Select Committee on Environment, Food and Rural Affairs Appendices to the Minutes of Evidence


Memorandum submitted by the Dairy Industry Association Ltd (DIAL) (G4)


  1.  DIAL is the trade association representing the interests of the milk processing and distribution sector of England and Wales. Our members include plcs, foreign multi-nationals, consumer co-ops, producer co-ops, small independent processors and bottled milk buyers distributing milk on the doorstep. DIAL members account for nearly 90 per cent of the milk processed in England and Wales.

  2.  The dairy processing industry is a major industry where there is a significant investment in sunk capital costs. The industry employs around 40,000 people and the value of industry sales is in the order of £6 billion.

  3.  The sector is subject to the normal rules of business, ie pursuit of profit through effectiveness in competition. The industry operates in an international market place.


  4.  In our submission to the inquiry we wish to focus on providing a response to the first two points of reference issued for the inquiry:

    (i)  whether the vision for the Department is appropriate and what progress has been made towards meeting that vision; and

    (ii)  whether farming and food, environment and conservation concerns and rural affairs are each given proper weight by the Department and whether the Department is engineered to deliver its objectives.

  5.  DEFRA is the sponsoring department for the dairy industry. Under normal circumstances it could be expected that the industry would be sponsored by the DTI. It is therefore important that DEFRA recognises the impact it has on the industry and that its requirements are acknowledged in DEFRA's aims and objectives.

  6.  DEFRA's vision is elaborated by the aims and objectives set out in its document "Working for Essential of Life". We are of the view that these aims and objectives do not give sufficient recognition of the economic imperatives agriculture and its associated processing industries are subject to. This is somewhat in contrast to the focus given to environmental issues. Both areas require full consideration.

  7.  We believe that a better appreciation of DEFRA's function could be achieved if it was explicitly stated that DEFRA's role was to reconcile competing interests for the countryside. This should be followed by a statement of those competing interests which should include a clear and unambiguous affirmation of the need for the food and farming sector to achieve profitability. This would ensure that the commercial needs of the sector were clearly recognised.


  8.  DEFRA has only been in existence for one year. It is difficult at this stage to comment on anything other than policy direction. However, one example of how it does not give adequate consideration to the economic imperatives of the food and farming industry is in respect of DEFRA's objectives for the reform of the CAP.

  9.  DEFRA is seeking to reduce the level of price support given to agriculture. If DEFRA is successful in realising its objective then it will compel a major restructuring of UK farming that will mean fewer and larger farms. Whilst a number of smaller farms will be able to maintain themselves by diversification and pursuing the range of alternative strategies identified by DEFRA, the effect of price reductions for the majority of farmers will be the need for them to pursue economies of scale.

  10.  The pursuit of economies of scale by producers must be recognised and supported by DEFRA. DEFRA should develop policies to assist in this process. This should include the provision of public funds where possible. DEFRA should also ensure that other policies, such as its environmental objectives, give due regard to the process.


  11.  In the longer term, assuming the economic needs of agriculture and food processing is recognised, then DEFRA will only be able to give proper weight to the range of interests it has to reconcile once it has established a single corporate culture. This will be achieved by day-to-day contact between staff and through the process of staff rotation. This will ensure that staff have an instinctive appreciation of the range of concerns that need to be reconciled by the Department. The structure and organisation of DEFRA, whilst it is relevant, probably does not play such a significant role in the establishment of a single corporate culture.


  12.  Since the creation of DEFRA we have continued to maintain a good working relationship with DEFRA personnel. DIAL remains satisfied with the professionalism and dedication of the civil servants in DEFRA. DEFRA personnel respond promptly to queries raised by DIAL.

  13.  We are however concerned that the consultation process used by DEFRA to elicit views from industry can be formalistic and unproductive. Large unwieldy stakeholder forums, whilst they can be used to demonstrate that all interests have been consulted, are not effective at establishing the detailed needs of each sector.

  14.  We have raised this issue with DEFRA in respect of CAP reform issues and they have indicated that they will seek to consult more closely on a sectoral basis. DIAL looks forward to this dialogue.

31 May 2002

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