Dairy Industry Debate

It is a pleasure to serve under your chairmanship, Mr Walker. I congratulate the hon. Member for Dunfermline and West Fife (Thomas Docherty) on securing the debate.

Over the summer, much of my political work centred on the dairy industry. I was invited by the National Farmers Union to meet local farmers, a meeting hosted by Mr and Mrs Thomas of Dolau Gleision farm near Llandeilo. It was an extremely interesting experience. I was chaperoned into a nearby barn, where the local farming community sat on rows of hay. It was a bit like “Question Time”. I also had a detailed meeting with the executive of the Farmers Union of Wales in Carmarthenshire, in which we discussed policy options,

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and my Assembly colleague, Rhodri Glyn Thomas, and I arranged an open meeting on the eve of the Royal Welsh show in Llandeilo. To his credit, the Welsh Deputy Minister for Agriculture, Food, Fisheries and European Programmes, Mr Alun Davies, attended the meeting at extremely short notice.

Feelings in all those meetings were running extremely high. Most farmers had just received news that they were facing price cuts of at least 2p. A large number of farmers were threatening to spill their milk down the drains, and many did not attend the meetings because they were picketing processing units across the border. Thankfully, and to his credit, the UK Minister at the time acted, and during the Royal Welsh show announced progress on a voluntary code of best practice between processors and producers. Together with the milk price cuts being postponed, that was enough to restore calm in the countryside and avoid a summer of discontent, which meant that I could enjoy the rest of my August holidays.

The process culminated with the announcement of a finalised voluntary arrangement earlier this month, which is undoubtedly a step forward. However, the key question is whether it will result in a fair price for farmers for their product. At the end of the day, that is key, as well as creating a fair and transparent supply chain. Unless farmers are confident about the future prospects of the industry they will not commit to dairy production.

I welcome the moves to equalise the relationship between producer and processor, specifically in the contractual arrangements. Previously, producers were tied to a processor for periods of longer than a year, whereas the processors could cut the price on a whim. The voluntary agreement, as I understand it, will ensure that processors have to give producers 30 days’ notice before dropping prices, but producers will have to give three months’ notice. Although the agreement is a step forward, the balance will still be weighted towards the processors.

There has been broad support for the voluntary code. NFU Cymru has always championed a voluntary agreement. The Farmers Union of Wales, which traditionally shares my more militant tendencies, has also welcomed the announcement. I am not being pessimistic, but I believe that it is incumbent on both the UK and Welsh Governments to prepare a policy response, if the voluntary code breaks down.

During the public meeting in Llandeilo, the Welsh Deputy Minister said that he had the power to introduce a Welsh dairy package. I was completely flat-footed by that suggestion, because I had always thought that such things had to be introduced at member state level. However, during a visit to Brussels last week, the Welsh Affairs Committee met with Hermanus Versteijlen, the European Commission’s director of agriculture and rural development. I naturally asked him about that, and he said that a dairy package could be implemented wherever the political competence lay, which seems to indicate that it would be possible for the Welsh Government to introduce one. I urge the Welsh Deputy Minister—I hope that he is listening in Cardiff—and stakeholders in my country to at least begin to prepare the framework for legislating on a Welsh dairy package. Having something concrete in draft form might even concentrate the minds of processors, in relation to ensuring that the voluntary code that was set out earlier this month works.

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I have a few questions for the Minister on the voluntary code. How does he expect the code to affect the expected legislation on the grocery ombudsman? What measures will he use to judge the voluntary code’s effectiveness? How do British farming Ministers view the implementation of the European Union recommendations for producer organisations? How will they develop on these isles? What is the potential threat of quotas ending in 2015? In informal meetings in Brussels we were led to believe that the Irish are gearing up vastly to increase their production to flood the UK market. Will the Minister indicate his thinking on the potential threat of that future development?

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