Agricultural Policy

FUW Relieved With Chancellor’s Announcement To Continue Red Diesel Duty

Earlier this month, the FUW, along with other industry representatives, raised huge concerns following Chancellor Rishi Sunak’s speech regarding the UK 2020 Budget.

It was reported that the Chancellor had plans to abolish the 11.1 pence per litre duty rate for red diesel which is used to fuel off-road vehicles, agricultural machinery and some industrial equipment. Such a move would mean those whose businesses rely on the reduced duty would be charged the full tax rate of 57.7 pence per litre. For dairy producers this could represent 0.5 pence per litre of their milk production costs during times of already tight profit margins.

The agricultural industry urged the Chancellor to recognise the importance of red diesel to farm viability and the FUW remained firmly opposed to the removal of the red diesel entitlement from the agricultural sector. The FUW believed that a continuation of the subsidy was imperative at a time when certainty is lacking over the future of farm payments and the future trade environment. Indeed, the FUW is aware that farmer competitors in both the EU and US would have had a lower fuel tax on red diesel maintained. The Chancellor had also been urged to take steps towards improving farm productivity and business resilience prior to announcing the 2020 Budget.

Given the importance of the current level of red diesel duty to farming families, the Farmers’ Union of Wales was pleased to see that the UK Government’s 2020 First Budget, which was released on 11 March, would not remove the entitlement to the use of red diesel from the agricultural sector.

Leaked Comments Made By Government Official Are Outrageous Says FUW

The Farmers’ Union of Wales has expressed outrage at the leaked comments which were made by UK Treasury Advisor, Mr Tim Leunig, earlier this month. As part of the comments made, Mr Leunig stated that the UK does not need its own agricultural industry.

The statement made by the Treasury Advisor included comments which asserted that the food sector is not “critically important” to the UK economy and that agriculture and fishery production “certainly isn’t” important to our economy.

On a similar vein, Senior Economic Advisor Rishi Sunak, who had plans to abolish tax subsidies on red diesel, posited that the UK could follow the Singapore model ‘which is rich without having its own agricultural sector’.

Aside from producing safe, nutritious, high welfare and environmentally conscious food, Welsh farmers deliver a wealth of other societal needs and wants such as carbon sequestration, preservation of historical features, mitigation of rural depopulation, preservation of the Welsh language, flood management and so on. It remains extremely frustrating that the largely significant contributions that farmers already make towards mitigating climate change, maintaining rural landscapes and ensuring domestic food security are often ignored by some politicians.

The recent covid-19 pandemic has served to reinforce the FUW’s firm belief that domestic food security is imperative and the union has called on both the UK and Welsh governments to protect food producers and rural communities.

The current pandemic has had a significant impact on food supply chains; with panic buying and other factors leading to shortages of certain foodstuffs and this has brought the importance of maintaining UK food security rapidly into sharp focus. The more complex the supply chain the greater the fragility and it is rather telling that Singapore’s dedicated agency for food security has included a policy which aims to increase domestic food production.


FUW Welcomes MPs Call for UK Food Standards Protection

The FUW has welcomed a call by MPs which would see the introduction of legislation to protect UK food production standards whilst future trade deals are negotiated.

When responding to the Public Bills Committee call for written evidence on the UK Agriculture Bill, the Farmers’ Union of Wales outlined concerns that the Bill does not introduce means by which to prevent the importation of food produced to environmental, animal welfare and other production standards which fall short of those legally required of UK farmers. The union added that failure to prevent the importation of food produced to lower standards would not only compromise UK businesses required to operate under more costly regimes, but also result in a net fall in environmental and animal welfare standards, as production from countries with lower standards would be favoured.

The FUW was pleased to see the call for an amendment to the Agriculture Bill following an Environment, Food and Rural Affairs Committee hearing and in response to the evidence provided. However, according to Defra Minister, Victoria Prentis, in comments made during a March session of the Public Bill Committee examining the Agricultural Bill, such an amendment would create a large degree of uncertainty over current imports and whether they could continue.

At present, the UK Government US Free Trade Agreement document states that the FTA “will include not compromising on our high environmental protection, animal welfare and food standards”. The FUW continues to stress the high animal welfare and environmental regulations adhered to by domestic producers and believes that future trade deals should recognise and protect such production.

News in Brief

i) UK Ministers Appoint New AHDB Chair
Mr Nicholas Saphir has been appointed as the new AHDB Chair for a three-year term from 1 April 2020. Mr Saphir has vast experience in both large scale horticulture and organic dairy cooperatives across the World and replaces Sir Peter Kendall who finishes his second term in office this month.

ii) First Milk Launches New First4Milk Pledge
First Milk have launched their new First4Milk pledge this month, building on the First4Milk Responsible Sourcing programme which was launched in 2019. The key elements of the pledge include providing a minimum amount of time to graze, enhancing soil health and promoting a positive image of dairy production.

iii) UK Lamb Exports To Germany And Middle East Boom
HMRC 2019 UK export statistics show that sheepmeat exports increased by 12.6% in value compared with 2018. Germany and the Middle East are the biggest contributors with sales increasing to over 19,000 tonnes and nearly 2,000 tonnes respectively. It is thought that the combination of these markets were worth a total of approximately £22.5 million to the Welsh economy.

iv) Largest New Zealand Beef Market Distorted But Expected To Recover
As a result of the Coronavirus pandemic, North Island New Zealand bull and steer prices have fallen by around 20% since November 2019 to $4.80 per kilogram carcase weight. New Zealand will now be seeking alternative markets for prime cuts to Countries such as Japan.

How Covid-19 Is Affecting Farmers

Farmers recognised as key workers

Farmers have been recognised by the Government as ‘key workers’ producing food and other necessary goods, meaning they can continue to go about their essential work in relation to producing food.
The category includes those involved in food production, processing, distribution, sale and delivery, as well as those essential to the provision of other key goods (for example hygienic and veterinary medicines).

The inclusion of farmers allows them to continue to undertake all actions necessary for the running of their businesses which they cannot undertake from home, and the FUW has made it clear to the authorities that this includes the movement of animals and feed - actions which are essential for food production and carry with them minimum risks in terms of coronavirus provided appropriate biosecurity measures are followed.

To date, the advice has focussed on the provision of schooling for key workers. However, further guidance is expected over the coming days, and the FUW has emphasised the need to ensure workers such as agricultural mechanics and contractors can continue to work to keep farm businesses running.