The Government is to be given the power to make payments, loans or guarantees to farmers suffering because of ‘exceptionally’ low prices under the terms of the Agriculture Bill.
The new legislation will allow the Secretary of State to offer such support wherever there is a ‘severe disturbance’ or threat of a disturbance to the agricultural market which could hit farmers’ incomes.
Extreme weather conditions or an animal disease outbreak would only be considered ‘exceptional events’ for this purpose if they resulted in an actual or threatened market disturbance.
The Bill will also give the Government the power to operate public intervention schemes such as intervention buying, where the state stabilises the market by buying up surplus supplies to be stored until the price increases.
In 2015 and ‘16, the EU used this mechanism to purchase 350,000 tonnes of skimmed milk powder when the price dropped below €169.80 per 100kg in several member states.
Private storage aid schemes, where aid is granted for storage of products by private operators, could also be employed under the terms of the Bill.
Guy Smith, deputy president of the NFU, gave a cautious welcome to the plans.
He said: “Our concern with the Defra announcements made around the introduction of the Agriculture Bill have been the lack of mention of support for farms and food production and the protection of farm businesses from market and/or weather volatility.
“However, Part 4 of the Bill reassuringly lays down some sort of safety net which gives the Secretary of State powers to assist farm businesses where there are ‘exceptional market conditions’.
“Although this is very different to the routine support American or EU farmers will continue to receive, it does allow for something similar.
“But of course, the million dollar question is, who decides what the ‘exceptional market conditions’ are which trigger the support.
“The deliberations around this will undoubtedly involve a lot of politics.”