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11:10 - 05 July 2004

Hundreds more Westcountry dairy farmers will be forced out of business as milk prices continue to fall, the Rural Affairs Secretary Margaret Beckett warns today.

In an article for the Western Morning News likely to attract charges of complacency, Mrs Beckett makes a frank assessment of the state of the beleaguered industry - and warns that it has not yet hit rock bottom.

Mrs Beckett acknowledges that farm gate milk prices are below the cost of production and she warns that controversial reforms of the Common Agricultural Policy are likely to drive those prices lower still.

But she insists that the reforms will also produce benefits for farmers. And she says the Government cannot intervene to prop up milk prices.

"We appreciate that many dairy farmers are not making enough money to sustain their businesses," she writes.

"Milk prices are likely to fall further as a result of the reforms to the CAP.

"We expect some dairy farmers will leave the sector, accelerating the existing long-term trend. However, the reforms to the CAP also provide opportunities for the industry."

Mrs Beckett insists that the Westcountry's dairy farmers "do have a future".

But in separate articles for the WMN today the Shadow Rural Affairs Secretary Tim Yeo, and Lib-Dem rural affairs spokesman Andrew George accuse her of abandoning the industry that dominates the Westcountry's farming and landscape.

Mr George, MP for St Ives, describes the low milk prices driving the decline of dairy farming as "almost criminal".

"The truth is that the Government is happy to stand idly by and watch our desperate dairy farmers pushed beyond the edge of viability," he writes.

Mr George accuses ministers of being "mesmerised" by the power of the major supermarkets, which he says should face a strengthened code of practice and proactive investigations by the Office of Fair Trading.

"Intervention is now required to secure a sustainable farmgate price and fair contracts for farmers," he says.

Mr Yeo also urges ministers to look again at the widely discredited supermarket code of practice, which was set up two years ago to end "rip-off" practices by the major retailers.

He says it is "absurd" that farmers are forced to take direct action against the major dairies and supermarkets in order to secure a temporary rise in milk prices.

"It's time to explore whether a strengthened code of practice between supermarkets could help," he says.

Mrs Beckett argues that the Government is working with the industry on a range of initiatives to ease its difficulties - including the formation of co-operatives.

But she says it is not the Government's job to draw up a "blueprint" for the industry's future.

And she warns that ministers cannot be expected to intervene directly in the market.

"I understand the problems that low farm gate prices have caused," she says.

"But provided competition law is respected, the Government cannot and should not get involved in price negotiations."

An economic assessment published by the Government last week showed that dairy farmers would be the biggest losers from the reforms of the Common Agricultural Policy.

And last month, a committee of MPs warned that further falls in the price of milk could force 3,000 Westcountry dairy farmers out of business.

Last night, Martin Hann, the county chairman for the National Farmers' Union in Devon, condemned Mrs Beckett's comments as leaving the industry at the mercy of market forces.

He said: "It sounds as if Mrs Beckett is washing her hands of the matter.

"I would think that the dairy farmers would feel that at the moment the Government does not seem to want to get involved in the rather cosy relationship that exists among the major retailers.

"When the relationship was tilted back the other way, perhaps too far in favour of the producers, they were keen enough to get involved then.

"They are keen to interfere in the market when it suits them.

"The Government says it is something that must be left to market forces.

"But at the end of the day, it is the Government's obligation to ensure that the country has the ability to feed itself in some form or other.

"That means ensuring a degree of food supply and security in this country."

Alistair Freeth, of Wonton Farm near South Brent, South Devon, who sold the last of his dairy herd in April, added: "Mrs Beckett is showing signs of a very short memory.

"I remember going with a deputation of dairy farmers from the Westcountry to see her predecessor, Nick Brown.

"That was just before competition legislation against having one single co-operative and the break up of Milk Marque. I remember Nick Brown saying that breaking up this one co-operative will have no meaning if it does not enhance the price of milk or it only brings the price of milk down and that is what happened.

"What Mrs Beckett is now saying sounds very much like double standards."

The bad news is compounded by a report released today by the Country Land & Business Association. It highlights the importance of sheep, beef and dairy farming to maintaining the beauty and biodiversity of the Westcountry countryside.

And it warns that a steep fall in the number of grazing animals could have dramatic consequences for the environment.