Intensive Dairy Farming

Without wishing to duck that question, I should say that trade issues are, as my hon. Friend is well aware, a matter for my right hon. Friend the Secretary of State for Business, Innovation and Skills. Obviously, however, we would wish to pursue as best we can commitments made by the Prime Minister before the election. Let me move on to the point about competition in the domestic market and about supermarkets, which all my hon. Friends have raised in various ways. First, let me reaffirm that the Government are committed to introducing legislation to bring in the supermarket code adjudicator. We will call it an adjudicator because, compared with existing ombudsmen, it is not strictly an ombudsman. I urge those of my hon. Friends who share my view that the sooner we introduce the adjudicator the better, to press the Secretary of State for Business, Innovation and Skill because this is his legislation. We will proceed as quickly as possible, but we need to be absolutely honest with ourselves and with farmers that this proposal will not in itself lead to a price rise; it is about ensuring that we have fair and transparent terms of trade and about enforcing the code, which has been in operation since February. We must not be accused of misleading people into thinking that the adjudicator will somehow make everything all right. My hon. Friends said a lot about supermarkets, so I will not go further into that issue. However, we also need to look at processors. As my hon. Friend the Member for Tiverton and Honiton (Neil Parish) said, certain processors have massively bid for contracts to process and bottle for supermarkets. They then pass on to the producers the results of what is, in many ways, over-bidding. We are now in the absurd situation where the farm-gate price paid for milk that goes into liquid products or relatively high-value cheese products is lower than that which people could afford to pay if they were going to convert that milk into skimmed milk powder, which is the lowest-priced global commodity—although, even then, the global price for the raw milk is about 27p or 28p a litre. The Government are, of course, committed to the concept of free trade and open markets, and the Opposition probably largely share that fundamental belief. We do not believe in interfering in how business operates, but it behoves business to operate a fair market arrangement. I cannot stand here and say that the Government will never intervene if we clearly see unfair practices going on. We hope that the adjudicator will resolve all that, but let me make it clear to the dairy processing and retail sectors that it behoves them to operate a fair market. They must recognise that if they do not, we will, as hon. Members have frequently said, lose the British dairy industry, whatever the type of housing, to overseas competitors. The result will be ever-more volatile prices.