Meeting of the Parliament 23 September 2015
I welcome the opportunity to take part in a debate on an issue that is important not just to my constituents but to the whole country.
I want to start a trifle unconventionally by wishing a happy 70th birthday to my constituent and friend Robert MacIntyre, who is a councillor for Bute and a farmer of immense experience and wisdom. Indeed, the cabinet secretary knows Mr MacIntyre, and his name is known through Scotland’s farming sector.
I have learned more about agriculture from Robert MacIntyre and other working farmers than I ever learned from briefings that I received as an environment minister and much more than I thought I could learn from attending, as I did on a couple of occasions, the agricultural council of the European Union. Robert has been chief among my tutors, although I must also mention, with some sadness, the late Bert Leask of Mull, who passed away in July and whose deep knowledge and ready wit were always generously put at the disposal of not just his local MSP but the cabinet secretary.
I mention Robert MacIntyre not just because he has reached the biblical age of three score years and 10 but because he is a dairy farmer on the island of Bute. At a time when he has a right to be experiencing a more comfortable and less stressful life—though he remains a member of Argyll and Bute Council—he faces an immensely worrying and very pressured future.
Last year, Robert’s son, Robert, came home from a successful career in England because he wanted to take over the farm. The price of milk was good and the prospects for the industry were promising. That was last year. Earlier this year, the price of milk plummeted, as members know only too well, and the price has gone on falling. The two Roberts at Dunallan are producing milk for a First Milk price that is some 10p or more per litre below the cost of production. They are pouring their money into a tanker and off the island, and they cannot do that for ever.
The reasons for the collapse of the price of milk are many and various. There was undoubtedly an oversupply of milk, with greater efficiency producing more milk from fewer cows. There has been increased competition from other countries, there has been loss leading in the retail sector, and the closure of the Russian market because of sanctions has meant that milk powder, which First Milk was producing, could not be sold there.
There are other, more local, factors, too. First Milk has been a disastrously run company. Last year, it lost over £20 million after a series of bad decisions and failed projects. Its incoming chief executive, Mike Gallacher, has admitted as much, and he gave compelling evidence to the Parliament’s Rural Affairs, Climate Change and Environment Committee in March about his plans to turn the company around. The committee and the agricultural sector have supported those plans.
The problems of that company do not affect just the 13 dairy farmers on Bute. There are First Milk dairy farmers in other parts of Scotland, in England and particularly in Wales. In my constituency, there are also some 36 or so dairy farmers in Kintyre and Gigha who are similarly challenged by rock-bottom prices and a scheme of retention of payments—capital retention—that First Milk has used to avoid insolvency.
The farmers in Kintyre and Gigha supply to a creamery in Campbeltown that requires substantial upgrading if it is to be competitive. I thank Richard Lochhead for helping to fund that work, which has at least started. However, First Milk’s previous management compounded the problems of the area by an inappropriate and ineffective sales and marketing agreement with an external company, which has led to huge amounts of premium Mull of Kintyre cheddar being sold on the mass market as bulk cheddar and returning very little profit. The farmers and their families are trying to rectify that with their own campaign for Campbeltown cheese.
It is no exaggeration to say that the future of the dairy industry in my constituency—in Kintyre, and on Gigha and Bute—hangs on a knife edge. If there is not a significant price rise or significant intervention before the winter sets in, with increased feeding costs, many of those who are presently in the sector will leave it, no matter the cost to them.
It is with great regret that I have to tell members that First Milk is now making the situation even worse. Tesco has agreed to pay full premium price for the milk that goes into cheese at the First Milk plant at Haverfordwest in Wales. As that is being paid to a co-operative across the UK, the expectation of all the members of that co-operative was that each one would benefit. However, First Milk announced last week that that would not be the case. Those who supply the Haverfordwest plant will get a huge boost in payments, but all the other members, whose money has gone to equip and run it over the years, will get nothing. When is a co-operative not a co-operative? The answer is when it is run by First Milk.
I appeal to First Milk to rescind that decision to help all its members to survive, not just some. The members of First Milk have much money tied up in the company and they want it to succeed, but if First Milk turns its back on them just when they need it most, it will forfeit all right to respect and continuing support.
Other parts of the agriculture sector also face hard times, of course—we have heard about sheep and beef prices—but the dairy sector is a special case. Its very future is in doubt in my constituency at least. More help must be given now, as I think the cabinet secretary knows. Help must be given over and above the worthwhile but longer-term aims of the cabinet secretary’s dairy action plan.
I do not want to finish on a gloomy note. In early August, I took my friend Robert MacIntyre to the Kintyre show. Wandering around an agricultural event with him is a slow process. He knows everybody, and he has a story for everyone and a story about everyone. Many of his stories are immensely entertaining, and many of them could not be told in the chamber.
There was a sense of camaraderie and comradeship, and indications of innovation and new thinking. There was enthusiasm for the jobs that had to be done, which many young people wanted to be involved in.