Dairy Industry

It is a pleasure, Mr. Chope, to serve under your guidance twice in the same morning and to congratulate my hon. Friend the Member for Ceredigion (Mark Williams) on securing a debate that is crucial not just with respect to dairy farming, but, from my observations of the debate so far, for the fact that it brings out some good old-fashioned politics. We can talk about the role of the market, where we stand and what we understand by the term ““the free market””. To get to the point, the issue is simply one of market failure. Five years ago, the retailers’ margin throughout the country was in the region of 11 per cent. It is now 30 per cent. There is no market justification for that. In Germany the margin is still 11 per cent. Supermarkets have increased their margins for no appreciable reason, apart from the fact that they just can. Farmers have often been challenged with the claim that their calls for fairness will lead to higher milk prices in the supermarket and on shop shelves. Far from it, the figures show that supermarkets could keep prices on the shelves as they are, ensure that farmers get a fair deal and still have a mark up twice what it was in 2002. Why do not they do that? It can only be that the supermarkets, apparently entirely legally, are abusing their market power. It is not good enough for the Government to shrug and say that it is all down to the market; that it is a sad fact of modern life. It is market failure. Adam Smith, the author of ““The Wealth of Nations”” and many other works, was in many ways a great man and a decent human being, but he was fundamentally wrong in my view in his assessment of how markets operate. There is no invisible hand making sure that everything reaches a nice satisfactory equilibrium. The only natural force that I can see in the marketplace is something akin to gravity, by which those who already have plenty of wealth and power accrue a lot more of it to themselves. It is therefore important—and it is something that I request of the Government, as I expect many hon. Members of all parties who are present for the debate would do—that the Government use their visible hand to ensure that regulation takes place. Perhaps I may offer some counselling to the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski), who is clearly bruised by his trip to Brussels: if we are to tackle the problems of the abuse of market power by multinational companies, we shall need multinational solutions to face down such companies.