Earlier this week, the Environment, Food and Rural Affairs (EFRA) Committee called for protection provided against major retailers by the Groceries Code Adjudicator (GCA) yo be extended to all dairy farmers and small-scale producers.
The independent watchdog, which oversees the relationship between British supermarkets and their suppliers, also urged Westminster to grant GCA the power to fine retailers, some of whom have been accused of squeezing suppliers by driving the cost of milk down to as little as 89p for a four-pint bottle.
During Prime Minister's Question in the House of Commons yesterday, Glyn Davis, MP for Montgomeryshire, Wales, asked Cameron if he “accepts that the Government must consider all ways to bring stability” to the dairy industry.
Specifically, Davis asked the Prime Minister whether powers held by GCA "should be extended and strengthened" as recommended by the EFRA Committee.
“I very much agree with my honourable friend, and I think it is important that we look at how we can support Britain’s dairy farmers at a time of very low milk prices,” said Cameron. “This is an important industry for our country and there are a number of things we can do.”
“Specifically on the Groceries Code Adjudicator, I think it is time to make sure that organisation has the power if necessary to levy fines so that it can get its will obeyed. I also think its time to look at whether there are ways in which its remit can be extended to make sure it looks at more of this vital industry.”
Global volatility
UK milk prices fell significantly in the second half of 2014 as a result of global volatility, caused in part by falling demand, increased production, and the Russian trade ban.
In November 2013, the average UK milk price stood at 34.55 pence per litre (ppl), according to the Department for Environment, Food and Rural Affairs (Defra).
First Milk, which last week delayed milk payments, is, for example, offering suppliers 21.57ppl from February 1.
Across the board, milk prices are significantly short of the reported 30ppl production costs faced by British farmers.
Dairy farmer numbers in the UK are as a result dwindling and are expected to fall below 10,000 – down from more than 35,000 in 2005.
Attempting to address the milk price crisis, the EFRA Committee this week also recommended a European Union (EU)-wide review of the milk intervention price, urged suppliers "to increase their market clout" by forming producer organisations, and urged the Establishment to help the British dairy sector "tap more worldwide export opportunities."
"More we can do"
Seemingly responding to the EFRA Committee call, Cameron added there "there's more we can do in terms of leading exports for British food producers."
Steps should also be taken to ascertain whether HM Revenue and Customs is "prepared to provide the time to pay to support our dairy farmers," the Prime Minster said.
In a statement, MP Davis welcomed Cameron's response.
He said he was "very pleased when David Cameron committed to Government consideration of how the Groceries Code Adjudicator can be given a wider remit and greater remit and greater powers to protect our dairy farmers."
“There is no doubt that the dairy industry is going through a desperately difficult period with milk prices way below the cost of production. Supermarkets charging just 89p for four pints of milk and forcing the dairy farmers to supply milk below cost is extremely unfair, and is using market domination to bully producers,” Davis’ statement continued.