Hansard

Public sector and private sector procurement by food service companies has a huge role to play. I assure David Stewart that, as part of our wider food policy, we are putting a lot more effort into that. On public procurement in this country, around 55 per cent of our cheese, yoghurts and so on are Scottish, which is way above what is stocked on our supermarket shelves, and nearly all our liquid milk originates in Scotland, as members can imagine.

There is still more to do, particularly in terms of food service companies in the private sector. That is a good point to highlight. We are certainly doing a lot of work with our food service companies. I should say that good marketing to try to reverse some of the trends works only if it is based on a strong supply chain.

In recent weeks and months, I have met many of our farmers in the dairy sector. One consistent message is that there is scope to be better at sharing best practice in the many areas that contribute to dairy farming.

We need to have effective measures to provide information services bespoke to dairy farmers, making it easier for farmers to benefit from practical advice from both advisers and their peers. We have already given priority access to the dairy sector to whole farm reviews and we will enhance the role of dairy monitor farms—initiatives to promote best practice in agriculture.

The dairy hub, which we set up following “Ambition 2025” as a one-stop shop for advice, is also making really good progress at the moment.

I am conscious, however, that some dairy farmers need more direct, tangible help. I am sure that the whole chamber is pleased that the chancellor listened to representations from this Government and from industry and extended the tax-averaging provisions in the recent budget from the current two years to five years for Scottish dairy farmers, which takes effect from April 2016.

We also need to focus on the wider issues that play a role in the efficiency of the sector, which is why our plan is promoting a transparent and efficient supply chain. The Groceries Code Adjudicator is fundamental to safeguarding the transparency of the market. I will meet her soon to discuss how her role can benefit and help our Scottish producers.

I take this opportunity to acknowledge the work done by Alex Fergusson, who happens to be sitting in the chamber, who was appointed to the review of the UK voluntary dairy code. I commend his good work on that. It is now important that his recommendations are considered by the industry. I urge the National Farmers Union and Dairy UK to agree a process for doing just that soon.

The voluntary code was an example of effective dialogue between farmers and the processing sector. The processing sector is at the heart of a successful dairy industry in this country. If we are to realise our ambition for the industry, there must be sufficient processing capacity in Scotland—a point that the committee highlighted. The Scottish Government and its partners are actively pursuing that and I hope that we will be able to update the chamber on progress in the near future.

Confidence out there is clearly high and we have to capitalise on it. Only yesterday I am sure that we were all delighted to see Graham’s Family Dairy announce exciting plans for the future with a new £20 million processing, research and training centre in Stirling. That is a company that is Scottish owned and Scottish based, using Scottish produce, which is going from strength to strength. That is a great sign of optimism for the future.

There are of course other players out there. Rob Gibson quite rightly mentioned First Milk. With its large number of members, that co-op alone accounts for more than 25 per cent of our dairy farmers. Securing a thriving future for the company is therefore vital for the future of the sector. We have been working closely with the company for several months and are committed to supporting its plans to transform the business, including its investment plans for the creamery at Campbeltown. I am pleased to confirm that following further detailed discussions with the company on the revised plans, we have now offered a new financial support package of £450,000, which can be drawn down in the next few weeks; and we expect it to be drawn down in that timescale. We hope that things will begin to move forward with that new investment. The improvements to the processing facility would be a big step in the right direction for the future of our dairy industry.

We do, however, recognise that there are other issues facing those in the industry, particularly those based on the islands or in remote areas. As the committee highlighted, transport costs are clearly one such issue. Haulage costs for dairy are not discounted in the same way as they are for other trades. That anomaly has its roots in history and it affects other sectors such as timber, construction and fuel. The current fare regime needs to take account of our rural industries that operate on a domestic and international scale.

As members will know, the Government is conducting a comprehensive review of ferry freight fares across the ferry network. The aim of the review is to deliver an overarching fare structure for all Scotland’s islands that is fair, transparent and straightforward.

I have agreed with Derek Mackay, the Minister for Transport and Islands, that the review will take particular account of the needs of those on Bute and Kintyre, for whom ferry charges are a crucial issue. He is also willing in the very near future to meet affected farmers to hear about the challenges at first hand. I am sure that the industry will want to take up that offer extremely quickly.

The impact of today’s challenges might be local, as is the case in Bute and other islands, but its genesis is international. It is clear that there is a need to focus on how international events play a part in the economic health and wellbeing of the dairy sector in Scotland, and, importantly, on the part that Scotland can play. We must get the international rules right and Europe’s agriculture ministers must keep a focus on dairy. As today marks the official end of dairy quotas, Europe must also monitor world markets to have a good understanding of the impact of the removal of the dairy quotas.

We will also continue to push for EU recognition of local products, particularly those from remote areas, such as Ayrshire Dunlop cheese, which was granted protected geographical indicator status just last week.

The committee has done an excellent job of investigating the current plight of the dairy sector in Scotland and holding many of the key players to account. Our dairy action plan, which was developed with a wide range of partners, in part in response to the committee’s findings, will, I believe, provide the right platform for a Scottish dairy industry that goes from strength to strength. I am not alone in that optimism. Indeed, when Carlo Petrini, the world-renowned leader of the slow food movement, visited the Parliament earlier this month, he was exuberant about the prospects for our dairy sector. Given our pastures, our climate, our products, our farmers and our heritage, he saw no reason why Scotland could not be a hugely successful player on the world dairy scene in the years to come. We should all share that view. As we debate a response to current challenges, we would do well to ensure that we keep that perspective and keep driving forward to deliver the best future for Scotland’s dairy farmers. I thank the committee for its report.