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Government must act to stop farming collapsing under the strain of coronavirus

Government must intervene to prevent agriculture from collapsing under the strain of the virus or risk hampering the wider economic recovery, says Ben Lake MP for Ceredigion.

The first Covid-19 cases in the UK were confirmed a little under two months ago. Such is the impact of the virus that it is getting difficult to remember life before it.

 

Governments across the world have had to shut down vast tracts of their economies as part of the struggle against the virus, and in turn introduce unprecedented support measures in the hope of preserving their economies.

 

Agriculture, like every other sector of the economy, is not immune. In little under three weeks, the disruption caused by Covid-19 has completely overturned the structure of consumer demand for food products.

 

Restrictions necessary to contain the spread of the virus effectively closed the hospitality sector overnight, and have sent food retail sales surging. Existing processing and supply chains have unsurprisingly struggled to absorb such a significant, and sudden, shift in demand.

 

Dairy disaster

 

The consequences have been severe, but particularly so for the liquid milk sector.

 

Processors who previously supplied the hospitality market have cut farmgate prices and deferred payments, forcing farmers to pour milk away as collections are delayed or cancelled.

 

Meanwhile, for processors supplying the food retail market increased demand has left them struggling to keep up.

 

The Government was right to amend competition law to allow for greater cooperation between supermarkets in response to this crisis.

 

It must now do likewise for milk processers, and provide the financial support necessary to enable the industry and supply chain to redirect produce to the retail market.

 

Of course, this would only partially alleviate the pressure on the milk industry.

 

Retail demand for milk will only go so far, and so in order to safeguard the future of the milk industry in the mid-term, the Government must urgently consider direct interventions to try and stabilise prices and keep dairy farmers from going under: whether in the form of direct financial support to help with cash flow and reduced incomes, or enhanced private storage measures.

 

Red meat market disruption

 

Beef and lamb farmers have also seen prices drop sharply during the past fortnight as demand patterns shift, and like many dairy farmers, they have been plunged into severe financial difficulties due to Covid-19.

 

Market volatility is sadly an all too common phenomenon for Welsh farmers, but recent price instability – and associated disruption - is unsustainable.

 

The crisis is compounded by the fact that falling incomes coincide with rising feed costs, and what is normally the most important part of the year for most Welsh farm businesses: Easter and the Spring Flush.

 

When we consider that this crisis follows a terrible winter, it is difficult to imagine a more perfect storm for agriculture.

 

Government must intervene

 

The Government was right to intervene to prevent businesses in the wider economy from collapsing under the strain of the virus.

 

It must do the same for agriculture, or risk hampering the wider economic recovery when Covid-19 is finally overcome.

 

Just as the food and farming sector cannot thrive without a functioning hospitality and retail sector, the hospitality and retail industry will struggle to return to normal if farm businesses across the country are left to succumb to Covid-19.

 

In both the economic and health crises that we face, we are all in this together.

 

You can find Ben tweeting at @BenMLake

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