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I congratulate the farming industry on its progress as a successful and vibrant industry that produces the raw materials that we need to enjoy a wide range of delicious and nutritious food. Lancashire of course has its fair share of excellent food and drink products, including traditional Lancashire cheese, which was one of the first UK foods to take advantage of the European Union protected food name scheme. In August, I had the pleasure of helping to host an event at No. 10 to promote the scheme and to encourage more of our quality regional food producers to take advantage of it. There has been interest in the scheme from other food and drink producers in the county, and from the Department for Environment, Food and Rural Affairs
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officials stand ready to provide guidance as appropriate. I hope that my hon. Friend will communicate that offer to his local producers.

Mr. Hoyle: My hon. Friend says that we have many good things in Lancashire, particularly Lancashire cheese. If he will come up to Chorley and visit Pat's cheese stall on Chorley market and Mr. Brown the butcher, he will realise the quality of local produce.

Jim Fitzpatrick: I am grateful for my hon. Friend's kind invitation. I would be happy to take advantage of it if I get the chance to do so before the general election.

The Government recognise that the marketing of regional and local food can bring benefits for producers and consumers. There are fewer middlemen, and that means farmers and small producers are able to retain a higher proportion of the end price for their produce. Local food chains increase consumer choice and raise awareness of and interest in local food by helping to improve consumers' links with and understanding of the rural economy and food production. Suppliers will flourish by providing what customers want, and there is growing public enthusiasm for locally produced food, especially food with a clear regional provenance. Consumers prefer to buy local if they can, and supermarkets are supporting that. Although I would not want to comment on Asda's recent planning application to open a new store in Chorley town centre, as mentioned by my hon. Friend, its early support of the Plumgarths regional food hub is an example of the retailer's interest in local food. As he and other hon. Friends said, that should be supported.

Research suggests that UK locally sourced food retail sales will total £6.2 billion by 2013, up from £4.7 billion in 2008-a growth of some 31 per cent. over that brief period. In recognition of this, we have provided a range of assistance to local food chains, including helping regional and local food producers to overcome various barriers to market. We have funded meet-the-buyer events for retailers and the food service sector. We also support farmers markets and farm shops and encourage the use of food hubs and shared distribution facilities.

We recognise, however, that there has been mounting concern over recent years among various industry and lobby groups about the power of major supermarkets, as described by my hon. Friend, and the impact that this has had, including on the ability of local producers to access markets. The Government and the Office of Fair Trading shared these concerns and so asked the Competition Commission to investigate the groceries market to see whether supermarket power was indeed detrimental to consumer interests. The Government are committed to fostering competitive markets that work in the best interests of consumers, including in the groceries market. By looking for ways to help make markets work better, we can enable businesses to compete freely and fairly, giving UK consumers more choice and better value.

We therefore welcomed the commission's final report, published last year, and thank it for its work to implement its findings. The commission found that in many respects competition between supermarkets was strong and working effectively. Competition in the groceries market provides consumers with diverse choice, good value and low prices, which is reflected in the numbers of shoppers who choose to buy their groceries in supermarkets.

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Mr. Hoyle: The Minister says that this is about ensuring fair competition. I think that competition failed in respect of the price that was being paid to farmers for milk. As one supermarket altered it, another followed, so the price went up for the consumer while the price being paid to the farmer went down. That acted against not only the farmer but the person shopping in supermarkets.

Jim Fitzpatrick: My hon. Friend makes a fair point. The hon. Member for South-West Norfolk (Christopher Fraser), who is no longer in his place, mentioned the premier contracts that some dairies have with farmers. I discussed that matter with my hon. Friend the Member for North-West Leicestershire (David Taylor) and the Select Committee on Environment, Food and Rural Affairs only last week. It is producing a report on the failure of dairy farmers in Britain, which will draw on the lessons learned and help the industry to move forward.

The Competition Commission identified two adverse aspects of competition-areas in which the market structure does not work in the best interests of consumers. It identified areas where local groceries markets were dominated by single retail chains, restricting the choice available to shoppers. It also found that certain supermarket practices passed unacceptable risks or costs on to suppliers, mainly food manufacturers and processors, creating higher levels of uncertainty about their income and so limiting their ability to invest and innovate.

The commission proposed a number of remedies and recommendations to address the adverse effects on competition identified. They include a new groceries supply code of practice for all supermarkets with a turnover of more than £1 billion a year. The GSCOP will come into force next February, and the OFT will play an important role in overseeing its implementation. Additionally, the commission recommended that the Government establish an ombudsman, which my hon. Friend the Member for Chorley and our other hon. Friends who support him mentioned. Its duty would be to monitor the GSCOP and arbitrate disputes between suppliers. It was also recommended that a competition test be added to the planning rules regarding the location of new supermarkets. That was a request that my hon. Friend made in his closing comments.

The Government are considering those recommendations carefully. Competition policy is a matter for the Department for Business, Innovation and Skills, but DEFRA too will play an active role in determining the Government's response to the proposal to create an ombudsman, and we want to take full account of the views of stakeholders.

Mr. Drew: By chance, I have a meeting with one of the BIS team tomorrow. Can I be assured that when I
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say to him that DEFRA is on board with the recommendation for an ombudsman, I am speaking from the correct record?

Jim Fitzpatrick: My hon. Friend tempts me to comment on a matter that is under collective Government discussion. I am sure that he is aware of the position in respect of the ombudsman, and we hope to bring forward a conclusion shortly.

I should like to comment on the relationship between retailers and farmers. The GSCOP will be for companies that supply directly to retailers. Most fresh produce is supplied to retailers through intermediaries such as packers, processors and fresh food wholesalers rather than by farmers. The Competition Commission found that the combined total value of direct purchases from farmers by six large grocery retailers amounted to less than 2 per cent. of the total value of agricultural production.

Although most farmers will be outside the direct scope of the GSCOP, the limited value of direct purchases by grocery retailers from farmers understates the closeness of the trading relationship between primary producers and grocery retailers. Farmers may be members of, or shareholders in, intermediary businesses that market their produce to grocery retailers, so the GSCOP will provide them with some certainty.

Given the importance of food to the economy, the Government are working with regional development agencies and regional food groups to develop businesses and market their products, promote regional food and farming and create demand for local seasonal produce. Where consumers continue to want good, distinctive and nutritious local food, supermarkets and local shops will continue to be able to supply it.

My hon. Friend the Member for Chorley mentioned sustainable production. He will know that a raft of documents and consultations have been going through DEFRA recently, and "Food Matters", food security measures, the "Food 2030" programme and food miles could all be the subject of debates in their own right. I will write to him and update him with the latest on each of them, as well as on training, skills and colleges for the agricultural community and the progress that we are making on cutting regulation for the agricultural industry. I congratulate him and our other hon. Friends who have participated in this debate, and if I have missed out any of the issues that he raised, I will write to him as promised.

Question put and agreed to.

10.29 pm

House adjourned.

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