August 3, 2011

 

European proposals for dairy industry insufficient

 

 

Although the European Commission proposals attempt to lift the dairy sector out of stagnation, they are not sufficient to solve the issues experienced by the sector in the UK, according to MPs.

 

In the wake of evidence that British farmers are the lowest paid in Europe, members of the House of Commons Environment Food and Rural Affairs Committee say they are disappointed that the government did not offer more concrete or proactive suggestions to help.

 

And the committee calls on the government to set out its own strategy to tackle the structural issues that beleaguer the industry.

 

In a report evaluating the EC "Milk Package", the Efra committee says farm-gate milk prices remain below the average cost of production. And it wants the government to ensure that UK dairy farmers are offered written contracts by processors that specify either the raw milk price or the principles underpinning the price, the volume and timing of deliveries, as well as duration of the agreement.

 

"Unless such contracts are made compulsory, we believe there will be no improvement in the system as our dairy farmers have little certainty over the price they will receive for their milk," said Thirsk and Malton MP Anne McIntosh, who chairs the committee.

 

"Without government action, many more UK dairy producers will simply go to the wall, with highly undesirable consequences for rural communities, landscapes, tourism, and consumer choice. We found Defra's lack of an action plan disappointing."

 

The committee also argues that the forthcoming abolition of EU milk quotas coupled with growing global demand for dairy products creates opportunities for UK dairy production.

 

"To capitalise on this, some core issues that lead to low profitability must be resolved, not least the imbalance of bargaining power between dairy farmers and buyers," said McIntosh. "Effort is also required to drive up investment in milk processing to increase capacity and develop new lines of value-added products.

 

"Retailers must recognise that the current distribution of margins along the supply chain is unsustainable. We have called on the government to exert influence on retailers to establish dedicated supply chains for processed dairy products."

 

The committee supports the European Commission's proposal to allow dairy producer organisations to set prices jointly but warns that without greater safeguards this could lead to competitive distortions. "Greater oversight by the Office of Fair Trading is needed to protect consumers from milk price rises," said McIntosh.

 

In addition, the committee calls on Defra promptly to establish its position on large-scale dairy farming.

 

McIntosh said, "These developments have potential, but further research is needed to establish what impacts such systems have on the environment and animal health or welfare. Defra has an essential role to play in enabling a reasoned public debate about new technologies in food and agriculture. The government must not shirk its responsibility to set out an informed rationale for whatever position it adopts on super-dairies."

 

MPs also urge Defra to provide greater support for innovative research and development in the dairy sector focuses on novel uses and processes that add value.