Large supermarkets and other retailers should be fined if they are seen to be bullying dairy farmers into knocking down their milk prices to unsustainable levels, an influential committee of MPs (Members of Parliament) is urging.
The Environment, Food and Rural Affairs (EFRA) Committee is calling on the UK Government to activate the Adjudicator’s power to fine retailers. This should be done before the general election in May using a straightforward parliamentary procedure, MPs say.
EFRA Committee Chair Anne McIntosh MP said:
“Frequent, sharp and unpredictable rises and falls in milk price are driving dairy farmers out of business every week. The volatility of worldwide and domestic milk markets is making financial planning and investment impossible for small-scale producers unable to hedge against changes beyond their control.”
“The vast majority of dairy farmers fall outside the protection offered by the Groceries Code Adjudicator (GCA). She can only investigate complaints involving direct suppliers to the big 10 supermarkets and retailers, and as most milk production is small-scale, that excludes most dairy farmers.”
“The EFRA Committee thought that was wrong when the GCA was set up in 2013, and events since then justify our view that her remit should be extended to include small-scale suppliers, whether or not they have a direct relationship with the ultimate seller of their produce.”
EFRA Committee Chair Anne McIntosh has been a Member of Parliament since 1997, and was previously an MEP since 1989. (Image: annemcintosh.org.uk)
The EFRA Committee report – Dairy Prices (Citation below) – says there should be an EU-wide review of the milk intervention price. It urges farmers to form Producer Organisations to increase their market clout.
Over the past six months, farmers have faced plummeting milk prices, resulting from a decline in global demand (especially from China), a worldwide oversupply following milk prices in 2013, and a Russian trade ban.
Some processing plants have seen protests, and farmers are leaving the industry in their thousands. There are today fewer than 10,000 dairy farmers in the UK, a record-low number.
The EFRA Committee severely criticizes the Government for undermining the GCA’s ability to use even the limited power she (Christine Tacon) has at her disposal.
Most dairy farmers in the UK today are unable to make a profit.
Ms. McIntosh said:
“We were shocked to learn in evidence that the Government have spent more than a year failing to set the level of fine the GCA can seek when she finds against a retailer. This leaves her unable to use her main power, and we call on the Government to set that fine immediately, and before the General Election in May.”
The Government should do more to help dairy farmers tap into global export opportunities, the MPs added. There should be a clearer ‘country-of-origin’ labelling on products.
Milk prices have plummeted. In fact, today it is cheaper than most bottled water. Last week, First Milk, the UK’s largest milk company told dairy farmers that their payments would be deferred by two weeks because it was having financial difficulties.
First Milk said the dairy business globally was facing extremely unfavorable conditions. In the UK and much of the rest of the world, dairy farmers are struggling from the recent price declines. The majority are operating at a loss.
The Tenant Farmers’ Association says that approximately 16 dairy farmers in England and Wales are switching to other agricultural products each week because their businesses became unprofitable.
National Farmers’ Union President Meurig Raymond said last week at Semex 2015:
“Take a look at the number of dairy farmers now leaving the sector – around 60 dairy farmers left farming in December alone. For the first time ever, we’ve dipped below 10,000 farmers in England and Wales. It is a number that has halved since 2002; Let me repeat that… the number of dairy farmers in England and Wales has halved in the last 12 years.”
“The worry for many dairy farmers now is how many of them will get through the next 12 months let alone 12 years. We certainly need to be prepared for things to be difficult for a few more months yet.”
National Farmers’ Union (NFU) dairy board chairman Rob Harrison welcomed the EFRA Committee’s recommendations.
Mr. Harrison, who gave evidence to the Committee, said:
“We are all aware of the short term issues currently facing the UK dairy sector and the implications for dairy farmers. While none of these recommendations are new, I do believe thatDefra now needs to deliver on these actions to help ensure a fairer, more sustainable dairy industry going forward.”
“There are obviously short and long term recommendations and I’m glad to see that the EFRA Committee took into account our views in their report. Top of the agenda is a push for a review of the EU intervention price for dairy products – I’m glad that Committee members agreed with me that 17ppl is not a safety net of any sort and this could help the current dairy situation immediately.”
Mr. Harrison agreed that over the longer term farmers need to develop a better dairy export strategy.
Citation: “Dairy Prices,” Environment, Food and Rural Affairs Committee – Fifth Report. Printed on January 14, 2015.
The following MPs are members of the Environment, Food and Rural Affairs Committee: (Chair) Anne McIntosh (Conservative), Richard Drax (Conservative), Jim Fitzpatrick (Labour), Mary Glindon (Labour), Emma Lewell-Buck (Labour), Iain McKenzie (Labour), Sheryll Murray (Conservative), Neil Parish (Conservative), Margaret Ritchie (Social Democratic & Labour Party), Mark Spencer (Conservative), and Roger Williams (Liberal Democrat).
BBC Video – Interview with EFRA Committee Chair