EFRA Committee Report – Dairy Prices

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Dairy farmers need more protection against rapid cuts in milk prices, MPs argue in Dairy prices report.

The Environment, Food and Rural Affairs Committee calls on the Government to change its mind on including all dairy farmers, and other small-scale producers, in protection against major retailers offered by the Groceries Code Adjudicator (GCA). The MPs are also calling on the Government to activate Adjudicator’s power to fine retailers – which can be done using a straightforward parliamentary procedure – before the election.

Chair’s comments

Committee Chair Anne McIntosh MP commented:

“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. 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.”

EU-wide review 

In its report, Dairy prices, the Committee also seeks an EU-wide review of the milk intervention price and calls on farmers themselves to consider forming Producer Organisations to increase their market clout.

Farmers have faced deep and rapid drops in milk price in the past six months, arising from a drop in worldwide demand, a Russian trade ban, and international oversupply following high milk prices in 2013.  Protests have resulted at some processing plants, and farmers have been leaving the industry, bringing the total number of UK dairy farmers below 10,000 for the first time.

Milk price crisis

The Committee strongly criticises the Government for hindering the GCA’s ability to use even the limited power she has.  Anne 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.”

MPs also call on the Government to help dairy producers tap more worldwide export opportunities, press for clearer ‘country-of-origin’ labelling on products and learn lessons from the current milk price crisis to improve codes of practice regulating dairy industry pricing and operations.