David Lidington MP, the UK's shadow secretary of state for the environment, food and rural affairs, outlined his party's view of the dairy industry at yesterday's National Dairy Event in Stoneleigh Park, Warwickshire. He said that the world looks almost certain to continue moving, albeit hesitantly and erratically, towards the further liberalisation of international markets.
"The dairy industry is going through a period of drastic and painful change," he said. "The rules of the market place are changing in three significant ways. First, we are seeing the gradual opening up of world trade and the dismantling of production subsidies.
"The enlargement of the European Union from 15 to 25 members will lead to an increase of about one fifth in total EU milk production and more vigorous competition for British producers in some of our traditional export markets. Together, enlargement and the push towards global free trade are bringing change to the Common Agricultural Policy."
He also railed against what he sees as weak government. "At a time when dairying is going through a traumatic recession, government should be making every conceivable effort to reduce the costs that it imposes on farmers. Too often that is not the case. Regulations are agreed and imposed without adequate thought being given to the practical, including the financial, implications. We all know the examples: nitrate vulnerable zones, fallen stock, not to mention the sheer incompetence of the Rural Payments Agency.
"Even after the government had conceded the principle of a ban on the burial of fallen stock, it could have used exemptions and derogations to allow time for an alternative system of disposal to be put in place. Ministers agreed to delay the implementation of the Animal By-products Regulation for waste food from retailers. It should have done the same. Other countries were more ingenious. The Spaniards even secured a derogation to allow carcasses to be left on the hills as a conservation measure to preserve vultures!"
Lidington outlined his belief of the need to limit the overall CAP budget. He also said that the growing political pressure from churches and charities to help developing countries would lead to export subsidies being reduced or phased out all together.
"If we look at dairying, figures from the Institute of Grocery Distribution show that demand for traditional dairy products - full fat milk and cheddar cheese - is static or declining. The growth in demand is for value-added products, for skimmed milk, yoghurt and fromage frais.
"There is a market for speciality products - I want to be the first in the queue for cheese like Llanboidy or Stinking Bishop. And there is a demand for novelty foods. When I read about the prospect of Tandoori flavoured cheddar, I want to run a mile. But it does actually offer the possibility of a new market for British dairy producers."
Following the breakdown of talks in Cancun, Lidington would like to see the burden of making concessions to help the poorest countries in the world to be shared fairly among thedeveloped nations. "For once, American rhetoric about free trade needs to be matched by American practice. Second, we have to find a way in which to write animal welfare into the rules governing international trade so that our producers do not suffer on account of the welfare standards that we as a society impose upon them."
Lidington supports the principle that the link between farm support and production should be broken. However, he is worried that the concessions made to France and others in terms of both the timing and the scale of decoupling may lead to market distortions. "The fact that 'degressivity' has now been renamed 'financial discipline' cannot conceal the fact that British farmers are going to be expected to pay a disproportionately large share of the costs of CAP reform," he said.
"The government also needs to come clean about cost compliance. One of the big attractions of decoupling is that it will sweep away a lot of form filling and red tape. That will be of little account if we simply substitute a host of new rules in the name of the environment. Nor is it clear how the standards required of farmers under cross compliance will relate to those that will have to be met to get into the 'broad and shallow' environmental payments scheme.
"The dairy industry is going through a time of great difficulty and challenge," said Lidington. "No politician could come to this event and say truthfully that he, or for that matter any government of any political colour, had all the answers. But I believe there are initiatives that Ministers could and should take to show dairy farmers that their government is on their side and will fight to get them a fair deal in a rapidly changing world."