Dairy Farming

The hon. Gentleman makes an important point. Undoubtedly, we need to protect our dairy farmers from unfairness in the market. I do not think that any dairy farmer wants a protectionist system, and I endorse the comments made by my hon. Friend the Member for Brecon and Radnorshire about reforming the common agricultural policy in that respect. Last summer, the EU Agriculture Committee issued a report showing that farm-gate prices for a litre of milk had dropped 31 per cent. while the shelf price of milk had dropped by only 2 per cent. We also know that in the past decade, supermarket mark-ups—the proportion of the price of a litre of milk that goes into the supermarkets' pocket—have tripled. In consequence, farmers are leaving the industry. One would think that the free market would not allow a situation in which buyers kill off their own suppliers or reduce their ability to reinvest in greater efficiency and productivity. To quote John Maynard Keynes,""Markets can remain illogical far longer than you can stay solvent."" That has clearly been borne out within the dairy industry. In any case, an unfettered market is not a free market. Dairy farmers are effectively forced to accept the prices that they are offered. Supermarkets' and processors' ability to abuse their market power legally must be curtailed. That is why we endorse the setting up of a supermarket ombudsman. I pay tribute to my hon. Friend the Member for St. Ives (Andrew George) for leading on that issue for many years. We as a party championed it for a long time while being ridiculed by others, but it is good news that those others have come on board. It is important that the supermarket ombudsman should, as my hon. Friend the Member for Argyll and Bute (Mr. Reid) said, be powerful and proactive, not supine and reactive. Hon. Members will know all about ombudsmen and will have had many reasons to make use of them on their constituents' behalf. Ombudsmen tend to be able only to react to complaints, to investigate only one tenth of complaints and to find in favour of the citizen in only one third of cases. That is not a model likely to strike fear or even respect into the hearts of the supermarkets. We support a powerful supermarket regulator based on a model similar to Ofcom, with proactive investigative and enforcement powers, a remit to go out and look for trouble and the ability to stand up forcefully to those who abuse market power, with appropriate sanctions at its fingertips. Anything less might be counter-productive by providing supermarkets with the necessary political cover to continue exploiting dairy farmers and other producers. Such exploitation was seen in its rawest and most appalling form after the tragic collapse of Dairy Farmers of Britain in May. Afterwards, some members of the co-operative were forced to accept as little as 10p a litre from buyers who simply took advantage. We have heard of the devastating losses involved. In my constituency, the average farmer lost £20,000 from their May milk cheque and perhaps £50,000 on their investment within the co-operative. The effects of that tragedy are still being felt and have caused unbearable financial and emotional strain among friends of mine who were struggling to get by even before the collapse. We are pleased by the £25 million in emergency support from the European Union. We lobbied for it from the beginning, whereas the Government did not. We are concerned that that money should be spent appropriately. For example, some of it could be spent to support the co-operative movement. After the demise of Dairy Farmers of Britain, it would be easy for many farmers to conclude that their best bet is to go it alone. I am sure that all of us would agree that that is the wrong lesson to learn. The co-operative movement is an important element of providing farmers with the strength to compete powerfully within the marketplace. In conclusion, abuse of market power is the main challenge to our dairy farming industry, but it is not the only challenge. Unnecessary regulation is also a huge problem. The extension of the European Union's nitrate vulnerable zones directive has caused and threatens to cause immense damage to farmers in general and dairy farmers in particular. That new directive will mean many farmers have to spend around £50,000 on a new slurry tank simply to comply with the measure, with absolutely no benefit to their business. That will be the straw that breaks the camel's back for many farms. There are more challenges to come. The Government made an announcement this week on cost sharing, and the establishment of an animal disease levy will be cause for alarm for many dairy farmers in Cumbria and across the country. The proposal to charge farmers at a rate of £4.80 per cow to pay for the clean up of disease outbreaks, which in the case of the 2007 foot and mouth crisis was wholly the Government's fault, is unjust and extreme. Such a proposal will help to push even more dairy farmers out of business. We have heard about the Government's failure to tackle bovine TB, and I endorse those remarks. Some 29,000 cattle were slaughtered in England for TB control reasons just last year. Squeamishness over a controlled cull of badgers led to that mass slaughter of cattle, and a failure to deal with that disease is contributing towards making many farms non-viable. The story of British dairy farming in recent years is one of market failure, and Government failure to tackle market failure, versus the staggeringly impressive resilience of an industry that is determined to succeed against the odds. That battle continues and my money is undoubtedly on dairy farmers to win. I suggest that it is time this House got off the fence and took their side.