Oral Question Organic Milk

Speech delivered on Thu 21st Oct 2004

Annette Brooke (Mid Dorset and North Poole) (LD): What assessment her Department has made of changes in the farm-gate price for liquid milk in the last 10 years.

The Minister for Rural Affairs and Local Environmental Quality (Alun Michael): The farm-gate price of milk has generally declined over the past 10 years. That is mainly due to exchange rates, but other factors affect the farm-gate price, including prices on world commodity markets, domestic supply and demand, the value of the product mix and the structure of the UK dairy industry.

Mrs. Brooke: What advice can the Minister give to organic farmers in my constituency, who find current farm-gate prices inadequate to sustain their activities, whereas supermarkets are thriving?

Alun Michael: It is fair to point out that farm-gate prices in August were at 18.43p per litre, which was 0.01p higher than in July. One has to look at these matters over a period of time, and the way in which a product is marketed is also an issue for many producers. I think that the hon. Lady wants me to give business advice to her producers, but I do not think that that is necessarily my role.

Mr. David Heath (Somerton and Frome) (LD): No one expects the Minister to give business advice to constituents, but we do expect him to take an interest in the future of the dairy industry. Given that the Milk Development Council has confirmed what we all knew—that dairy farmers are struggling while supermarkets are making record profits—surely it is time for him to have words with his colleagues in the Department of Trade and Industry and do something about it.

Alun Michael: A recent study by the university of Manchester found that, in 2002-03, 60 per cent. of the milk produced in the UK was produced at a profit. That was produced by something like 40 per cent. of our dairy farmers, so there is change going on in the market. The result of CAP reform will be that production must meet the needs of the market.