Oral Question: Dairy Industry to DEFRA

Speech by Annette Brooke MP delivered to Jim Knight MP, Minister for Rural Affairs on Thu 20th Oct 2005

Supermarket pressure forces down the cost of milk, and makes life harder for farmers.

Annette Brooke (Mid-Dorset and North Poole) (LD): To ask the Secretary of State for Environment, Food and Rural Affairs if she will make a statement on the state of the dairy industry.

The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Jim Knight): The Government cannot get involved with price negotiations. However, through the dairy supply chain forum chaired by my noble Friend Lord Bach, we have brought the industry together to develop collective solutions to some of the challenges it faces as it adapts to the reformed common agricultural policy. I firmly believe that there is a bright future for a modern, profitable and efficient UK dairy sector.

Mr. Cox: Does the Minister agree that some of the acute problems affecting dairy pricing might be alleviated if the processing sector could have the confidence that any future consolidation will not be blocked by the Office of Fair Trading? Does he agree that it would be helpful if the Secretary of State for Trade and Industry sent a direct and clear message to the OFT that future consolidation in the sector should be looked at in a European context, not a purely national one?

Jim Knight: There is a lot of talk about consolidation and it is suggested that co-operatives can control only 25 per cent. of the market. That is only a trigger. The competition authorities will consider each case on its merits. I am in discussions with the Department of Trade and Industry about some of these issues and ensuring that it hears

Annette Brooke: The pressures on remaining dairy farmers, such as a family farm in my constituency where individuals work up to 90 hours a week, include rising fuel costs and worries about potential competition from imports. Does the Minister therefore agree, despite his previous words, that the Government should play a stronger role in ensuring that an effective supermarket code of conduct is enforced so that we have a transparent and fair supply chain for milk? I emphasise fairness in all this. the concerns that are expressed to me by dairy farmers.

Jim Knight: I repeat that markets should set prices. However, there are issues of cost that are being pursued by the dairy supply chain forum. As regards the supermarket code of practice, I am having discussions with the Under-Secretary of State for Trade and Industry, my hon. Friend the Member for Bradford, South (Mr. Sutcliffe), and I will continue those discussions. Like the hon. Lady, I hear constituents say that they cannot properly register their complaint, but if the OFT does not receive any complaint it is difficult for it to act.