Dairy Farming

It is a great pleasure to serve under your chairmanship, Dr. McCrea. Before I say any more, I refer hon. Members to my entry in the register. Until 14 months ago, I was the only dairy farmer in the House. I left dairy farming for many of the reasons discussed today—not least because of the effects of the nitrates vulnerable zone directive. I also left the industry because I did not invest in my business, for the very good reason that my unit costs of production were greater than the pence per litre I was receiving. That situation is replicated across the country and has led to a dramatic reduction in dairy farmers and the amount of milk we are producing. There is a range of other issues, including food security. I pay great tribute to my hon. Friend the Member for Preseli Pembrokeshire (Mr. Crabb) for not only securing the debate but speaking passionately about the needs of this important sector of the farming community, which he represents—he has done so in the past and will continue to do so, whichever party is in government. I also pay tribute to hon. Members such as my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski), who have set up the all-party group on dairy farmers. They do great work and hon. Members from all parties who take part in that should feel proud that they have set up something really important. As I said, since 1997, I have been one of 14,000 dairy farmers who are no longer dairy farmers—if hon. Members can follow that tautology. Since that time, milk production has fallen by more than 1 billion litres and the National Farmers Union has warned that Britain will lose its "critical mass" of milk suppliers. That is important, because when someone has left dairy farming, it is very hard to go back to it. If someone is growing sugar beet and they stop doing so, they can go back to it easily. In areas such as mine—the central-south of England—we have lost slaughterhouses, a large amount of veterinary expertise, cattle markets and all the infrastructure that supports mixed farming units. One does not get that infrastructure back. Such a situation makes a dramatic difference to our landscape and our biodiversity. The issues relating to the subject go much further. I also pay tribute to the hon. Member for Stroud (Mr. Drew), who made an important point about skills. We are losing skills across the farming industry, particularly in stock farming, and we make a great mistake if we do not understand the need to bring young people in and give them a career in a good industry. According to DairyCo, if the increasing trend in the consumption of dairy products is extrapolated forward, annual consumption in 2030 could be in the region of 16 billion litres, which is some 23 per cent. greater than the current UK production level. The hon. Member for Westmorland and Lonsdale (Tim Farron) makes a good point: to say there is overcapacity in this industry is completely wrong. The price that dairy farmers receive for their milk has fluctuated between 15p and 28p a litre over the past 13 years, which has led to wide variations in profitability. The UK average farm-gate price has been consistently below the average for the EU15 throughout the past decade, which partly explains why dairy farmers have under-invested in their businesses compared with their European counterparts. In addition to the fall in prices paid to milk producers, during 2009, more than 1,800 dairy producers suffered significant financial losses. We have heard about the effects that the collapse of Dairy Farmers of Britain has had on many constituents of hon. Members in this Chamber. The NFU estimates that an average supplying member lost in the range of £10,000 to £15,000 as a result of being left without pay for milk collected in May and up to 3 June. As well as low farm-gate prices, dairy farmers have had to manage rising input costs, which has left little spare for investment. As the hon. Member for Westmorland and Lonsdale pointed out, the unit cost of production of 26.5p per litre is significantly higher than the average milk price at the time of 24.5p per litre. In 2009, DairyCo's farmer intentions survey revealed that only 18 per cent. of dairy farmers intend to increase milk production—down from 35 per cent.—with 13 per cent. intending to exit the industry within the next two years. An increase in production is forecast on some farms, but the reduction in the number of dairy farmers will result in a further fall in milk production next year. With demand for dairy products increasing and domestic supply declining, it is vital that the Government act to put the dairy industry on a secure and sustainable long-term footing. I suggest to the Minister that there are five steps we need to take to improve the outlook for the dairy industry. I hope that he will have time to deal with those in his remarks. First, we have heard talk of supply chain fairness but, in recent years, the price for raw milk has dropped by 27 per cent. and the consumer price has risen by 11 per cent. Government documents on the dairy market state:""On the whole, there is little connection between the price paid by the consumer for milk and the price paid to producers"." On Monday, there was a European Committee debate in which my hon. Friend the Member for South-East Cambridgeshire (Mr. Paice) asked the Minister a question. I will repeat that question, because it needs a full answer from the Minister. He said""Can the Minister tell us the Government's view about the relative market share within the UK, vis-à-vis the main processes, and the EU? Many people will find it astonishing that there are co-operative and other organisations in the EU with up to 80 or 90 per cent. of the domestic market, yet in this country, the OFT has frequently over the past decade, forced the break-up or restricted mergers and amalgamations to give equivalent market share."—[Official Report, European Committee A, 25 January 2010; c. 9.]" That is a really important matter. My hon. Friend the Member for Shrewsbury and Atcham talked about Arla in Denmark, which has an 80 per cent. share of the market in that country. We broke up Milk Marque when it had only 37 per cent., which has had a detrimental effect on the ability of producers to work together to get a fair deal. We have heard about a need for proportionate regulation. That is so important. As I said, I have experience of the impact of the effect of the nitrates vulnerable zone directive. None of us wants impossible levels of nitrates to be in our water supply, but we know from the Government's figures that the changes imposed by the directive in respect of muck spreading will lead to a 1 per cent. drop in nitrate leaching. That has a massive cost—an impossible cost for some businesses—for the farming community. We need effective action on disease. Much has been said about TB but, of course, Johne's disease is also having a large impact on production. On TB, the Minister was wrong to say in his intervention that those of us who support a limited cull consider that to be a silver bullet and that is all we talk about; we are talking about a cull as part of a much wider approach. The hon. Member for Stroud talked about vaccination but, frankly, it will be 2014 before we get an oral Bacillus Calmette Guérin that is available to work. What state will the dairy sector be in in many areas of this country by then? It is vital that the Government grasp the nettle and get a grip of the TB issue. That point was poignantly made on "Countryfile," which is a programme that sometimes irritates me because it considers the matter through the prism of a rather more urban view. There is a man called Adam on that programme, of Adam's farm, and he showed precisely the frustration, depression and anxiety caused during TB testing. We need a stronger focus on research and development. When R and D is so fundamental to the immense challenge of increasing food production while conserving our natural resources, it is critical that we get the most from our world-class science base. That will require the Government to do everything they can to help our universities, institutes and scientists to maximise their contribution to strengthening food security, both here and across the world. They need to do that by equipping farmers with the tools necessary to produce more and impact less. Smart solutions must be found to translate research more effectively into practical use at farm level, so that yields and quality in all sectors improve. I do not have time to go into details, but I would very much like to take that point up further with the Minister. My final point is on honest labelling. We have heard much about that in the debate and we have been talking about it for a long time, so I hope that the Government can come on board and understand the problem. More than 408,000 tonnes of cheese are imported into this country, and imports of cheese have increased by 60 per cent. in the past 10 years. There is real concern among dairy organisations, such as the Royal Association of British Dairy Farmers, that the ability to put dairy products on our shelves without telling the consumer where they come from is not fair on our farmers. There is much more that I would like to say on the subject, as it is one that is close to my heart. I can assure hon. Members that if we are in government in a few weeks time we will take the plight of the British dairy farmer to heart.