That point is accepted by the farming unions, but as my hon. Friend rightly points out, offsetting those difficulties through diversification schemes is often easier said than done. The uncertainty of the future of dairy farming gives rise to the issue of whether farmers can obtain the necessary funding to enter diversification schemes or more adventurous marketing schemes on the back of a dangerously fluctuating short-term horizon. However, I take on board his well made point.
Some solutions have been put forward by the retailers themselves, so there are silver linings to one or two clouds that we have referred to. To cite ideas from one
particular retailer—I am trying to avoid naming individual companies, so that I am not bombarded with rebuttals and the like when I leave the Chamber—those solutions include working with processors to create greater transparency in the supply chain, and enabling farmers to see how prices are set in order to create better trust within the supply chain. That is a new way of working that has not been seen before in the industry, and it will create benefits for farmers, consumers and the industry. For example, the price paid to farmers will be worked out every three months, based on a rolling average of indexed butter and milk powder prices. Those commodity prices are publicly quoted, and in each case there is a futures market, allowing farmers to look ahead and hedge or protect themselves against price movements. That will allow dairy farmers better to predict milk prices and plan accordingly.
That idea comes from an e-mail from somebody who took the trouble to contact me recently. However, if I may use a rather clumsy analogy, it aligns what we are discussing with the principle of a fixed-term mortgage. If the industry is prepared to enter into an arrangement in which it can play the futures market, we can have contracts that are perhaps fixed for a longer period. If contracts can be fixed both between retailer and processor and between processor and farmer, we will be able to look at one-year or two-year contracts, or perhaps—maybe I am being over-optimistic—even further ahead than that.
Yes, of course, there are risks. There are risks to each person in the chain, but surely we can inject a degree of certainly into the industry to eliminate the risks and the downside from which people are suffering, which affects not just farmers, but everyone who relies on farmers in some shape or form.
It is a promising way forward if the retailers are beginning to recognise that there is a need for a transparent contract system based on being able to look ahead and take an average price over a future period. There would then at least be recognition that we are looking at the end of the unacceptable practice of simply sending a text message to a producer to downscale their milk price in two or three weeks.