MPs tell Minister to find way of ensuring fair-price milk deals

A report by the Environment, Food and Rural Affairs Committee, which monitors Defra affairs, says the European Commission’s plan for the sector is not enough and the UK government has to add to it.

The EC wants contracts which commit the big milk buyers to a formula which means they have to pay a fair price rather than the lowest possible.

UK farming Minister Jim Paice has said it would be difficult to translate that wish into a binding requirement which would make much difference to the kind of contracts already existing.

He made his argument to the EFRA Committee, but members have roundly rejected his scepticism and said he must find a way.

Their report said: “When we questioned the Minister on what he could do to improve farmgate dairy prices, he answered ‘Not a lot’.

“We are surprised and disappointed that the Minister was not able to offer more concrete and proactive suggestions.”

And they quote Mr Paice’s own testimony back at him: “Some sectors of the whole supply chain say that eventually supply and demand will work themselves out. I think that if we wait until then, it will be too late for countless small dairy farmers.”

Mr Paice’s on-the-fence position over megafarms is also criticised. He has argued they are a matter for local planning authorities but the committee says he must decide if they would be good for the industry or not and support them if they are.

Committee chairman Anne McIntosh, Conservative MP for Thirsk & Malton, said: “We have called on 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 that currently means our dairy farmers have little certainty over the price they will receive for their milk.”

The MPs’ report also calls for:

Pressure on supermarkets to set up their own supply chains for milk products, like cheese and butter, and ensure they are paid sustainable prices, as they are beginning to do with liquid milk suppliers

A new drive for anaerobic digesters, running on muck and grass

More research into novel uses for milk, such as making plastics, and support for investment in new dairy processing ideas.

The NFU endorsed the report, criticising the “exploitative nature” of milk contracts and lack of negotiating power that currently exists.

A Defra spokesperson said: “The UK has some of the best grazing in Europe and our dairy industry has a strong future if it can seize opportunities to grow and take a greater share of domestic and export markets. We’ve reinvigorated the Dairy Supply Chain Forum to encourage this change.

“Fixing pricing, through contracts or otherwise, is not possible and it’s not the answer for dairy farmers who struggle to make a profit.

“We’ve encouraged producers to band together in producer organisations which can help them be more competitive and successful.

“There is room for dairies of all sizes and types.”