Cost of Living: Support for Farmers

Cherilyn Mackrory Excerpts

Tuesday 12th July 2022 Westminster Hall

[Cherilyn Mackrory (Truro and Falmouth) (Con)]

I congratulate my hon. Friend the Member for Rutland and Melton (Alicia Kearns) on securing this hugely important debate, which is fundamentally important to the people of Cornwall. I speak as the Member for Truro and Falmouth, an area with a long history of farming and with 82% of its land used for agriculture.

Farming is a vital industry in Cornwall and has helped to shape the landscape that we see today. Almost every type of farming practised across the UK can be found in our Duchy. Our food industry is worth about £2 billion, and one in three jobs in the county—equating to about 60,000 people, and growing—has some attachment to the Cornish food and drink production industry. We have hundreds of fantastic farmers from all backgrounds who are passionate about growing an abundant supply of food, produced to world-leading standards and sustainability. We must enable those farmers to produce food efficiently if they are to continue to play their essential role in the south-west’s rural economy and deliver environmental benefits.

I recently met the National Farmers Union and farmers at Sixty Acres farm in Truro. That was a really positive meeting at which farmers raised many of the issues that we have heard about today. They also voiced their appreciation for what the Government have done to help support them so far.

A couple of weeks ago, I visited Carruan farm in the constituency of my hon. Friend the Member for North Cornwall (Scott Mann). We heard from farmers about how we can meet our net zero and carbon targets, deliver on nature recovery and boost sustainable food production. At the farm, they are successfully trying to do that. They are finding out which of their fields are non-productive and doing more with that. I will come to some of its concerns later on.

As we have heard, the key concern shared by farmers throughout Cornwall is the struggle to absorb rising input costs, which are increasing three times faster than the headline UK inflation rate. As we have heard, agflation topped 30% in April and is currently at about 28.4%. The war in Ukraine has pushed up the already sky-high input costs of the three Fs: fertiliser, fuel and feed. This year, fertiliser trebled in price, and red diesel, as I have heard from my fishermen and farmers, has doubled in price, which is a much larger increase compared with road diesel. In March, concentrate animal feed prices had increased by about 15.6% compared with the previous year. Those price rises come at a time when the industry faces longer-term challenges due to not only the transition away from the basic payment scheme but labour shortages and the impact of new trade and environmental policies. Alongside the variable role of the weather—of course—the decisions that farmers are making feel more like a gamble than ever before.

I thank the Government for listening last winter and extending the seasonal agricultural workers scheme to our daffodil pickers in particular, because there was going to be a disaster in the making. It took a lot of effort—it was not the Minister but the Home Office that we needed to convince—but we were listened to in the end and that saved an awful lot of jobs and gave security to our farmers.

Those challenges are impacting on the food we are producing as a nation, and leading to a crisis of confidence among our farmers. The cost of living crisis will only worsen if our domestic food security is undermined. Although they are larger than they used to be, farm businesses in Cornwall are smaller than the national average, and they are more likely to be livestock-oriented and still family-based. Small livestock farms have higher costs and smaller revenue, and they are more reliant on support payments for now, meaning that BPS reductions have hit hard and early in the transition.

In 2020, Cornwall received £51.6 billion in BPS payments. The reason for highlighting that figure is not to suggest that we are merely swapping this for a smaller-size replacement, but the future of sustainable farming will not be built on the same old subsidy models. I raise this issue so that the Government can think proactively about mitigating the adverse impacts on the farming community and the business ecosystem of the Cornish countryside of simply withdrawing that payment, and I urge the Government to produce on-farm business advice to support the transition. I believe we heard that earlier, and it was one of the main points that come out of our farm visit in North Cornwall a couple of weeks ago.

There seem to be a lot of grants available for farmers—a huge number are out there for them to access—but the time-consuming and complicated nature of the grant application is causing them huge issues. What they are really looking for are people who have local knowledge on the ground in the county and who can help guide them through the cost of living crisis, be it through the local enterprise partnership, the council or DEFRA agents. Farmers really need on-site support, and they also need effective business plans with a clear direction of travel to improve productivity.

The Government have taken a range of actions to tackle the challenges, including delaying the introduction of changes to urea fertiliser for at least a year and the recent launch of the new grant scheme for storing slurry on farms. The Government have also committed to spending £600 million on farm-based innovation over the next three years, and have laid out further details of the sustainable farming incentive. That will reward farmers for promoting the common good and bolstering our food security.

However, farmers are still under real pressure, and the Government have a range of options available for further support. The Government must focus on protecting UK food production and security by assisting farmers and managing the high costs. That includes working with farmers to diversify inputs, and investing in new technologies that will improve their resource and efficiency. We must also support farmers to find new ways to manufacture more organic-based fertiliser products and utilise techniques, including using nitrogen as an alternative fertiliser. The other thing that I learned on the farm visit a couple of weeks ago, and from speaking to other farmers in Cornwall, is that one size does not fit all, even in Cornwall. Somebody three miles down the road will have completely different soil, so what works for them will not work for their neighbour, which is why we need people on the ground who can really help in these situations.

The Government should look at encouraging the uptake of regenerative farming to reduce input costs, encouraging more pasture-fed livestock to reduce feed costs, and supporting new production methods in the forthcoming food strategy White Paper. I also support calls from the NFU for Ministers to assess the impact of any new policy or regulation on domestic food production, which is hugely important at the moment.

Our farming industry is facing very difficult circumstances, with many farmers struggling to pay their bills. That is threatening food security and worsening the cost of living crisis for us all, but they are a resilient bunch. I look forward to continuing to meet our farmers, listening to their concerns and talking to our Government. I will work with the Minister and my neighbours on both sides—the Secretary of State and the new Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for St Austell and Newquay (Steve Double)—to make sure that we back this vital industry going forward.

--- Later in debate ---

[The Minister for Farming, Fisheries and Food (Victoria Prentis)]

It is a great pleasure to serve under your chairmanship, Mr Hollobone, as it has been to listen to the constructive suggestions across the House on how to deal with the very real difficulties in the sector, largely caused by high rises in input costs. I will start by addressing the various issues that colleagues mentioned, and will do my best to answer the very wide-ranging group of issues raised as comprehensively as I can.

I thank my hon. Friend the Member for Rutland and Melton (Alicia Kearns) for securing the debate. I also thank our former DEFRA Parliamentary Private Secretary, my hon. Friend the Member for North Devon (Selaine Saxby), who served the Department with great distinction and a great deal of hard work. She is a real champion for Devon farmers. I have heard her and have met her farmers with her on many occasions as they tell her what they need. I reassure her that the advisory board conversation will continue in the next few weeks.

My hon. Friend the Member for Truro and Falmouth (Cherilyn Mackrory) made a comprehensive speech. Again, she frequently buttonholes me on behalf of her farmers and her fishermen. The future farming resilience fund is available to give exactly the sort of advice that she envisages. I would love to talk to her about that outside the debate, if that would be helpful to her.

I have frequently discussed farming issues with my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) and the farmers he represents so well. I agree that the opportunities for the future of agriculture are vast. Let me put on record how pleased I am that we passed, with agreement broadly across the House, Committee stage of the Genetic Technology (Precision Breeding) Bill last week. In a week that was perhaps difficult for the Government, that was a high point and is exactly what my hon. Friend means when he says that there are real opportunities for the future of agriculture if we are able to grasp the regulatory space. I would be delighted to visit Harper Adams, although my hon. Friend the Member for Bury St Edmunds (Jo Churchill), who so recently and sadly departed from the Department, visited extremely recently and came away full of ideas.

I was interested to hear what the hon. Member for Ellesmere Port and Neston (Justin Madders) said. He and I have spoken, as he has with my Secretary of State, about the difficult issues facing Ince. My understanding is that discussions, which are commercially sensitive, are still under way. I would welcome the opportunity to talk to the hon. Gentleman directly about the current situation. I am also very happy to make his points across Government if he feels that would be helpful. The situation with Ince is worrying for all of us who care about fertiliser prices, although I recognise that it is particularly difficult for those whose jobs are at risk.

These are not easy times for our farmers, who face increasing costs, particularly for fertiliser, animal feed, fuel and energy. Undoubtedly, that is creating short-term cash flow pressures. The Government have announced a series of measures to help farmers with those pressures and to support them through an undoubtedly difficult time. From the end of July, we are bringing forward half this year’s basic payment scheme payment as an advanced injection of cash to farm businesses. That is a practical and appropriate solution to current input problems. Payments will be made in two instalments each year for the remainder of the agricultural transition period. I am very pleased with that policy decision.

I am fully aware of the cost of fertiliser. The current cost is a little lower than my hon. Friend the Member for Rutland and Melton suggested—it is between £700 and £750 a tonne, although I accept that that is considerably more than usual. As a purchaser of fertiliser, I am always extremely aware of that market, as are most farmers. Although cereals farmers, such as me, often buy ahead and will be able to manage for this year at least, livestock farmers often buy much later in the season, and we need them to have the confidence to make purchasing decisions and put in orders so that we are assured that enough fodder crops will be grown in the next 12 months.

I have worked extremely closely with farmers’ representatives—the NFU, the Country Land and Business Association, and the tenants—to build confidence through cross-Government and industry working, and by ensuring that the Government pull all the levers we can to make the situation better, short, frankly, of writing the cheque for everybody’s fertiliser bill. We have issued updated guidance to provide clarity to farmers about how they can use slurry and other manures during autumn and winter. We have delayed the changes to the use of urea fertiliser, and we have introduced new slurry storage grants to help farmers to comply with the farming rules for water. The aim of all that, of course, is to reduce the dependency on artificial fertiliser.

My hon. Friend asked about the potential to increase transparency in the fertiliser market through the NFU suggestion of a gas fertiliser index. We are currently working with the Agriculture and Horticulture Development Board, the Agricultural Industries Confederation and the NFU on how best to achieve fertiliser price transparency. My hon. Friend should please keep talking to me about how that can be best achieved. Some sensible suggestions were made today, not least by the hon. Member for Ceredigion (Ben Lake), but there is a bit more work to be done. We need to continue to work on this policy area to get it absolutely right. The fertiliser taskforce, which I chair with my hon. Friend the Member for Bury St Edmunds, is very much continuing, and I believe we have a meeting next week. This is ongoing work. It is not easy, but we are doing our best to be flexible and react where we can.

We recognise that feed is a particular issue for the pig and poultry sectors. As of 1 June, we successfully concluded the removal of section 232 tariffs, allowing us to remove the 25% tariff on US maize imports. That was a key industry ask and should be an important step in opening alternative sourcing options. Again, we remain very open to working with the industry on specific asks.

We are the only sector with a carve-out for seasonal labour, and I think that is absolutely right. I am convinced that seasonal worker visas are a critical part of how we bring the harvest home. I am happy to continue to make the case for them across Government. We have achieved an extra 10,000 visas through the seasonal agricultural worker scheme route, so we have 40,000 visas for this summer and winter, which are critical to maintaining the agricultural labour provision.

Through the Agriculture Act, we have taken powers to look at supply chain fairness in more detail. We started by dealing with the dairy sector, and we plan to take regulatory action in it as a result of our work later this year. It is complex and we need to get it right. We are about to launch a review of the pig sector supply chain. I look forward to announcing that formally shortly and to giving more details of the consultation process.

My hon. Friend the Member for Rutland and Melton asked about farm business loans to support farmers with rising costs. My officials in the Department regularly meet the agricultural leads of major banks, and I have done so on several occasions. I have also had a special meeting with agricultural leads about the pig sector. In the most recent meeting, on 7 July, the banks suggested that the level of debt among UK farmers is low in comparison with other European countries, and that they are very willing to view farmers as a good industry to lend to. We will continue to engage closely with banks to monitor the situation, but as yet I am not hearing evidence from the industry that it is not getting loans where that is appropriate.

In the briefing that the NFU prepared for this debate, it called for mandatory food resilience assessments of new policies. I reassure Members that the Ag Act already commits the Secretary of State to consider the need to encourage the production of food. That is the basis of our new schemes and is very much part of the food strategy that was published a few weeks ago and embedded in departmental policy.

I want to briefly touch on the NFU survey that was mentioned by my hon. Friend the Member for Rutland and Melton, which suggested that a certain proportion of farmers are intending to reduce production or exit the industry. Surveys are useful and a helpful gauge of what is happening, but not all farmers are members of the NFU. It is important that we continue to monitor the situation closely. I am confident that we have strong and resilient food production in this country. The pig sector in particular is facing challenges. We believe that close to 60,000 sows may have been taken out of production over the last year, but we must put that in context: in 2021, the pig herd grew by nearly 10%, to the biggest it has been in 20 years.

I have worked extremely closely with the pig industry over the last nine months. There is still money being made in the pig world—not by the producers, I agree, but I am determined that the supply chain review is the way to go. I encourage anybody involved in the sector to lean in extremely heavily to the work we are about to launch in that sector. We need to make sure that the supply chain is fair, and we need to eat more British pig. We produce in this country about 60% of what we consume. I would very much like that figure to go up, not least for animal welfare reasons. I will do everything in my power to work with the pig industry—producer, processor and retailer—to achieve that.

In the arable sector, we are expecting increased yields this year, although I must confess that, as a cereal farmer, I look out of the window at very dry weather and worry—that will not surprise anybody—although our wheat area is in fact forecast to be up a little, by a percentage point. Winter barley is up about 10% and rape up about 9% from last year. There are of course real concerns about profit margins, and we have rehearsed the reasons why, although current indications are that the crop is expected to be good—as a farmer, I almost cannot say that sentence for fear of upsetting the harvest, but at the moment we are hopeful and confident in this year’s supply.

On the agricultural transition, direct payments are not a system that I am prepared to defend. Some 50% of direct payments go to 10% of the largest farms and landowners. There are better ways of spending the agricultural subsidy pot. Smaller farmers might well need further intervention if input costs continue to rise, but I am convinced that there are more targeted ways that we can help.

We opened the new sustainable farming incentive on 30 June and are pleased with the application rate so far. I should emphasise that throughout the agricultural transition, which is by its nature slow—we have purposefully worked over a seven-year period to enable farmers to adapt, change their ways and plan for the way that they run their businesses—the pot of money available to support farmers will remain the same for this Government. It will, however, be more targeted and be used to support public goods. We have ambitious environmental goals, which are generally supported across the House. Farmers want to help us to achieve those, and we want to reward them for doing so.

There have never been arbitrary divisions in how much money attaches to each sector of future farming schemes. Those schemes are very much designed to be stacked, so the SFI is not in itself intended to replace fully BPS, but should be stacked with the other schemes to ensure that farmers are properly rewarded.

In my view, subsidy is useful in agriculture, and I am very happy to argue across Government for the pot to remain at £3.7 billion. I think that is a good figure for us to spend on helping our farmers to produce public goods.

[Cherilyn Mackrory]

Briefly, on the payments being stacked, my farmers say that there seems to be a lot more that they have to do to get the same payments. How can we streamline the process?

[Victoria Prentis]

As I said, I do not think that direct payments are defensible. We as farmers received money for doing nothing but owning our land. In the future schemes, farmers may have to change their behaviours or work in a slightly more environmental manner. In some cases, they may have to change very significantly what they are doing on parts of their land. I accept that. This is change. This is difficult, but it is worth it for those nature gains and environmental and carbon capture gains, on which I know there is great consensus across the Chamber.

Farmers are dealing with this period of change and transition by voting with their application forms. Now, more than half of farmers, including myself, are in a stewardship scheme. Those are mid-tier schemes, and we have said that we will seamlessly transition farmers in such schemes into the mid-tier of the new future farming schemes. That is not a complete solution but it is a coherent interim one while we continue to work on the agriculture transition to get the policies absolutely right.

I think the food strategy will be welcomed by all Members who have spoken. The goal of food security has been mentioned across the Chamber, as has buying British. The land use strategy, which we will work on in 2023, will deal with some of the specific points raised in the debate, not least by my hon. Friend the Member for Rutland and Melton. As ever, I am happy to meet any Member’s farmers if they would find that useful. I accept that change is difficult. We need to help farmers to manage that and to continue to produce not only the food we love, but the public goods for which we are very keen to continue to pay them.