Sheep Farming: No-deal EU Exit

Matt Western Excerpts

Tuesday 3rd September 2019 Commons Chamber

[Jenny Chapman]

This affects every region of the country, from the Lakeland fells, to Exmoor, to Teesdale, where I live. People are saying, “Why does this matter? Surely this just means that there will be more lamb for the UK market, the price will be cut, and we can all enjoy more lamb this Christmas,” but the problem is that we just do not have the facilities to safely slaughter, store and freeze that volume of lamb in the UK. If the Minister plans to introduce such facilities, he needs to say so tonight, because knowing that this year’s yield of around 15 million lambs can be safely stored and enjoyed by consumers, and therefore paid for, would be of huge benefit to the 34,000 people currently employed in the industry. If that meat cannot be stored and sold—even at a knock-down price—the sector will be decimated.

The Government have said that they are aware of the special circumstances that would lead to a substantial negative effect on the income of UK sheep farmers and that they would compensate farmers. To their credit, the Government have pledged to continue to commit the same cash total in funds for farm support until the end of this Parliament—although obviously that might be coming sooner than was anticipated. Financial support is already included in farmers’ business plans, but it does not compensate farmers for a sudden loss of market or for feed costs for animals that they cannot now slaughter. It does not ensure that sufficient feed is available to keep lambs bred for slaughter alive. It does not create abattoir or cold-storage capacity. It certainly does not create new export markets or offset tariffs, because that would be against WTO rules.

In answer to one of my written parliamentary questions on 18 July, the then Minister, the right hon. Member for Scarborough and Whitby (Mr Goodwill), said:

“We are doing all we can to mitigate the challenges our farmers will face and we have contingency plans in place to minimise disruption.”

But Ministers have not explained, and continue to refuse to explain, what those contingency plans are. The Minister’s predecessor offered from the Dispatch Box to meet me, but the current Minister then declined that invitation and has refused to discuss the issue. If a wasteful cull of millions of lambs and breeding ewes is to be avoided, measures need to be put in place now. If the slaughter and storage facilities are not in place and no deal happens, farmers will have little option but to cull their flocks. The meat will not be eaten, and the waste will be shameful.

The lack of new trading arrangements and an implementation period would mean that farmers will set about drastically reducing the size of their flocks. Chillingly, the AHDB says:

“Culling rates would record significant uplift driving the increase in adult sheep slaughterings. Quarter one of year two”—

of a no-deal Brexit—

“records a year-on-year uplift in slaughterings as the remainder of the year-one lamb crop are slaughtered.”

The estimate of 3 million lambs is at the lower end of the estimates.

[Matt Western (Warwick and Leamington) (Lab)]

My hon. Friend is making an important speech. Perhaps she can enlighten us or confirm this, but my understanding is that the breeding season is probably just about to start, because sheep gestation is typically around 150 days, if I well recall, so farmers must be planning now exactly what their programmes will be.

[Jenny Chapman]

That is exactly right. I think the phrase is “In with a bang and out like fools,” because sheep breed at the end of October or the beginning of November, and the lambs arrive in the spring. As the Minister well knows, farmers make their arrangements and plan such things a long way in advance, which is why, according to farming bodies, we need at least a two to three-year transitional period. The AHDB report I was referring to goes on to say that

“under a rapid response scenario, the national flock would be culled to reduce size”.

--- Later in debate ---

[George Eustice]

I am going to conclude because we are running out of time.

The hon. Member for Bishop Auckland (Helen Goodman) raised the important issue of whether we have the legal vires to make those interventions, and I can confirm that we do. The Government have a number of legislative vehicles with which to do so, including elements of retained EU law, and the Natural Environment and Rural Communities Act 2006 also includes general grant-making powers that give us the ability to do so. We are considering two possible options. One is a headage payment on breeding ewes, should that be necessary. That would be important in the event that farmers producing lambs are the ones who have the shock to their income. The second option would be something called a slaughterhouse premium, which would in effect involve a supplementary top-up payment for lambs at the point of slaughter. We could use a combination of those options but, broadly speaking, a headage payment and income-support approach would be the right approach to adopt.

[Matt Western]

rose—

[George Eustice]

I want to conclude now as we are running out of time.

The scale of, or need for, any intervention is difficult to judge at this point, because it will depend quite considerably on the approach that the European Union finally takes. As I said earlier, it is open to it to create an autonomous tariff rate quota, but it is also highly dependent on the extent of exchange rates. I can give hon. Members an undertaking tonight to reassure them that the Rural Payments Agency has already been told to design the administrative procedures necessary to make such headage payments. Discussions with the Treasury are at an advanced stage about what support may need to be set aside, while recognising that no final decisions can be taken until we actually leave the European Union.

I know that the hon. Member for Darlington has previously raised the issue of culling sheep, and she raised it again tonight. I can confirm that that is not under consideration. We regard any problems as being potentially short term and the correct approach would be to supplement farmers’ incomes through the headage payment schemes that I have described. We do not want to reduce the capacity of our flock.

We are a global player in this sector and we believe that there is a bright future for our sheep sector. However, in the unlikely event that it is not possible to get a longer-term free trade agreement with the European Union, there are, of course, other approaches that we can take. Our existing tariff-rate policy is set for just 12 months. It is open to us in future to review that and to apply certain tariffs to other EU sectors, to give our farmers opportunities to diversify into different sectors such as beef. Many of our sheep producers are mixed beef and sheep enterprises. It is also open to us to support the opening of new markets through, for instance, the deployment of new attachés to our embassy to help gain that market access. I know that the hon. Lady said that that was against WTO rules, but that is not correct. Certain types of export refunds are against WTO convention, but there is no rule against investment to support market access.

In conclusion, we recognise that the sheep sector more than any other agriculture sector is exposed because of the scale of its exports to the European Union, but the Government have been working for the past two years on modelling the potential impacts and planning the types of interventions that we may need to make to ensure that our sheep farmers are protected from any no-deal exit.

Question put and agreed to.