Mr Eustice told MPs in a Commons hearing that there are limits to what his department could do to mitigate the downturn in the sector but that it is was making progress, for example, in setting up a “futures market” - which would guarantee farm gate prices in advance for some dairy products - as three commercial parties have expressed an interest in taking forward the proposal.
Addressing the level of UK milk production is a key issue, he said. Production rose by around nine per cent last year as farmers sought to produce their way to higher milk cheques, yet the number of UK dairy farmers fell by around three per cent in the same period.
Mr Eustice told the Environment, Farming and Rural Affairs Select Committee: “Short of reintroducing (milk) quotas, which we don’t want to do because in the long term we think that would be the wrong thing to do, we don’t think there’s a great deal we can do (to lower production).
“The problem here is oversupply, so ultimately, we want farmers around Europe and around the world to read the market signals and temper supply so we can get it back into equilibrium.”
Total farming incomes fell by £1.5bn last year, cutting profitability by 29 per cent, and Mr Eustice said: “Probably a recovery in farming incomes will come when we see a rebalancing of the pound against the euro and when we see a better equilibrium around the world between supply and demand.”
He said the latest market signals were that there would not be a “firming” of milk prices until next year.
MPs expressed concern that the publication of the Government’s long-awaited 25-year Food and Farming Plan had been delayed because the blueprint document would give the industry clear direction for the future.
Mr Eustice said this was partly down to the recent elections and that it could be held up further depending on the outcome of the EU referendum - although he was hopeful it would materialise by the end of the year.
The Minister was appearing before the committee on the back of EFRA’s farmgate prices report which identified that current guidelines on food labelling have the potential to mislead customers - a point which echoes The Yorkshire Post’s Clearly British campaign, calling for retailers, food processors and the wider food industry to clearly label dairy products with where their milk is from.
Under EU rules, dairy products that are manufactured in the UK can be labelled as ‘UK’ even if the milk is not from British cows.
A motion will be presented before the European Parliament tomorrow calling for the European Commission to reconsider its rejection of extending origin labels to processed foods.
The Brussels-branch of the National Farmers’ Union has urged all UK MEPs to support the motion, which is being tabled by seven MEPs - including representatives of the South West and the East Midlands.
Amjad Bashir, Conservative MEP for Yorkshire and the Humber, who will back the motion, said: “If the vote succeeds it will put real pressure on the Commission to stop this unfair treatment of the dairy sector. Consumers want to support our dairy farmers but they can only do so if food is clearly labelled. If they see a ‘British cheese’ label they want to know is made from British milk.”
SIGN THE CLEARLY BRITISH PETITION
To put pressure on retailers, food processors and the wider food industry to clearly label dairy products with where their milk is from, The Yorkshire Post is asking readers to sign its petition, which can be found here.