Agriculture: Dairy Industry — Question

– in the House of Lords at 2:40 pm on 26th July 2010.

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Photo of Baroness O'Cathain Baroness O'Cathain Chair, EU Sub-Committee B - Internal Market, Energy and Transport 2:40 pm, 26th July 2010

To ask Her Majesty's Government what plans they have for the dairy industry.

Photo of Lord de Mauley Lord de Mauley Lord in Waiting (HM Household) (Whip)

Our goal is a competitive, profitable dairy sector that produces for the market. It should meet consumer needs while protecting and enhancing the environment it depends on to safeguard future production. We are reinvigorating the Dairy Supply Chain Forum, which my honourable friend Jim Paice chairs, to identify and tackle the issues affecting the industry's health. We are developing the milk road map and involving ourselves closely in the EU High Level Group for dairy.

Photo of Baroness O'Cathain Baroness O'Cathain Chair, EU Sub-Committee B - Internal Market, Energy and Transport

My Lords, I thank my noble friend very much indeed for that positive reply to my Question. Does he agree that, despite the vicissitudes of the past 13 years, the dairy industry has shown remarkable resilience and been extremely innovative in its products? In view of the statement made by the Secretary of State in this week's issue of Country Life that:

"The growing world population means that food security is becoming a very serious issue", and that she is,

"determined to help British agriculture to increase production", does he further agree that it would be a very good idea if the department and the dairy industry got together to work out a long-term strategy for the industry so that, if we do have food shortages, it will be able to cope?

Photo of Lord de Mauley Lord de Mauley Lord in Waiting (HM Household) (Whip)

My Lords, the industry is a significant part of British agriculture and is, as my noble friend said, resilient and innovative. Our main strategic thrusts, which cover several objectives, including food security, are active participation in the EU High Level Group for dairy and the Food 2030 strategy. In addition, we are introducing an ombudsman into the OFT to enforce the groceries and supply code of practice, to curb abuses of power and to establish a task force on regulation to identify ways of reducing regulatory burdens on farmers.

Photo of Baroness Quin Baroness Quin Labour

My Lords, given that the Minister mentioned the idea of the supermarket ombudsman-something to which all parties were committed at the time of the election-has the department for business asked for a second consultation on the establishment of the ombudsman? Is there not a risk that this will further delay the establishment of the ombudsman? What timetable do the Government now propose to set for the establishment of this important post?

Photo of Lord de Mauley Lord de Mauley Lord in Waiting (HM Household) (Whip)

My Lords, I am grateful for that question because it allows me to explain that the coalition programme for government, published on 18 May, made a commitment to introduce an ombudsman into the Office of Fair Trading to enforce the GSCOP and to curb abuses of power that act against the long-term interests of consumers. As to the when, about which the noble Baroness asked, we are awaiting the results of the consultation exercise within BIS. This will guide our decision on how best to enforce the GSCOP, which, as I have said, the coalition Government have agreed should be done through an ombudsman.

Photo of Lord Williamson of Horton Lord Williamson of Horton Crossbench

My Lords, as a former head of the milk division in the Ministry of Agriculture and the owner of a milk churn presented to me by dairy farmers, may I invite the Minister to agree that we have excellent dairy farmers here and excellent natural conditions in the United Kingdom for the production of milk from grass? In order that we can all have the benefit of these advantages, can we make a special effort to ensure that milk is produced and marketed in fair conditions?

Photo of Lord de Mauley Lord de Mauley Lord in Waiting (HM Household) (Whip)

I am grateful for that question, which brings us back to the issue of the ombudsman, whose duties will be precisely that. I agree very much with what the noble Lord says.

Photo of Lord Lea of Crondall Lord Lea of Crondall Labour

My Lords, is the Minister aware that, in the European Union, Britain is not atypical in subsidising each cow by £900 per annum? Is he further aware that in the two countries outside the EU that are much vaunted by Eurosceptics outside-that is, Switzerland and Norway-each cow is subsidised by £9,000 per annum?

Photo of Lord de Mauley Lord de Mauley Lord in Waiting (HM Household) (Whip)

My Lords, I am not entirely sure what the question was, but we think that competitiveness is extremely important in this market.

Photo of Lord Livsey of Talgarth Lord Livsey of Talgarth Liberal Democrat

My Lords, when the supermarket ombudsman is in his place, will the Minister take action to make it illegal for retail milk to be sold for less than the cost of production? It is the reason why 14,000 dairy farmers have left the industry since 1997 and why we have only 11,000 left. The ombudsman should use his powers to address that problem immediately.

Photo of Lord de Mauley Lord de Mauley Lord in Waiting (HM Household) (Whip)

I acknowledge my noble friend's point, but it will be up to the ombudsman to make these sorts of decisions. Industry tells us that there are grounds for cautious optimism in the dairy industry. The continuing decline in production has put pressure on buyers to pay more remunerative prices. Secondly, most major retailers now have dedicated groups of farmers supplying them with milk in return for premium prices.

Photo of Lord Scott of Foscote Lord Scott of Foscote Crossbench

My Lords, do the Minister's answers apply simply to farms that produce milk by cows or do they apply also to the increasing number of farms where the milk is produced by goats?

Photo of Lord de Mauley Lord de Mauley Lord in Waiting (HM Household) (Whip)

My Lords, I am answering in respect of dairy. I think that means principally dairy cows.

Photo of The Bishop of Bradford The Bishop of Bradford Bishop

My Lords, does the Minister accept that, if young people are to come into the dairy farming industry, superfast broadband is a necessity? Can he confirm that superfast broadband will be rolled out to the one-third of farmers who are unable to access it?

Photo of Lord de Mauley Lord de Mauley Lord in Waiting (HM Household) (Whip)

My Lords, the Government are very keen that broadband should be rolled out. Ministers intend to provide a strong lead in driving forward rural policy, such as ensuring that rapid rollout.

Photo of Lord Davies of Coity Lord Davies of Coity Labour

My Lords, does the Minister agree that the discounting of milk by the processors and the abolition of the Milk Marketing Board have damaged the dairy industry considerably?

Photo of Lord de Mauley Lord de Mauley Lord in Waiting (HM Household) (Whip)

My Lords, I think we need to move on to the future, which is, as I have tried to explain, reasonably positive for the industry.