A committee of MPs has raised questions over the way red meat levy is collected in the UK and has asked if Defra should have the final say on levy expenditure.
The Environment, Food and Rural Affairs (EFRA) committee report published today, (March 2) laid bare the cash flow crisis currently circling agriculture and proposed a series of measures to help farmers bounce back.
Delays to BPS, plummeting farm gate prices, supermarket price wars, short term contracts and the regulatory burden on farmers have all added to the turmoil faced by the British agricultural industry, MPs found.
The EFRA committee, which has been collating evidence from across the industry for several weeks, said it was disappointed about the delay to the start of the lamb and beef promotional campaign in 2015, and called on Defra and AHDB to ensure any future problems were identified and resolved sooner.
The report said: “There must be no repeat of this delay in the future. It may also be timely for wider questions to be asked about the role of Government in signing off AHDB expenditure, and whether farmers and other levy payers should have the final say on expenditure.”
The committee highlighted a Farmers Guardian survey, which showed 60 per cent of respondents wanted more money spent on consumer promotion.
The National Pig Association and National Sheep Association also highlighted the importance of promotion and the positive impact it had on sales, in the evidence they gave to the committee.
“We were surprised when AHDB seemed to downplay the impact that a successful marketing campaign can have on stimulating demand,” the MPs said, adding products should be promoted at the peak period of production.
“We recommend that the Agriculture and Horticulture Development Board increase the proportion of its income spent on marketing, and work closely with levy payers to consider their views.”
AHDB Beef and Lamb board chairman Adam Quinney and the board’s strategy director Laura Ryan both told the livestock session at last week’s NFU Conference that promotion would be important going forward.
Mr Quinney said research and development in order to understand what consumers want would be a vital part of this.
The committee urged Defra to amend current legislation to ensure red meat levy funds were fed back to the regions in which the livestock were reared, not, as at present, those in which they are slaughtered.
The report also found current legislation surrounding origin labelling had the potential to mislead consumers and cause confusion.
MPs found a growing interest in the provenance of food and in British products required a move towards clearer labelling.
EFRA chairman Neil Parish said: “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.
A Defra spokesman said: “We recognise that many farmers are suffering financial difficulty in the face of volatile global prices. We want to help find ways through this difficult time to build a thriving, resilient industry that is able to take advantage of the growing demand for British produce both at home and overseas.
“That’s why we’re pursuing a host of measures including introducing a fairer tax system, backing a futures market and the creation of producer organisations, and opening up new export markets.
“We’re also continuing to push for mandatory labelling for dairy products so consumers are clear where the food they buy comes from.”
Commenting on the wider report, NFU president Meurig Raymond said the fall in prices and associated cash flow problems were the biggest challenges currently facing farmers.
“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,” said Mr Raymond.
“Using these tools will help the agri-food sector through this period of uncertainty and the whole supply chain better combat volatility.”
Phil Stocker, chief executive of the National Sheep Association, said the report ‘clearly shows that the structure of the farming and food sector does not generally support adequate farmgate prices, despite the fundamental role agriculture plays in the UK economy’.
“The report outlines some valuable recommendations that could work to address this, including several based on evidence NSA gave during the enquiry,” added Mr Stocker.
“These include further development of export opportunities, as well as displacing imports through greater domestic trade, setting up producer organisations and establishing futures markets for red meat as well dairy produce.”
Dr Judith Bryans, chief executive of Dairy UK, said the entire dairy industry was taking positive steps forward but needed government support to achieve long-lasting success.
"From farm to fridge, the industry is affected by harsh market conditions and we must continue to work with Government and its agencies to facilitate and stimulate demand at home as well as in key export markets," Dr Bryans said.
“We welcome the Committee’s recommendation to promote exports with the help of Defra and AHDB."
Ash Amirahmadi, head of milk and member services, Arla Foods UK, added: "Arla recognise the importance of working closely with the Government to boost exports, drive innovation within our sector and to highlight the dietary and nutritional benefits of dairy.
"As the report points out, it’s also about highlighting the importance of collective working amongst the farming community."