and suppliers on what they pay our dairy farmers. They say that they pay a fair price, but according to the European average they do not. They say that consumers are under financial pressure and that they need to keep the cost of milk down, and there is some truth in that. Yes, we are in difficult economic times, consumers are under financial pressure, and we want the cost for consumers to be as low as possible. However, although the price of milk in the shops over the past few years has risen considerably—by 70% or 80%—the increase paid to the farmer has been disproportionately lower. There has not been the necessary knock-on for farmers, so although retailers and suppliers are benefiting from a rise in the price of milk in the shops, our milk farmers are not. That is not fair, and it is not beneficial to the dairy industry. If we do not support our dairy producers, more farms will go out of business, which will be bad because it will impact adversely on consumers given the perishable nature of milk.

The other argument often put forward by retailers and suppliers is that milk must be resourced exclusively from the UK. We all want to see retailers supporting British farmers, backing honest food labelling and buying from them whenever they can. However, given the perishable nature of the product, and given that unlike many European countries we have a particular market for fresh milk, British retailers and suppliers have no option but to buy from British producers. That is another spurious argument put forward by many retailers and suppliers, and it is not a good reason for them not to pay our British farmers a fair price for their milk.

I am pleased that the European Commission has identified the significant imbalance in bargaining power between farmers and dairies and the lack of certainty and control over the price that farmers receive for their milk. It has recognised that the problem lies with the contracts and has proposed a number of ways in which national Governments can address it.

As the Minister will be aware, the Commission’s proposals to improve the position of dairy farming include allowing member states to introduce minimum legal standards for milk contracts, which would include the price to be paid for the duration of the agreement and a proper arrangement for the termination of those contracts. At the moment, when a farmer seeks to end a contract, they have to wait 12 or even 18 months before it can be terminated, but the penalty clause kicks in immediately, which means a lower price for the milk that they produce. That does not seem to be a fair contract, and it should be investigated.

The EU has talked about permitting producer organisations to be established, which would allow dairy farmers to come together to improve their negotiating power with dairy companies, and that would be a good thing. It has also discussed introducing greater market transparency into the dairy supply chain.

The EU has identified a number of issues with the contracts, which, as my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) has said, are at the crux of this matter. The majority of milk contracts offer dairy farmers no certainty or clarity about the price they will be paid from month to month. They allow the milk buyer to make unilateral changes to milk prices, which often take place at very short notice. Dairy farmers have great difficulty exiting such contracts. All those issues imbalance the contractual relationship between the dairy farmer and the milk buyer.

I hope that the Minister will tell us that the Government support a fair code of practice and that they will give us a little more clarity over the role of the ombudsman. Unless we improve the current situation between milk producers, milk suppliers and retailers, more and more of our dairy farms will go out of business.

It has been a pleasure to flag up these key issues, and I look forward to hearing from the Minister and my colleagues.

[Julian Smith (Skipton and Ripon) (Con)]

I thank my hon. Friend for giving way just as he is ending his speech. Is he convinced that Government-led contracts are the way ahead, or does he see the potential for a halfway house, where there is a greater focus on transparency and a greater use of nudging for all parts of the industry? In other words, does he think that we need to legislate to address the contract issue?

[Dr Poulter]

Instinctively, I do not like unnecessary red tape. However, given that the National Farmers Union has already been involved in some considerable nudging and given that there is a considerable imbalance between the power of the dairy producers and of the retailers, perhaps the Government have a role to play. I agree that it would be good to see a mutually agreed solution that supports the code of conduct and the role of the ombudsman. However, if that does not work, I hope that the Government will intervene. To start with, I would like to see things being resolved without using unnecessary red tape. Hopefully, we will see many organisations taking corporate responsibility and backing British suppliers. We have seen that in the pork and meat sectors of the industry, with many British retailers beginning to show greater corporate responsibility in buying British meat and putting it on their shelves. In the dairy industry, we need to see our retailers taking a similarly robust attitude and showing such corporate responsibility as well. I want to see that first and then, if necessary, further action and intervention from the Government.

[Caroline Nokes (Romsey and Southampton North) (Con)]

I thank my hon. Friend for giving way and for having secured this important debate. Does he not acknowledge that there are a number of retailers who are showing greater corporate responsibility? Waitrose, for example, operates a partnership of dairy farmers, one of which is based in Leckford in my constituency. Can we not encourage a greater use of that model in the rest of the country?

[Dr Poulter]

That is a good point. Marks and Spencer provides us with another good example. Like Waitrose, it has already shown a high level of corporate responsibility. Indeed, Waitrose has a good attitude to supporting British farming in general. My hon. Friend is right to say that there is a need for a number of companies to support a profitable and sustainable agricultural sector. The crisis in the dairy industry at the moment highlights such a need.

A number of dairy farms are being forced out of business. The prices of commodities and fuel are making it difficult for farms to be as successful as they once were. My hon. Friend is right to say that retailers should show some support, and we hope to see the model that she has mentioned rolled out across the country. However, it is important for us to trust the retailers to show that greater corporate responsibility before the Government intervene.

In conclusion, the number of dairy producers in the UK is plummeting, and the price paid for milk is consistently low. At the moment, we are 25th out of 27 in the EU league table. Input costs have soared for producers in recent years, especially over the past few months. In 2009-10, milk production was at an all-time low in the United Kingdom.

The crux of the matter lies in the fact that contracts between suppliers and producers are skewed against the producer, so that prices can be changed arbitrarily while notice periods are often 18 months or more. Most contracts are exclusive, which means that a producer can be tied to one supplier for a long period. The penalty clauses in many contracts are detrimental to the producer and favour the retailer.

The Food Labelling Regulations (Amendment) Bill will help to address some of the imbalances, and I am sure that the Minister will discuss it. None the less, retailers need to show greater corporate responsibility. The Government must be prepared to intervene if retailers do not support the industry in such a way and if the current nudges in our regulations do not work.

I thank the Minister for attending the debate and look forward to hearing his remarks. Some colleagues may wish to add some remarks on bovine TB.

Oral Answers to Questions

Dan Poulter Excerpts

Thursday 12th May 2011 Commons Chamber

[Mr Speaker]

I am extremely grateful to the Minister. I am trying to help Back-Bench Members, but in topical questions we must have single, short, supplementary questions and short answers.

[Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)]

T6. British dairy farmers such as Graham Tibbenham from Weybread in my constituency are struggling to be paid a fair price for their milk by British supermarkets. I am sure that the Minister would like to help. What can his Department do?

[Mr Paice]

I know the dairy industry, and many sectors face great difficulties, particularly with regard to price. The Government are about to publish proposals— we trust with all-party support—for a groceries code adjudicator, which we hope will go a long way towards helping with that. There are measures, too, going through the EU with regards to contracts. We do not think that they are the sole answer, as some do, but we think that they are a step forward.

Pig Farming

Dan Poulter Excerpts

Wednesday 23rd March 2011 Westminster Hall

[Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)]

It is a great pleasure to serve under your chairmanship, Mr Bayley. I congratulate my hon. Friend the Member for South Norfolk (Mr Bacon) on securing the debate, which is very important not just for us in East Anglia, but for many rural communities all over the country. Pig farming and farming in general have suffered in the past few years. Although it is important that we have a comprehensive debate about pig farming, it also helps us to raise a number of issues that are important to the wider farming sector.

One of my first engagements as a new MP last year was a visit to Stuston farm in my constituency, where I was introduced to a new breed of pig—the mangalitsa pig— which has just come into the United Kingdom; that was a great pleasure. Today’s debate is about the future of pig farming, which is one of the most important parts of agriculture in East Anglia, particularly in Suffolk and Norfolk. I am therefore delighted that we have replying to today’s debate a great friend of East Anglia, Suffolk and my constituency. The Minister knows the issues better than many and I am sure that he will do all he can to help us resolve them.

My hon. Friend the Member for South Norfolk talked about a number of important issues, including the fact that the pig industry slid back into loss making in 2010, its problems exacerbated by the rise in wheat prices and the fact that retailers are not passing on their profits to pig producers. According to the National Farmers Union, over the past three years pig producers have been losing £20 a pig, whereas retailers have continued to make a profit of £100 a pig. That is unacceptable. Retailers should show more corporate responsibility in supporting British food producers.

Of course, the increasing cost of fuel will further exacerbate the problems in the pig industry, so we were pleased to hear in today’s Budget statement about the fuel stabiliser, which will help many farmers. Another important problem is the difficulties in many parts of the country with getting planning permission for local abattoirs, so that we can reduce food miles. I am delighted that we finally have in East Anglia, in my constituency, an abattoir. Local pigs can now be slaughtered locally, which is a very good thing.

We have talked about broader questions of Britain’s food sustainability and the importance of supporting a profitable and sustainable agricultural sector to improve that. In the past decade or so, the amount of food consumed in Britain that is produced here has fallen quite dramatically: we now produce only about 40% of the food that we eat. With climate change already affecting many major agricultural producers such as Australia, where extreme temperatures could undermine a major world supplier of wheat, it is all the more important that we promote food sustainability and support British pig farmers as a means of doing that. I am pleased that that matter has already been raised: the Minister talked about it in response to parliamentary questions from my hon. Friend the Member for North Warwickshire (Dan Byles), who touched on it in the context of supporting our armed forces. It is important that we make sure that Britain can feed itself and that we have proper food security and food sustainability for the future.

One important point that has been teased out in the debate is that British pig producers have much higher standards of traceability and animal welfare than many of their overseas competitors, but they are not competing on a level playing field in the supermarkets where they sell their goods. An important related point is that 30% of imported pork does not meet UK standards of animal welfare, but it is still sold in our supermarkets.

[Mr Bacon]

Actually, BPEX estimates that 70% of imported pork does not meet the British standard, and that only 30% does.

[Dr Poulter]

I thank my hon. Friend for that clarification, which makes the point even more forcefully. As he says, only 30% of imported pork in our supermarkets meets UK standards, according to BPEX. We need action from the Government to put the onus on supermarkets to show greater corporate responsibility and to provide a more level playing field for British food producers and the goods they sell.

[Simon Hart]

The Minister might be able to comment on the appropriateness and legality of using the planning system to impose such conditions on supermarkets.

[Dr Poulter]

I thank my hon. Friend for that, and I look forward to the Minister covering that that in his concluding remarks.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

My hon. Friend is making a powerful point about the need for a level playing field. Pig farmers in my constituency are not asking to be given any artificial support; they are asking to compete on a level basis. They go to other countries and see farmers putting in new sow stalls when they themselves spent hundreds of thousands of pounds per unit replacing their stalls 10 years ago, and they are rightly upset. Does my hon. Friend agree that other countries should not be allowed a derogation in due course? If our farmers have had to make that investment, so should farmers elsewhere and they should not be allowed to import their meat into this country unless they follow the same rules.

[Dr Poulter]

My hon. Friend is absolutely right and makes the point very powerfully. The fact is that there is not a level playing field, particularly in the European Union. Stricter EU animal welfare laws for pigs have been agreed, but they will come fully into force only in 2013. As he forcefully argues, we need those standards to be applied in Europe. However, it is not just a question of standards being applied universally; our supermarkets must also show corporate responsibility. If overseas food producers do not produce food to the same high standards of animal welfare and traceability as British farmers, our supermarkets should not buy food from them. We need to see that corporate responsibility from the industry.

[Jim Shannon (Strangford) (DUP)]

I represent an area in Northern Ireland where almost everyone used to keep pigs, sometimes in large numbers. We are now down to only one producer, albeit a big one, which indicates that we are hearing the death knell of the pig industry. In some parts of Europe, regulation is non-existent, so does the hon. Gentleman feel that the Minister needs to convey to European Ministers and to Brussels the fact that whereas regulation is enforced with almost evangelical zeal in parts of the United Kingdom, the same is not true in other parts of Europe?

[Dr Poulter]

I thank the hon. Gentleman for that forceful intervention, and I absolutely agree with him. British pig farmers have struggled a great deal over the past few years, and it is a great pity that the number of people farming pigs has consistently declined throughout the UK. We would like that to be put right and we would like to see greater support for pig farmers. He is right to mention the EU, because over the past decade or so Whitehall has been fond of gold-plating and platinum-plating European legislation, whereas countries that do not like the legislation tend to ignore it. He is absolutely right to say that we need to seek consistency across the EU, and that needs to be taken up at a European level. We want a level playing field so that our farmers can have a thriving and prosperous future.

I do not want to detain colleagues much longer, because we want to hear from the Minister. We have talked much about honest food labelling, which applies across the farming sector, but particularly to British pork. At the moment, bacon only has to be sliced in the UK to be labelled British, which is unacceptable. UK law requires that labelling should not be misleading, which is a good thing, but it does not define how much British involvement is required before produce can be counted as British. Traditionally, slaughtering animals in this country would count, so calling something British lamb or British pork could mean that although the meat was imported, slaughter and packaging took place in the UK, but now meat need only be sliced here to be labelled British. That can be misleading in supermarkets. We want stronger action on labelling, and I am sure that the Bill to be introduced by my hon. Friend the Member for South Norfolk will go a good way towards countering that great problem, which would also help to support British pig farmers.

We have talked a lot about getting greater corporate responsibility from our retailers. I mentioned the fact that while pig farmers have been losing £20 per pig over the past three years, our retailers have been making profits of £100 to £120 per pig. Surely there must be an onus on those retailers not only to support honest food labelling and promote the fact that British farmers produce pork to higher animal welfare standards and with greater traceability, but to want to support local and British produce. That has to be a good thing. As we know from the example of Morrisons, cited by my hon. Friend the Member for South Norfolk, consumers want to buy British and support local food producers. Consumers in East Anglia, Suffolk and Norfolk want to support our local food producers. That would be a good thing for supermarkets to do.

[Roger Williams (Brecon and Radnorshire) (LD)]

I could not resist attending the debate, if only for a few minutes. Does the hon. Gentleman agree that one consequence of the pricing system used by supermarkets is that pig production in this country is driven down and more pigs are produced in sub-standard conditions in other countries? That is a serious problem.

[Dr Poulter]

My hon. Friend is right. The key point, which my hon. Friend the Member for Beverley and Holderness (Mr Stuart) raised, is the need for a level playing field. We are proud that Britain has high animal welfare and traceability standards, but if our farmers are not competing on a level playing field with farmers in Europe and overseas, with 70% of overseas pork not being produced to the same high animal welfare standards, that is wrong. There is an onus on our supermarkets to show greater corporate responsibility and to make a stand by supporting local food producers and ensuring that they help their customers to understand the issues. I hope that we will hear strong words of support on that from the Minister.

We have talked today about the importance of backing British pig farmers, because we believe in backing British food sustainability and security. We have talked about the fact that there should be a level playing field for British farmers and pork producers, with their high animal welfare and traceability standards compared with the standards of their European competitors. We have talked about the need for honest food labelling, which we will discuss further in the main Chamber in the near future. The Minister is a great friend of farming and we look forward to his reply to the debate and to him telling us how he and the Government will support the British pig industry.

[Hugh Bayley (in the Chair)]

I want to call the Front-Bench spokesmen to start the winding-up speeches at half-past 3, which leaves us time for one further speech.

Oral Answers to Questions

Dan Poulter Excerpts

Thursday 17th March 2011 Commons Chamber

[Mrs Spelman]

It is not a question of frustrating the will of the other place. There has been a change of Government, and the two parties that together form the Government have Members of Parliament who mostly have rural constituencies. It is thus easier for us to champion rural causes, as in our uplands policy review. The hon. Lady’s Government had 13 years in which to do something about the uplands, but it has taken a change of Government to achieve that.

[Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)]

2. What recent representations she has received on the profitability of the pig farming sector.

[The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)]

The Secretary of State and I discussed the difficulties faced by the pig industry with representatives of the National Pig Association and the British Pig Executive two weeks ago. I am very much aware of the high cost of feedstuffs and the problems that it is creating, causing serious losses for pig producers.

[Dr Poulter]

I am sure the Minister is aware that, according to the National Farmers Union, over the past three years pig producers have been losing £20 per pig, whereas at the same time retailers have still been making £100 profit per pig. May I call on him and the Department to take some action and put pressure on retailers to give our pig producers a fair price for their pigs?

[Mr Paice]

I understand my hon. Friend’s point entirely. It is incumbent on any retailer that is concerned about ensuring that it can supply British pigmeat not just this year but in years to come to do what it can to ensure that our industry can continue through this difficult period. I am sure that prices will recover at some stage, but it is down to the retailers to ensure that their long-term supply chain interests come through into the practices they follow today.

Oral Answers to Questions

Dan Poulter Excerpts

Thursday 9th December 2010 Commons Chamber

[Mr Paice]

I entirely understand the hon. Lady’s point, but no Minister in DEFRA has the power to create a moratorium. This is entirely a planning matter, and it is up to the local district council to decide how to respond. I have no powers to stop the development.

[Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)]

14. What recent representations she has received on provision of funding for permissive access routes under higher level stewardship schemes in rural areas.

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon)]

About 3,000 current agri-environment agreements support permissive access, contributing around 3% of the public rights of way network. As part of the spending review, we have looked very closely at how best to maximise the funds that we receive from the European Union for higher level stewardship. Funds will continue to be provided for permissive access under existing HLS agreements, and we will also continue to provide capital payments under new HLS agreements.

[Dr Poulter]

As the Minister will know, there are 129 higher level stewardship agreements in Suffolk. They help to provide an excellent link between rural and urban communities, and to interest young people in schools in issues relating to agriculture and food. Given the importance of such schemes in Suffolk, will the Minister agree to meet me, along with Suffolk farmers, to establish how we can develop the schemes further in the county?

[Richard Benyon]

I am always happy to meet my hon. Friend, and farmers in his constituency. We are keen to maximise the use of money from the rural development programme for England. For every pound that we put into biodiversity or environmental works through HLS, we receive £3 from Europe, whereas access is funded entirely through Government spending. That does not mean, however, that there is not an enormous amount that we can to do to encourage the kind of access to which my hon. Friend has referred. We will secure the capital spending, and we will make further provision to secure access in other parts of the country.