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The Secretary of State for Environment, Food and Rural Affairs (Hilary Benn): May I take this opportunity to welcome my hon. Friends the Members for Poplar and Canning Town (Jim Fitzpatrick) and for Wansdyke (Dan Norris) to the DEFRA ministerial team? As we have heard already this morning, they are making a great impact.
I and my ministerial colleagues have been working with the Dairy Farmers of Britain members council, the receiver, Dairy UK, farm unions, banks, and charity and benevolent organisations to continue to help all those affected.
Mr. Wallace: Many Dairy Farmers of Britain producers in Lancashire and Cumbria are suffering because of the collapse of their dairy business and associated cash-flow problems. Will the Secretary of State consider extending meeting the requirements of the nitrates directive by perhaps one year? Will he also consider bringing forward some of the single farm payment due in the autumn for affected farmers to alleviate some of their cash-flow problems?
Hilary Benn: I am only too well aware of the difficulties that farmers have faced, but let me take the opportunity to give the House the very latest information. Of the 1,813 farmers with Dairy Farmers of Britain on 3 June, 1,759 have found other buyers for their milk, 45 have retired or are in the process of retiring and nine have not yet decided. Given where we were on 3 June, that is considerable progress.
To respond to the two points that the hon. Gentleman raised, in theory it would be possible to try and advance single farm payments, but that might have a knock-on effect on other farmers. On the RPA, I have said throughout that the one thing that I am not prepared to do is jeopardise the recovery that my hon. Friend the Minister of State referred to. Secondly, we cannot delay the requirements on nitrate vulnerable zones further, but I remind the House that the new requirements on slurry storage do not have to come in until 2012.
May I ask my right hon. Friend the Secretary of State to pass on my welcome to my two colleagues who have joined him on the Front Bench? Food and food production are far too important to be left entirely to the advocacy of Members with rural constituencies. They are of importance to everyone.
I noted my right hon. Friends response to the hon. Member for Lancaster and Wyre (Mr. Wallace). Will he consider approaching the Office of Fair Trading and pressing it for its view on what is competitive in the dairy market? That would allow it to take a more pragmatic approach when mergers and changes happen in the co-operative sector.
Hilary Benn: First, may I say that it is very good to see my right hon. Friend in her new place? [ Interruption. ] At the last Question Time, I expressed my sorrow at her departure. To make it clear, I refer to the fact that she continues to take an interest in DEFRA matters. I thoroughly welcome that, and I thank her for her efforts in relation to Dairy Farmers of Britain.
On the role of the Office of Fair Trading, as my right hon. Friend will be well aware, a merger was proposed last year between two of the co-operatives, but it did not come off, not because of problems with the OFT, but because the two partners were not able to reach agreement. However, I will reflect on the point that she rightly makes.
Adam Price (Carmarthen, East and Dinefwr) (PC): When Parmalat went into administration in 2004, the Italian Government provided emergency compensation to the thousands of Italian dairy farmers who were affected and the European Union agreed to waive state aid rules. Why do the British Government not provide similar support now to the thousands of British dairy farmers affected by the collapse of DFOB?
The most important thing that we have done, as I have just informed the House, is work with all the partners to try to ensure that farmers can find other buyers for their milk. Considerable progress has been made, although one should acknowledge the position of workers in the creameries and dairies that have not been able to be bought by others. The dairy industry is
facing longer-term problems because of the difficulties in the world market. Through the dairy supply chain forum, which we established in 2003, we are working with the sector to look ahead. There is over-supply at the moment, but the longer-term prospects are slightly brighter.
Mr. David Drew (Stroud) (Lab/Co-op): The most important issue for most farmers is, of course, the lack of the milk cheque. Will my right hon. Friend at least talk to PricewaterhouseCoopers about the fact that, although some people obviously knew how desperate the state of the company was, milk was supplied and has been purchased by various outlets? Is it not right that those outlets pay the farmers for the milk that they have received and that PWC ensures that that is done as a matter of urgency?
Hilary Benn: If others have contractual obligations, it is clearly very important that they are met, but we have made further progress in the past week or so because of Milk Links offer to purchase the rest of the milkmilk that had not been bought by other buyersat a price of 18.45p a litre, as opposed to the 10p a litre that the receiver was offering.
Tim Farron (Westmorland and Lonsdale) (LD): The Milk Marketing Board was scrapped under the Conservative Government and its successor, Milk Marque, was broken up under this Government, all in the name of free and fair trade, yet dairy farmers are now receiving as little as 10p a litre for their milk in the aftermath of the break-up of Dairy Farmers of Britain. I wonder to what extent that constitutes a free and fair market. Will the Secretary of State undertake to do two things now? First, to prevent a disastrous loss of capacity in the dairy sector, will he underwrite the unpaid May milk cheque for Dairy Farmers of Britain? Secondly, will he intervene to prevent unfair trade by introducing a powerful food market regulator, to prevent buyers from exploiting farmers from all sectors in this unfair, unfree and unbalanced food market?
Hilary Benn: First, I cannot give the hon. Gentleman the answer that he wants on the payment of the milk cheque. Secondly, as he will be well aware, the Competition Commission has been consulting on the idea of an ombudsman and seeking agreement with the supermarkets and others. At some point in the not-too-distant future, the commission may come back to ask the Government to form a view on that, and we will consider it very carefully at the time.
On the dairy industry more widely, I simply say that there has been a huge increase in productivity. Although if we look back over 20 years, we see that milk production has declined a bit from about 14 billion litres to 13 billion litres, the dairy industry in Britain is much more productive than it was.
Mr. Lindsay Hoyle (Chorley) (Lab):
The situation is very serious. I represent hundreds of farmers, who were receiving 10p a litre, which is totally unacceptable and not sustainable, when the company went into receivership. First, we need the Secretary of State to call for a full inquiry into what has happened in Dairy Farmers of Britain. Secondly, we need him to help to fund the shortfall. Why did the banks foreclose when the farmers were owed the most money and the banks could therefore
receive the most from the receivership? We need a full inquiry, we need support to ensure that those farmers are compensated, and we need him to see what help he can give.
Hilary Benn: To be honest, I am not sure that an inquiry is required. Dairy Farmers of Britain had problems and in the end, despite the efforts of the members, it was not capable of being saved. I agree with my hon. Friend that receiving 10p a litre is impossible for farmers, and that is why Milk Links offer to all the remaining farmers to buy at an average of 18.45p a litre is to be welcomed.
The Minister of State, Department for Environment, Food and Rural Affairs (Jim Fitzpatrick): The common agricultural policy was one of the issues discussed at the last EU Agriculture Council that I attended, which was in Luxembourg on 22 and 24 June, during the Czech presidency. I look forward to continuing discussions under the Swedish presidency in the second half of the year.
Mr. Bone: In December 2005, Tony Blair surrendered the British rebate, which Mrs. Thatcher negotiated, on the false promise that the CAP budget would be slashed. Last year, the UK paid £3 billion to the EU; next year, it will pay £6.5 billion. How many teachers, police officers and nurses will have to be cut to pay for that?
Jim Fitzpatrick: The health check that I mentioned earlier provided much of what the UK wanted. Negotiations on the future are already under way informally, as was evidenced by the discussions that took place in Luxembourg last week. We are intent on making sure that we can reform the common agricultural policy to the benefit of Britain and British farmers, and to the benefit of Europe, and we continue with that policy.
Mr. Brian Jenkins (Tamworth) (Lab): Will my hon. Friend please assure the House that when he sees his European colleagues, he will get them to recognise that security of food supply requires a premium? That is not merely a handout for farmers; it is to allow farmers to work towards supplying us with our food. We should never slash and burn it, or run away from supporting our farmers in this country, as the Conservative party would.
My hon. Friend makes an important point. We are intent on making sure that the reforms to the CAP are in the direction of travel that he wants us to take. We had discussions last week that will clearly lead to intense negotiations in the months and couple of years ahead on the next round of the CAP and the next round of the European budget. There may be a new
Agriculture Commissioner later this year, and the Lisbon treaty may have an impact on how the negotiations proceed in the years ahead. There is a lot going on in the background and we are intent on protecting British interests.
Mr. James Paice (South-East Cambridgeshire) (Con): Very recently, the Secretary of State persuaded the rest of the EU to allow him to keep set-aside. It is widely rumoured that he will announce at the royal show next week that he will accept the voluntary approach. If he does, we will support him, as that would be the right decision. Does he agree that the success of the voluntary approach should not be measured simply by what area of land is taken out of production? The objective is to improve biodiversity. Will he reject the simplistic arguments made by some organisations in favour of setting targets on the area of land, and will he instead set targets on indicator species of birds, animals and invertebrates? That is the only way to really tell whether we are improving biodiversity.
Jim Fitzpatrick: My right hon. Friend the Secretary of State is considering the conclusions and will make an announcement shortly, as has been trailed. Clearly, the issues are complex, as the hon. Gentleman has outlined. He knows better than I that whatever decisions are made to improve biodiversity and the ability of species to prosper, it will take some years to be able to demonstrate that that has happened. I assure him that my right hon. Friend the Secretary of State is taking all those complex matters into consideration and will make a statement shortly.
The Secretary of State for Environment, Food and Rural Affairs (Hilary Benn): In difficult times, agriculture overall is doing well. Farming incomes increased by 36 per cent. in real terms last year and there was a record wheat harvest. The UK exported £12 billion-worth of food and drink in 2007. However, some sectors are facing difficulties and farmers have been able to benefit from the help that the Government are giving to all businesses.
Hilary Benn: In April I convened a meeting of all those who have an interest in skills in the industry, and the industry has undertaken to come back to us with its plan. We are providing support through Fresh Start, funding for new businesses in rural areas, Train to Gain, apprenticeships, and of course the new land-based diploma for 14 to 19-year-olds, which will be available from this September.
Mr. Roger Williams (Brecon and Radnorshire) (LD):
These are difficult times and some farmers with land in my constituency have not received their single farm
payment from four years ago because of the difficulty in ensuring that cross-border applications are properly instituted. Will the Secretary of State please respond to me if I supply details to him, so that we can obtain some relief for those farmers?
The Secretary of State for Environment, Food and Rural Affairs (Hilary Benn): Proposals on how responsibilities and costs for animal health could be shared with livestock keepers in future have been the subject of a three-month consultation. Final decisions will be taken in the light of responses to the consultation.
Mr. Hollobone: DEFRA assumes that in a typical year, whatever that is, the costs of coping with such outbreaks might be £134 million, of which £65 million would fall on the Government and £69 million on the industry. The Secretary of State now proposes that the industry shares half the Governments costs, effectively meaning that farmers will pay 70 per cent. of the overall bill. Are not DEFRAs estimates of the overall cost of preventing such outbreaks too high, and is not the proposed burden sharing unfair?
Hilary Benn: The figures that we published in the consultation paper were illustrative, but the fundamental principle is about whether it is right to share responsibility for taking decisions about animal disease. My view, and that of the industry, is that it is. Indeed, the industry has long argued for it. Is it then unreasonable in the circumstances to share some costs of handling disease outbreaks, as we have done with blue tongue? It is not. Indeed, it was a recommendation of Iain Anderson after the 2001 foot and mouth outbreak. It is important that we get on with the process. Indeed, Germany has had a disease levy for several years.
The Minister of State, Department for Environment, Food and Rural Affairs (Jim Fitzpatrick): The long-term prospects for the dairy sector are encouraging, and the UK is well placed to take advantage of the expected growth in global demand. The British dairy sector as a whole is fundamentally sound, and, through the dairy supply chain forum, we are providing a framework for constructive debate and information for the industry to make informed decisions about its future.
Is the Minister aware of the particular vulnerability of small dairy farms in remote locations, such as the North York Moors national park, as the big dairies cherry-pick the accessible farms with the big
herds? What does he think would be a fair price for milk to secure the future of such businesses for generations to come?
Jim Fitzpatrick: Setting the milk price is a commercial matter to be resolved through private negotiations that should take place within the parameters set down by competition law. The market must determine prices. I fully recognise, however, the different challenges that remote farms face and which the hon. Gentleman raises. They can be exacerbated by the fact that such farms tend to be smaller, as he describes, and unable to provide the quality of milk to make collection commercially viable. In the case of DFOB farmers, we have ensured that the parties involved have got together to make haulage costs more viable. That is one way in which remote farms could look after their business interests more collectively.
Robert Key (Salisbury) (Con): Please will the Minister listen to small dairy farmers, in particular, who will tell him that the dairy industry is far from secure in the long run? Indeed, what thinking is his Department undertaking to determine the future strategicallyin terms of Britains food supply and, in particular, its raw milk supply? The prospects are so bleak that farmers are convinced that there will be no milk production in this country within 10 or 12 years unless we do something about the matter.
Jim Fitzpatrick: I hear what the hon. Gentleman says, and his less than optimistic description of the industry. I chaired the dairy supply chain forum 10 days ago at the Department, and the impression that I got from industry members, including farmers, National Farmers Union members, dairy supply chain representatives and retailers, was one of optimism and positivity, notwithstanding a reduction in production from 14 billion to 13 billion litres and a reduction in the number of dairy farmers over the past 12 months. The overall position for the industry, however, looked very encouraging.
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