Cost of Living: Support for Farmers

Helen Morgan Excerpts

Tuesday 12th July 2022 Westminster Hall

[Helen Morgan (North Shropshire) (LD)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank the hon. Member for Rutland and Melton (Alicia Kearns) for securing this important debate, and for her incredibly useful opening remarks.

A few weeks ago, I met a number of farmers and farming representatives in my constituency of North Shropshire, at a lovey farm near Whitchurch. Despite the warm welcome and a tour of the state-of-the-art calf shed, the subject matter of the meeting was very sobering. Living in a rural area, often off-grid, in older and less energy-efficient houses, and with little access to public transport means that farmers and their neighbours are experiencing the cost of living crisis to a significant degree. However, for our farmers, it is not just a cost of living crisis—it is a cost of doing business crisis.

Farmers have told me, and we have heard colleagues raise the issue a number of times in the House, that rocketing input costs are putting them at risk of going out of business. Even where increased selling prices are helping to offset that, the cash-flow impact of increased input prices, months before crops are harvested or animals sold, will be enough to put some of our critical food producers out of business. We are all aware of the scale of those input cost prices: the cost of fertiliser has increased more than fourfold; diesel prices have nearly doubled; and the price of animal feed and energy costs are all increasing. Agriflation is hitting the sector really hard.

Those price increases are compounded by other challenges, as the hon. Member for Rutland and Melton has mentioned, such as the shortage of labour for tasks such as harvesting and milking. Pig farmers face an especially tough period, with labour shortages at meat processing plants leaving pigs on farm, and they still need feeding and caring for. I have met pig farmers in North Shropshire whose only option now is to shoot pigs that cannot be processed on farm and think about shutting up shop.

The nail in the coffin for many farmers is the manner in which the basic farm payment has been phased out before its replacement—the agricultural transition plan—is ready to roll. The biggest farms are seeing 40% cuts in their payments, and smaller family farms are seeing cuts that mark the difference between staying in business and going bust altogether. Although the new support schemes are a good idea in principle and I support them, farmers in North Shropshire report that they are not ready to be implemented, require too much up-front investment and will not make up the shortfall in the time required. The National Farmers Union, the National Audit Office and the Public Accounts Committee have all agreed with that bleak assessment.

In the spirit of being constructive, I have some suggestions. As an accountant, I back the call of the NFU to introduce farm business loans to support the cash flow of agricultural businesses through that critical period between input, cost and harvest, as well as its suggestion to improve the transparency of fertiliser market prices and enable greater certainty over the price of fertiliser for next year’s crop.

I also ask the Minister for some additional support for our farmers. At a time when food security can no longer be taken for granted, the Government’s broken promise to maintain the historical levels of support for the transition period is putting the farming sector at high risk. Local farmers have been clear with me that while they support the idea of a payment system that encourages more sustainability in farming, they will not be in business to use it and exploit it after years of falling income and high levels of up-front investment. They have also expressed concern that some of the larger types of regeneration scheme proposed will discourage food production, rather than find a way to improve production on a sustainable basis.

We need an effective strategy to deal with the labour shortages affecting the ability not only to harvest but to process that food once it has been reared and sent off to processing. Farmers need confidence for the future, not just to plant next year’s crop but to invest for greater productivity. I would like the Minister to commit that trade deals done by this Government will not undercut our family farms by allowing cheaper, lower-quality food into the country. We should be proud of our higher animal welfare and environmental standards and lead the world by insisting on a level playing field when we agree to trade with our competitors.

I would like to reflect for a moment on the impact on the people whose businesses are affected by this crisis. They already suffer high levels of isolation and poor levels of mental health, and the situation is worsened by the cruel financial pressure they find themselves under. Visiting a farm close to me on Open Farm Sunday, I met representatives from Shropshire Rural Support, a charity providing a vital component of support for farmers and agricultural workers who need additional help with their mental health. They have reported a noticeable increase in people turning to them for help as the business climate has worsened.

It is vital that we remember the human cost as well as the financial one for those working hard to keep Britain fed. The challenges facing the farming industry are significant and are global in nature—we recognise that. But the Government can take steps to mitigate their impact. I look forward to the Minister’s response.