Milk

I have focused particularly hard on dairy farmers lately. Not least because of the fall in the price they receive for their milk. It costs around 30p per litre to produce with farmers receiving only around 24p.

I have made a point of meeting with many local farmers recently and last week I attended a rally of 3,000 dairy farmers in Westminster. They are right to be angry about milk prices but amidst the sound and fury we must not loose sight of the positive actions being taken.

The main reason for low milk prices is the structure of the milk market.

Highly disaggregated producers (farmers) sell milk to a small number of processors who in turn sell on to a concentrated group of powerful retailers.

Those at the top of the supply chain squeeze farmers' margins. So what can be done? Firstly, we are bringing in a Grocery Code Adjudicator to intervene where there is evidence of the unfair use of market power.

I pressed hard for the adjudicator and was delighted to see it included within the Queen's Speech.

I will be watching how it works in practice very closely indeed.

Another aspect of rebalancing the market is to set a sensible code for the way the contracts between farmer and processor are drawn-up.

There needs to be greater transparency of pricing and the removal of the ability to rapidly reduce the amount to be paid to farmers.

There also needs to be a greater ability for farmers to switch from one processor to another.

These factors should drive the pressure on processors to keep up the price they pay farmers and to negotiate harder with supermarkets. If necessary the government should legislate on this.

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