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Dept for Environment Food and Rural Affairs

Answer

Sir Nicholas Winterton: To ask the Secretary of State for Environment, Food and Rural Affairs if she will make a statement on fluctuations in the level of the farm gate price of milk in the last 20 years. [148694] Alun Michael: The fluctuations in the farmgate price of milk over the last 20 years are caused by a number of factors, including the level of supplies, demand on EU and world markets and exchange rates. However, none of these factors are sufficient to explain why UK farmgate prices have been constantly below the EU average with the exception of a few years after deregulation of the milk market in 1994. This question was examined by KPMG in its report on "Prices and Profitability in the GB Supply Chain", which was commissioned by the Milk Development Council and published last year. The Report concluded that low farmgate prices in the UK were largely the product the structure of the UK industry, the low value of the product mix and the low level of product innovation within the UK compared with some Member States. The Report also identified a number of areas where farmgate prices could be improved by increasing supply chain efficiency, through rationalisation or through benchmarking. Many of these factors are for the industry to address itself, the Government has taken action in line with its Strategy for Sustainable Farming and Food to facilitate industry action. In particular: Lord Whitty has chaired meetings of a Dairy Supply Chain Forum, which has been looking at collaborative solutions to improve supply chain efficiency, as well as other issues; Under the auspices of the Forum, the Milk Development Council has initiated an innovations workshop to look at barriers to innovation in the sector and how to overcome them; Defra is participating in a further two sub groups of the Forum, which aim to facilitate the long term sustainable development of the dairy supply chain and help it adjust to the new environment created by the reformed CAP; The Government have made a grant of nearly £0.5 million to the Food Chain Centre to examine how to improve dairy supply chain efficiency; and We have established English Food and Farming Partnerships to encourage co-operation and collaboration across all agricultural sectors.

Secondary information

Type

Written question

Reference

417 c253-4W;417 c254-5W; 148694

Session

2003-04

Subjects

Dairy farming Prices Milk

Contains statistics

Yes

Link

View this Written question on www.publications.parliament.uk