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Farmgate Prices Report Shows Livelihoods at Risk After Payment Delays

04 March 2016

UK - The Environment, Food and Rural Affairs Committee warns that farmers in the UK are at risk of suffering further cash flow problems if the Rural Payment Agency (RPA) does not commit to fixing ongoing issues with its IT systems, in its report on Farmgate prices.

Grants administered by the RPA have been delayed since last year due to an inadequate electronic application system.

Neil Parish MP, Environment, Food and Rural Affairs Committee Chair said: "Many producers rely on CAP payments to turn a profit so it is unacceptable that our farmers are still facing lengthy delays to financial support.

"The RPA introduced an IT system that wasn’t fit for purpose and subsequent errors made in the attempt to fix the problem only caused further delays and confusion for applicants.

"We welcome the efforts being made to solve this problem and reduce delays but it is crucial that the RPA works to at least match the target achieved by the previous scheme of 90 per cent of payments made by the end of December each year."

Commenting on this recommendation, NFU President Meurig Raymond said: “This will alleviate the financial turmoil that thousands of farmers have been and still are feeling. And we will be pushing this recommendation in our own discussions with the RPA.”

The report also found that current legislation surrounding origin labelling has the potential to mislead consumers and cause confusion. MPs found that a growing interest in the provenance of food and in British products requires a move towards clearer labelling.

Neil Parish MP commented: "Many people in Britain want to support a British agricultural industry. But Defra’s current guidance on origin labelling allows for companies to sell products such as cheese and butter as British when the raw product is being sourced oversees.

"As a result consumers are given a false impression that they are supporting a home industry when in fact their money is not supporting UK farmers at all.

"The British public deserve to buy British in confidence. Defra must strengthen its guidelines around country of origin labelling and continue to press for EU support in establishing clearer and better labelling requirements."

Another key outcome of the report was that the Committee questions assurance from the retail sector that there is no link between the price at which supermarkets sell to their customers and the price supermarkets pay to farmers.

While farmers engaged in contractual arrangements with supermarkets, directly or otherwise, are guaranteed a price for their milk for specific periods, the chronic low price of milk sold through supermarkets inevitably disadvantages farmers in the longer term.

Supermarkets may choose to sell milk cheaply as a loss leader, but farmers must not be the victims of the supermarket wars currently taking place in the UK, the committee concluded. Progress is uneven amongst supermarkets and assurances must be met with action.

Other areas for action identified in the report included producer organisations, futures markets, exports, equality across the different countries of the UK, and the Groceries Code Adjudicator. 

Commenting on the wider report, Mr Raymond said: “The fall in prices and associated cash-flow problems are the biggest challenges currently facing our farmer members. And we’re not expecting the market situation to get better anytime soon.

“We are pleased that the EFRA committee has listened to our evidence and to others from across the supply chain and produced this wide-ranging report.

“There is no quick-fix. However the report identifies a range of recommendations that can help in the short-term and not leave the industry so exposed in the future. Our members now expect to see this swiftly followed up with positive, visible and tangible actions.

“It is vital that the industry comes together to deliver these recommendations to support farmers through these difficult times. We want to see genuine improvements, transparency and commitment to give farmers more confidence.

“Pricing models, long term relationships, contracts, producer organisations and a greater emphasis on export opportunities for British agriculture are all tools which can be used by government and the supply chain. Using these tools will help the agri-food sector through this period of uncertainty and the whole supply chain better combat volatility."

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