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Farm Profitability

Volume 716: debated on Thursday 23 June 2022

We will spend over £600 million on farm-based innovation over the next three years. Our recent food strategy outlined how we intend to use grant support to help businesses invest to improve their profitability and increase their agricultural output. While we will not tell farmers what to invest in, we will support the investment decisions that they judge to be right for their own businesses.

My farmers are seeing rising production costs, from increases in fertiliser costs, feed prices going up, the price of red diesel agriculture fuel doubling and increasing labour costs because of low availability of labour in the south-west. Those pressures will increase food prices further or see farms go to the wall. What more can be done?

My hon. Friend makes an important point. It is true that farmers are facing increased input costs, particularly for fertiliser, fuel, animal feed and energy. Some farm-gate prices are also at record highs, and that is helping to mitigate the impact of those increased costs. The Government have already announced a package of measures to support farmers with the availability of fertiliser. To help with cash flow, we have brought forward basic payment scheme payments to July, and we have also announced an additional 10,000 visas through the seasonal worker visa route to help with labour shortages.

What is the Secretary of State’s latest assessment of the impact on farm profits of plunging exports, new red tape and the labour shortage caused by the Conservative Government’s Brexit deal?

Farm incomes have seen a strong recovery since the 2016 referendum. Land prices are running at record highs and the price of milk has also increased. Farm profits have been on the rise in recent years. In the current year, it is true that the increased input costs caused by the spike in gas prices will put pressure on margins, but it is in the context of a successful post-Brexit boom for agriculture generally.

While the other place’s International Agreements Committee report broadly welcomed the Australia-UK trade deal for sectors such as financial services, it was concerned about the deal’s impact on UK agriculture, highlighting that it will allow the importation of beef from deforested land, crops grown with pesticides not permitted in the UK or the EU, and often no protection from copies for products such as Scottish whisky and Cornish pasties. The Committee fears that that will continue with other trade deals that the Government pursue and criticises their refusal to involve the devolved Governments. How can farms and our food and drink sector remain profitable in the face of such free trade agreements? Does the Secretary of State accept that his failure to achieve protections from untrammelled competition for farmers and food producers will ultimately have an impact on their businesses and livelihoods?

In the context of the free trade agreement with Australia, we secured staging protections for the sensitive sectors of beef and lamb for a decade, and then a very strong special agricultural safeguard thereafter, set against volumes. We judged that that would be sufficient to manage any risks to the market. It is important to recognise that Australia cannot compete with the UK on the vast majority of agricultural products, including dairy. In lamb, New Zealand cannot compete with the UK and does not use the quota it already has. Beef is an issue that we are watching, but we believe that we have the right protections in place.