Farmgate Prices Report Recommends Action on Rural Payments, Exports

UK - A report published by a cross-party group of MPs acknowledges the threats facing the farming industry but positive, visible and tangible action must now be taken, said the NFU.
calendar icon 3 March 2016
clock icon 4 minute read

The EFRA report warns that farmers in the UK are at risk of suffering further cash flow problems if the Rural Payment Agency (RPA) does not commit to fixing ongoing issues with its IT systems. The NFU says it welcomes the EFRA committee’s recommendation to the RPA which states it ‘must return to paying at least 90 per cent of BPS monies by the end of December each year.’

Commenting on this recommendation, NFU President Meurig Raymond says: “This will alleviate the financial turmoil that thousands of farmers have been and still are feeling. And we will be pushing this recommendation in our own discussions with the RPA.”

The report also found that current legislation surrounding origin labelling has the potential to mislead consumers and cause confusion. MPs found that a growing interest in the provenance of food and in British products requires a move towards clearer labelling.

Neil Parish MP commented: "Many people in Britain want to support a British agricultural industry. But Defra’s current guidance on origin labelling allows for companies to sell products such as cheese and butter as British when the raw product is being sourced oversees.

"As a result consumers are given a false impression that they are supporting a home industry when in fact their money is not supporting UK farmers at all.

"The British public deserve to buy British in confidence. Defra must strengthen its guidelines around country of origin labelling and continue to press for EU support in establishing clearer and better labelling requirements."

Another key outcome of the report was that the Committee questions assurance from the retail sector that there is no link between the price at which supermarkets sell to their customers and the price supermarkets pay to farmers.

While farmers engaged in contractual arrangements with supermarkets, directly or otherwise, are guaranteed a price for their milk for specific periods, the chronic low price of milk sold through supermarkets inevitably disadvantages farmers in the longer term.

Supermarkets may choose to sell milk cheaply as a loss leader, but farmers must not be the victims of the supermarket wars currently taking place in the UK, the committee concluded. Progress is uneven amongst supermarkets and assurances must be met with action.

Other areas for action identified in the report included producer organisations, futures markets, exports, equality across the different countries of the UK, and the Groceries Code Adjudicator.

Commenting on the wider report, Mr Raymond continues: “The fall in prices and associated cash-flow problems are the biggest challenges currently facing our farmer members. And we’re not expecting the market situation to get better anytime soon.

“We are pleased that the EFRA committee has listened to our evidence and to others from across the supply chain and produced this wide-ranging report.

“There is no quick-fix. However the report identifies a range of recommendations that can help in the short-term and not leave the industry so exposed in the future. Our members now expect to see this swiftly followed up with positive, visible and tangible actions."

Dr Judith Bryans, Chief Executive of Dairy UK, said the entire dairy industry is taking positive steps forward but still needs government support to achieve long-lasting success.

Dr Bryans said: “The report makes a number of recommendations on exports, adding value and promotion that are very much aligned with Dairy UK’s key priorities in these challenging times for the dairy industry.

"From farm to fridge, the industry is affected by harsh market conditions and we must continue to work with Government and its agencies to facilitate and stimulate demand at home as well as in key export markets.

“We welcome the Committee’s recommendation to promote exports with the help of Defra and AHDB. Just last month, Dairy UK published a new export strategy to drive demand for our quality British products abroad and promote UK dairy globally.

"This strategy can help steer industry efforts in the right direction in collaboration with Defra, AHDB and other supply chain stakeholders. In order to develop these new export markets, we will need to showcase and promote the quality, the value and the integrity of UK dairy products.

“We fully agree with the Committee on the need for innovation and new product development to meet changing demands. We must focus on value to make sure we deliver innovative, appealing and nutritious dairy products to consumers across the world.”

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