Hansard

I begin by drawing the attention of members to my entry in the register of members' interests. My entry shows that I am a farmer but, to give more full information, I should say that I am a dairy farmer and am a contracted supplier to Robert Wiseman Dairies.

It is interesting that the Greens should have lodged the motion that we are debating today, given that it relies heavily on much of the information that the NFU Scotland has put to the Parliament through its lobbying in recent weeks and by other means. That said, having heard some of the opening speeches in the debate and some of the comments that members of the Green party have made in their interventions, it seems that they decided to focus the debate on their belief that we should be attacking global capitalism. The Greens are trying to prevent the benefits of free trade from filtering down to the ordinary people who benefit from the existence of supermarkets. People use supermarkets because they provide quality at competitive prices. Supermarkets also allow people to spend a much smaller proportion of their income on food than was the case in the past.

For example, the town of Arbroath in the north-east of Scotland has only one supermarket at the moment to serve a population of about 25,000 people. Several applications have been made to build another supermarket in the town—indeed, quite some competition has emerged to get permission to do that. The consistent view of the people of Arbroath and the surrounding area is that they want another supermarket, because they want competition in the retail sector in the town. They do not want to have to go out of the town to benefit from cheap supermarket food, which is a benefit that is acquired through competition.

Although I believe that supermarkets serve an important purpose in the production of cheap food, I also agree that there is a problem with them. In that regard, I turn to Fergus Ewing's remarks about the abolition of the milk marketing boards. Given that he does not have my experience of going through that process, I remind him that undertaking collective bargaining on behalf of the farmer was not one of the roles of the supermarket, whereas the role of the milk marketing boards was to set a price that was acceptable to processors and buyers. Ultimately, their role was to guarantee the survival of the farmer, but they had to do that at the same time as guaranteeing that the price of milk was kept down.

As a result, in the early 1990s, a lot of pressure was put on the Government to end the regulatory process and allow the market to deliver a fairer return. I can vouch for the fact that, after the milk marketing boards were abolished in the autumn of 1994, milk prices rose—not by a little but by a lot. In my experience, the price of milk rose by 22 per cent to a peak in early 1997. That rise in price was the benefit that came from releasing milk production from the regulatory process. However, those who bought milk were not subject to the same regulation as those who sold it. Consequently, the opportunity was taken more recently to manipulate the process through which milk passes before it is sold to the consumer. At the end of the day, the process has ensured that too much of the profit lands in the hands of the retailer and not nearly enough in the hands of those who are lower down the process.

If we are to follow the terms of the motion in this debate about supermarkets, I agree that we have to talk about regulation and competition, but therein lies the problem: we need to ensure that we have a regulatory environment that allows fair competition across the board, which means that those who produce milk in Scotland need to act for their own benefit. Action is happening in that respect—I refer to the attempt to integrate the interests of co-operatives and those of the processors that is under way as a result of First Milk Ltd taking a shareholding in Robert Wiseman Dairies. In a small country such as Scotland, we can never afford to believe that one company can actually hold a monopoly. I hope that the link between First Milk and Robert Wiseman Dairies is the start of an integration that will be fruitful in the long term.

Dairy farmers need the support of the minister, who said that his department has had discussions with the Office of Fair Trading. We need to ensure that he makes strong representations on behalf of Scottish dairy farmers and that he takes the opportunity to point out the imbalance that has emerged in the market.

An inquiry was held in the House of Commons into the milk trade. Having looked at the committee report, perhaps through rose-coloured spectacles, I feel that the wool was pulled over committee members' eyes on that occasion. The supermarkets seemed to manage to give the distinct impression that somebody else—and not them—was profiteering.

However, the facts speak for themselves. Milk prices have fallen back from the peak in the mid-1990s to only 17p or 18p a litre, the level that the majority of farmers are being paid today. The margin that is being made by the dairy companies is clearly identifiable, because they publish their profits and the number of litres that they process in a year. It is clear that companies such as Robert Wiseman are making at or just under 2.5p per litre for processing milk.

As a consequence, somebody, somewhere, is soaking up 18 pence of the typical milk price and the only suspects are the supermarkets. If we are not to see a level playing field in competition regulation, we will have to look closely at the implementation of the supermarket code of practice. In the first instance, if it can be enforced through negotiation, it can be made to deliver for farmers.