Question to the Department for Environment, Food and Rural Affairs:

To ask the Secretary of State for Environment, Food and Rural Affairs, what steps he plans to take to stabilise the price of milk during the covid-19 outbreak.

Defra is working closely with the dairy industry to manage the impact of Covid-19. Demand for milk and some dairy products has increased in supermarkets and the vast majority of Britain’s dairy farmers continue to supply their contracts at the usual price. However, between 5 and 10 per cent of total milk production goes to the service trade, and these farmers have been impacted by the significantly reduced demand.

In order to support affected farmers, we have eased some elements of competition law to make it easier for processors to come together to maximise production and processing and storage efficiency until shops, restaurants and pubs are able to open again. This SI will be laid shortly and will apply retrospectively from the 1 April 2020. We have asked the Agriculture and Horticulture Development Board and Dairy UK to work with farmers and processors to help industry take advantage of these easements.

Public intervention for skimmed milk powder and butter also continues to be available. Industry can sell skimmed milk powder and butter into public intervention when the price they would receive on the open market falls below the intervention price. This provides a floor price for dairy products.

Furthermore, the dairy industry can access various Government backed loan schemes. The Covid-19 Business Interruption Loans scheme is available to farmers, milk buyers and milk processors. In addition, the new Bounce Back Loan scheme, which will apply to businesses operating in agriculture, will ensure that the smallest businesses can access up to £50,000 loans. The government will provide lenders of this latter scheme with a 100% guarantee on each loan, to provide them with the confidence they need to support the smallest businesses in the country. We will also cover the first 12 months of interest payments and fees charged to the business by the lender.

We will continue to engage closely with representatives from all parts of the dairy supply chain to support the sector throughout this challenging period.