What steps the Government are taking to support the dairy industry in rural Wales.

The Government are very aware of the severe pressures currently facing the UK dairy sector. I have discussed the situation in Wales with my ministerial colleagues, as well as with key stakeholders, including numerous dairy farmers. There are major short-term global factors pushing down prices, and we are calling on banks, supermarkets and major processors to show flexibility and understanding at this time.

I thank the Secretary of State for that answer. We all understand the global challenges facing the industry, but will he urgently speak to his Department for Business, Innovation and Skills colleagues about extending the role of the Groceries Code Adjudicator to the whole supply chain—to all dairy producers—and, crucially, enacting the adjudicator’s power to fine? The next review of the role is not expected until 2016, and many of our farmers will not be functioning as farmers unless we have urgent action now.

First, I commend the work my hon. Friend does on the dairy sector in Wales; he is a powerful voice on behalf of dairy farmers in his Constituency and throughout Wales. We strongly support the work of the Groceries Code Adjudicator. Its jurisdiction is currently limited, but a review will take place next year. I take my hon. Friend’s point about the short-term pressures, so we look forward to receiving information and updates from him on action we can take.

As a Member representing Pembrokeshire, the Secretary of State will be well aware that the dairy industry in Wales still contributes about 10% to the whole of the UK’s production, but that since 1999 its level has fallen by 51%. Will he look at yesterday’s report by the Select Committee on Environment, Food and Rural Affairs, which says exactly what Mr Williams says: give the adjudicator greater teeth to tackle unfair pricing?

I thank the right hon. Gentleman for his question, and we are looking exactly at that report. A very severe short-term crisis faces the dairy sector at this time. Nobody pretends that expanding the role of the adjudicator will fix the global problems—big market challenges need to be addressed—but we are doing everything we can to work with the dairy industry and protect the supply base.

On the market challenges that the right hon. Gentleman refers to, what steps is he taking to urge his Government to work with the Welsh Government to implement policies we have suggested—for example, the dairy equivalent of Hybu Cig Cymru to market Welsh milk, the use of rural development funding to develop supply chains to counteract volatility, and procurement in the local Welsh sector?

The right hon. Gentleman might be surprised to hear that we do follow the policy recommendations of Plaid Cymru and I have looked at the recommendation for that new body. When huge global imbalances are putting such severe pressure on dairy farmers throughout Europe, reaching for a bureaucratic solution and setting up a new quango probably will not make that much difference, but we will look at the proposal in further detail and have that discussion.

With dairy prices at 20p a litre, First Milk collapsing last week and the discount supermarkets cutting prices day by day, it is hardly surprising that one dairy farmer goes out of business every 10 days. Does the Secretary of State agree that in addition to the efforts of the EU and national Government, we need to see far more action from the Welsh Government? There is a great deal they could do to support Welsh farmers, as well as farmers in North Wiltshire.

I thank my hon. Friend for that question and make two points in response. First, First Milk did not collapse last week. It faces some pressures and there are specific impacts for dairy herds, but that co-operative is still very much functioning. Secondly, on the Welsh Government, we work constructively and co-operatively with them on agriculture issues.

The Secretary of State rightly recognises the severe crisis in the dairy industry, so with the Environment, Food and Rural Affairs Committee’s dairy price report criticising the grocery adjudicator’s role as too narrow and left toothless by this Government’s failure to set the level of fines that she can impose, will he now act with a sense of urgency, push for an immediate review of the adjudicator’s role and give that assurance to Welsh farmers?

I am surprised by the tone that the hon. Lady takes. Under the Government that she supported, no progress whatever was made on implementing a code of practice or an adjudicator. As a Government we have been taking forward these measures. We will look at the specific recommendations of the Select Committee report, but we will take no lessons from the Labour party on the dairy sector.

My right hon. Friend will know that independent grocers such as Spar in Tywyn in Gwynedd stock Welsh milk, which is clearly marked with y ddraig goch—the red dragon.

What steps can he take to ensure that people in Wales drink Welsh milk rather than European milk, which will stimulate the market and support Welsh farmers?

My hon. Friend is right. Welsh produce is the best in the world, and when it is labelled as such it gives consumers powerful signals, which they respond to. That is one of the ways in which we have been able to boost exports of Welsh agriculture produce in the past two years, but we will look at what further steps we can take to support labelled home-grown produce.