Cost of Living: Support for Farmers

Ben Lake Excerpts

Tuesday 12th July 2022 Westminster Hall

[Ben Lake (Ceredigion) (PC)]

It is a real pleasure to serve under your chairmanship, Mr Hollobone. It is also a pleasure to follow the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski). It might surprise him and other Members to hear that I very much agree with many of his remarks, especially his point that farmers in Shropshire, like those in my constituency, have long felt that Governments have not always appreciated the importance of their contribution to the nation’s wellbeing, and the importance of food security. I also associate myself with his comments about the strategic importance of fertiliser plants. He proposed the good idea of greater state intervention in those strategically important sites, and I will touch on that in a moment.

I congratulate the hon. Member for Rutland and Melton (Alicia Kearns) on securing this important debate. She eloquently set out the grave backdrop to it and the many challenges our farmers face. It is sobering to reflect on the fact that so many farmers, facing rising input costs and cost of living challenges, are considering leaving the industry. She said that 11.9% of dairy farmers are contemplating that, and I know anecdotally that a number of livestock farmers in Ceredigion are considering whether they have a future in the industry. It is little wonder, given that agflation, or agricultural inflation, stands at 28.4% according to the agricultural price index. The latest estimates from independent consultants the Andersons Centre have agricultural inflation standing at over 25%.

I spoke to some farmers in Wales recently. Many people say that they have better prices at the market, and that of course is true, but we do not always hear about the rising cost of production, so farmers very much need those higher prices. Although the prices have risen, they have seen little difference in their profit margin, and that is fuelling a great fear of a departure from the industry, which we can ill afford given the many concerns that have rightly been raised in recent months about our food security. The war in Ukraine has brought that into sharp relief. The challenge before us is to increase, not reduce, our agricultural productive capacity.

The hon. Member for North Devon (Selaine Saxby) made several important points, but one that struck a chord with me was about the need for more co-ordinated land use planning to overcome some of the many competing challenges. We need to return to that matter in earnest, because we cannot waste much time.

We have heard about rising fuel prices, and there is room for us to explore expanding the rural fuel duty relief scheme, although I appreciate that that is not within the Minister’s remit. Fertiliser has been mentioned a few times. To add to the remarks of the hon. Member for Shrewsbury and Atcham, I know of farmers who, just this last year, have seen orders for fertiliser increase significantly. They were quoted prices of about £200 per tonne last year, and now it is not uncommon to see prices upwards of £700 per tonne, plus VAT. The inability to plan amid such volatility is a real challenge for our farmers, and puts pressure on their margins. It is often said that farmers find it very difficult to eke out a living even in the best of times, but the added volatility and the price hikes that they have to navigate make it an almost impossible task.

In Wales, the average farm holding is 48 hectares. Anybody who cares to look at farm business incomes in Wales will know that most farms in Wales do not have much discretionary income with which to absorb these additional prices. It is time that we look at interventions to support farmers with rising input prices, particularly the cost of fertiliser.

The hon. Member for Rutland and Melton said that the Government need to establish a gas-fertiliser price index to help improve transparency in a very opaque market. That might not necessarily help to bring down prices, but it would at least offer a bit of a helping hand in planning and managing a bit of the volatility.

With regard to how we help with the costs of fertilisers, in addition to those points made by the hon. Members for Shrewsbury and Atcham and for Ellesmere Port and Neston (Justin Madders) about the strategic importance of fertiliser plants, is it perhaps time for us to consider again the VAT treatment of some of those inputs into agricultural production? I appreciate that that is for the Treasury, but perhaps the Farming Minister could consider having a discussion with Treasury colleagues.

In the short term, many Members representing rural constituencies will know that the price of heating homes is a real concern, especially for those in properties off the mains gas grid, including farmhouses. Under the energy bill support scheme, some £400 is due to come in the autumn, but a question remains as to whether farmhouses will be eligible, primarily due to how they tend to have commercial electricity contracts as opposed to domestic ones. The Department for Business, Energy and Industrial Strategy is looking at options to ensure that farms do not lose out under the scheme, but will the Minister impress on it the importance of us finding a way to include farmhouses in the scheme? Although it might not make the world of difference, every little will help in the coming economic storm, so it is important that we ensure that farmers do not lose out.