Dairy Industry

I congratulate the hon. Member for Ceredigion (Mark Williams) on securing this important debate. Only 10 days ago, I visited a successful dairy farmer in my constituency, Mr. Kirkup, who has a herd of 400 cows. I was concerned to hear about the income levels of farms in my constituency. Despite making significant investments, dairy farmers in County Durham earn about £15,000 a year. Given the hours that they work, some of those farmers would be earning below the minimum wage if it were applied to the industry. We need to consider the balance of power between the supermarkets and farmers. The essential problem relates to the time scale. Supermarkets work in a short-term time frame, and although the time frame in which farmers work does not quite span generations, the decisions that they take cannot have a significant impact in less than five years. That point is not well understood. One practice that supermarkets and processors engage in, which some of my constituents have discussed with me, is the backdating of price cuts. That is absolutely intolerable because farmers cannot get out of it. Why are such contracts legal? I have raised this issue with the Office of Fair Trading, but I have not received a satisfactory answer. I echo the remarks of the hon. Member for Westmorland and Lonsdale (Tim Farron) about the environmental benefits of dairy farming and how the shape of our countryside depends on it. We cannot ignore that, just as we do not ignore it when considering the financial regime for hill farming. Another issue that has been raised is the burden of regulation on farmers. About 18 months ago, the Select Committee on Public Accounts took evidence from Department for Environment, Food and Rural Affairs officials. I pushed them on that issue, but their answers were most unsatisfactory. Surely, there is a lack of logic in imposing high levels of regulation on UK farmers, thus raising their costs, given that the dairy market is international and that we import milk from countries with lower regulatory standards. The market is not a fair one in any of the classical senses of what constitutes a fair and efficient market. We must look into this issue. However, Opposition Members have not made their case on bovine TB. Although I agree with their general analysis of dairy farming, I shall not go with them all the way on that point. We must make the economics more sustainable. I am not sure whether we should aim to squeeze the supermarkets’ margins, or to have consumers pay more. The industry’s figures show that that would be unlikely to cost the average UK household more than 10p a week. That is a price well worth paying for a sustainable dairy industry.