Following an EU agriculture council meeting which dealt with the current crisis in the milk industry across Europe, MPs in the Efra Select Committee today quizzed milk industry representatives and farming leaders over the situation in the UK.

Farming representatives have warned in past weeks that cuts being made to farm gate milk prices are unsustainable and risk irreversibly damaging the viability of the dairy industry. Over the past two months, major suppliers in the UK have twice cut the price paid to farmers for their milk, in some cases by a cumulative 4 pence per litre.

Last week, farmers and industry representatives met in London for an emergency dairy summit at which they promised action unless the cuts inflicted since May are reversed by 1st August and moves are made to eradicate unsustainable practices and inequitable distribution within the dairy supply chain.

Yesterday, farming minister Jim Paice announced that he had failed to convey the seriousness of the situation in the UK dairy sector to his European colleagues after the council declined to intervene in the situation. Two years ago, following a similar series of events, a ‘dairy package’ was introduced to remedy the situation.

However, despite his fighting talk ahead of the Dairy Summit last week and action taken to protect farmers by his counterpart in the Scottish Government, Paice’s promise that he would “bang heads together” in order to achieve a resolution appears to have amounted to naught. Last week he told assembled farmers that “government ministers can’t fix prices and I don’t believe we should.”  

Pleas were made by Polish and Lithuanian MEPs farming ministers at Monday’s European Council meeting for support to cushion the effects of low milk prices on dairy farmers. Agriculture Commissioner Dacian Ciolos said evidence suggested an upturn in milk prices is forthcoming. A report released at the meeting revealed EU exports of milk and dairy products had increased by almost a quarter.

Efra committee meets with supply chain stakeholders

In response to the situation in the dairy industry, MPs in the Efra Select Committee today met with stakeholders from the UK dairy sector to follow up on issues raised in the Committee’s 2011 inquiry into the future of the dairy industry. Representatives of processors Dairy Crest and Asda, as well as the National Farming Union presented evidence at today’s meeting.

NFU delegate Meurig Raymond told assembled MPs that farmers in the UK are being paid 5 pence per litre below the cost of production for their milk and asked for government intervention. Anne McIntosh, the committee’s chair, suggested the formation of strong cooperatives could benefit the farming community, and the NFU Deputy President agreed with her to an extent.

Before leaving for another select committee, Labour MP Barry Gardiner asked Mr Raymond pointedly “These have been the same arguments we have been having for years; we talk about New Zealand, Ireland – island nations remote from the rest of the world – yet they do very well. Why is it that British dairy farmers don’t?”

Echoing farming minister Jim Paice’s suggestions delivered at the emergency dairy summit last week, he added accusatorily, “We have talked about [chasing markets for processed dairy products] for the past five years, that the industry produces more cheese, more yoghurt, all of that, but you don’t do it, do you?”

The discussion returned to efficiency and Mr Raymond explained that costs related to dairying have risen dramatically in response to Gardiner’s accusations that dairy farming remains inefficient. Last week, a similar suggestion by farming minister Jim Paice at the dairy summit sparked booing and heckling which lasted the duration of his speech.

The NFU representative called for moves towards more sustainable payment models from supermarkets, which factor cost of production into price paid, he used the example of Sainsbury’s and Marks and Spencer as retailers which have already implemented such schemes.

Asda representative Paul Kelly, announced that his supermarket had today made the decision to increase the premium paid to its milk suppliers. He also said Asda would make an effort to sell more processed dairy products made with British milk in its stores and that supermarkets want to work together to find a solution with stakeholders from across the supply chain.

Tory MP Richard Drax responded, “Yes, I’ve got your press release here; one could be cynical and say the timing just happens to be coincidental. Is it because of the pressure that’s mounting?”

Asda, along with Morrisons and the Cooperative, have been the focus of a concerted ‘name and shame’ campaign by the NFU. All supermarkets identified as not paying a sustainable price to their dairy suppliers have announced remedial action since the campaign began last week.   

Dairy Crest, the company which precipitated the first round of cuts this year, which came following the company’s announcement that it would be paying its farmer suppliers 2 pence per litre less for their milk with just four days’ notice made at the end of April, today announced an increase of 15 per cent in total sales for the first quarter of 2012. Dairy Crest has blamed its cuts on “challenging market conditions”. 

 The full debate can be watched here.

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