Wednesday 11 July 2012

Labour Attacks Tories on Milk Crisis

Milk teeth

Lord John Grantchester is a member of Labour’s Shadow DEFRA team in the House of Lords

1994 was a watershed year for the dairy industry. This was the year the Milk Board was disbanded. Dairy farmers received 25p per litre and looked forward to a new dynamic world of innovation and opportunity. The equivalent price on the Supermarket shelf was 43p per litre.

Today, nearly 20 years on, with price cuts this spring, dairy farmers now receive less, at 24.5p per litre, whilst the equivalent price on the supermarket shelf is 78p per litre. It begs the question: who’s milking who?

For a 2 million litres a year commercial dairy farmer, the recent price cuts amount to wiping £74,000 off the dairy farm’s annual income. That will amount to a cut of 10-15% turnover.

How can this happen? And why can’t the supply chain be made to work – and for all in the industry?

Farmers are expected to pay for consolidation of the supply chain, undertake massive efficiency work practices, invest in innovation and now accept losses on their products. Once again the multiplier effect on the rural economy means loss of jobs, loss of enterprise and loss of communities.

Already the industry has seen lots of public support: Farmers Weekly’s poster has been shared many thousands of times on Facebook and the #sosdairy twibbon adorns hundreds of Twitter profile pictures. The industry must keep on engaging and informing the public, ensuring that farmers communicate with the consumers and using such channels to continue to highlight the issue.

Encouragingly, the previous Labour government promoted a greater emphasis on co-operation. The wiser farmers at the disbanding of the milk boards realised that they would have to re-join Producer Organisations once again. This is now more vital than ever, but dairy farmers need help for a more level playing field. As well as widespread action, farmers are asking the questions. Now it is time for policymakers to respond.

Next week the Groceries Code Adjudicator Bill will have its Report stage in the Lords. This milestone offers opportunities to strengthen the proposed ‘watchdog’, particularly regarding the power to fine. The Adjudicator must be given teeth.

Trust alone cannot shield farmers from poor supermarket practices. The power to fine would help to provide a greater deterrent against those taking advantage of farmers. The way in which the recent price cuts of dairy happened highlights the lack of reach of the Code throughout the whole supply chain.

At Report in the Lords, Labour will press hard for the Groceries Supply Code of Practice to apply not just to the supermarkets and their immediate suppliers, but also right along the supply chain between the consolidators and processors with their suppliers – the diminishing number of dairy farmers.

The subject has reached the attention of Europe, as part of the current EU Dairy Package. The UK must respond and make our supply chain work for everyone. Only Labour has fought for a more responsible capitalism, and a fair code of practice is as vital between the processor and dairy farmer, as between the processor and the supermarkets.

Mary Creagh MP, Labour's Shadow Environment Secretary, responding to the Dairy Summit and lobby of Parliament being held in London today, said:

"This race to the bottom on farm gate prices is bad for farmers, bad for the dairy industry and bad for consumers. Consumers need affordable milk but the three biggest processors are cutting prices which hits dairy farmers’ livelihoods and could ultimately force them out of business.

"Labour wants to see fairness in the food supply chain which is why we have pressed the Government to introduce the Supermarket Ombudsman. The Government now needs to broker a deal between farmers and processors on dairy contracts to avoid further damage to this vital sector."