Fine supermarkets if they have unfairly squeezed milk suppliers, say MPs
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Version 0 of 1. The UK’s big supermarkets should be slapped with heavy fines, and as soon as possible, if they are found to have squeezed milk suppliers, an influential committee of MPs is urging. The MPs were responding to recent drastic falls in the price of milk, which have left thousands of dairy farmers struggling for survival. The environment and rural affairs select committee said ministers must bring forward measures before the general election to give more powers to Christine Tacon, the groceries code adjudicator, a position that was created after years of investigations into the big supermarkets using their muscle to squeeze farming suppliers. The MPs want the watchdog to be able to punish the big retailers if they are found to have misused their market muscle to overly depress prices to dairy farmers. This could be done quickly using parliamentary procedures and would not require new legislation. Large numbers of smaller dairy farmers in particular are unable to meet the costs of milk production after prices plummeted from nearly 34p a litre a year ago to as low as 20p a litre. Ann McIntosh, who chairs the committee, said: “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. As most milk production is small-scale, that excludes most dairy farmers.” Farmers welcomed the report. “The adjudicator is currently so ineffective that it cannot do anything to help dairy farmers,” said Ian Macalpine, chairman of the Royal Association of British Dairy Farmers. “Virtually no liquid milk is sold direct, there is a continuing lack of transparency throughout the sector and, until we get better market intelligence, we will continue to suffer milk price volatility. [Granting new powers] should improve the price and security for dairy farmers. We would urge action at the very earliest.” But Dairy UK, which represents processors and milk buyers as well as milk cooperatives, opposed the move. Judith Bryans, its chief executive, said: “We do not believe that extending the powers of the adjudicator would help to address the challenge of volatility and contractual relationships between farmers and processors that are already covered by the voluntary code.” The MPs on the committee called on the government to put more measures in place to aid dairy farmers, who have been hurt by increasing volatility on the international markets for milk products, including fresh and frozen milk, cheese, dried milk, cultured milk and other products. This has been driven bumper production in key areas, such as New Zealand, flooding the market while prices have also taken a hit from the Russian trade ban and faltering demand in China as the rate of economic growth there has stuttered. McIntosh said: “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.” Other measures they called for included a review of the way in which the European commission can intervene in the markets if the price falls sharply; the grouping of farmers in producer organisations in order to increase their market clout; and clearer country of origin labelling for UK dairy products. At the Oxford farming conference early this month, the environment secretary, Elizabeth Truss, promised help to dairy farmers. She promised to give them greater access to hedging against future price volatility on international markets and vowed to cut the number of inspections of dairy farms and tackle bovine TB. The British Retail Consortium, representing supermarkets and other major retailers, said farmers were not suffering from price wars among supermarkets. Andrew Opie, director of food and sustainability, said: “Some individual retailers have reduced the price of milk charged to consumers in store, but they alone are paying for the price reduction – not farmers. In fact, retailers continue to pay the highest prices in the market to farmers, regardless of the price they charge their customers.” He said the groceries code of practice, which the adjudicator implements, was working and that falling prices were the result of global economic trends with a glut of supply meeting a fall in demand. |