Dairy Farming

It is a great pleasure to serve under your chairmanship, Dr. McCrea. I pay tribute to the hon. Member for Preseli Pembrokeshire (Mr. Crabb) for securing this debate and starting it off so admirably and for his commitment to the sector, not just in his own constituency but across the country. My hon. Friend the Member for Brecon and Radnorshire (Mr. Williams) said more in four minutes than many of us are capable of saying in 40. If I just endorse everything that he said, I can knock about five minutes off my speech in order to allow others more time to wind up. I was at the Castle Green hotel in Kendal two weekends ago for the Cumbria Young Farmers annual general meeting and jamboree. It was a wonderful evening and a great opportunity. I listened to all the speeches made and sat there with my notebook writing down all the jokes—as a Liberal Democrat, I am a keen recycler, and that extends to my speeches and jokes as well—but at some point during the evening, I realised that there was absolutely no context in which I would ever be able to use one of the jokes and get away with it. Apart from having an entertaining and slightly off-colour sense of humour, the young farmers, a good proportion of whom were dairy farmers, demonstrated to me that however difficult and challenging life in the dairy sector has been and continues to be, there is nevertheless immense room for optimism. A new generation of young people are set to become the backbone of a dynamic, competitive and innovative dairy industry. However, the system is not making it easy for them. There is a huge risk that young dairy farmers' ambition, work ethic and talent will be stifled. As we have heard from many hon. Members, these are immensely difficult times for dairy farmers. Since 1997, the number of dairy holdings has decreased by 50 per cent. and the number of dairy farmers by 35 per cent. In the past three years alone, liquid milk production has dropped by 7 per cent. That is 1 billion litres of lost production. Production levels in this country are at their lowest since the 1970s, despite the fact that the UK population is now 15 per cent. higher and demand is rising. We are losing milk production capacity because farmers are leaving the industry. Some go to the wall; some slip quietly into other work; many wait for retirement. As my hon. Friends have said, they will retire having actively encouraged their children to do anything but follow them. Supply is tightening, yet the prices paid to farmers are pitiful. The estimated cost to the farmer of producing 1 litre of milk in October last year was 26p, and the average farm-gate price for liquid milk was 24p. The average farmer is making a loss on every litre produced. That is the average, but hundreds of dairy farmers, including dozens in my constituency, get less than 20p a litre. Many of us wander down one aisle in the supermarket and make ourselves feel good by buying fair trade coffee, but in the next aisle we buy milk that might be sourced locally but is anything but fairly traded. The factors behind the decline in production capacity are complex; we have heard about many of them. Even over-production is blamed, but that is an insult to the intelligence of dairy farmers. Production in this country is declining and demand is rising. To prove a point, to compensate for the steady loss of UK producers, imports of liquid drinking milk rose from 87.7 million litres in 2007 to 134.1 million litres in 2008. There is no question of UK producers over-producing; in fact, they are under-producing.