MPs Debate ‘Crisis’ in Dairy Sector

The Government was this week urged to scrutinise more closely the power of the big supermarkets over what they pay farmers for their milk.

In a Westminster Hall debate, Environment Minister Ben Bradshaw said pressure on prices was a “fact of life” but it was also in the interests of supermarkets to “ensure sustainable arrangements” with farmers.

Liberal Democrat Mark Williams (Ceredigion), opening the debate, said farmers were getting less than 18 pence a litre for their milk but production costs were around 21 pence per litre.

This was on top of increases in energy prices, diesel and fertiliser costs. Many farmers struggled to earn pounds 15,000 per year, he added.

Tory Daniel Kawczynski (Shrewsbury and Atcham), chairman of the all-party parliamentary group for dairy farmers, spoke of the “crisis” in the sector.

He said: “This industry is of such fundamental importance to our country that it deserves some form of spotlight being shone on it by the Government, at least for the Government to be scrutinising far more effectively what the supermarkets and processors are doing.”

Mr Bradshaw said: “I have to say that pressures on farm gate prices will remain. That is simply a fact of life. Dairy production exists in a competitive market and there will always be a pressure on costs.”

But he added: “We believe as a Government that it is in the supermarkets’ own long-term interests to ensure sustainable arrangements for dealing with their suppliers.”

The Competition Commission is investigating the prices paid to dairy farmers by supermarkets and processing companies. But it is claimed that some farmers fear to give evidence because their relationship with the supermarkets may be hit and they could lose contracts.Some of the supermarket chains have announced schemes to pay some farmers more for their milk or source it and market it locally.

Liberal Democrat rural affairs spokesman Roger Williams said milk output was falling and claimed that many young farmers were not joining the sector.

He said: “Because of the huge pressure on prices, more and more dairy farmers have gone out of business so that we are now left with half of the dairy farmers we had some time ago.”

Mr Williams said milk output was down by half a billion litres to around 13.5bn. “I think that is what is focusing the supermarkets’ minds. They know that they can’t in any quantity import liquid milk into this country. If they became short of British milk then they would really be feeling the pressure.”

(c) 2007 The Journal – Newcastle-upon-Tyne. Provided by ProQuest Information and Learning. All rights Reserved.