The Bishop of Exeter received the following written answers on 25th April 2022:
The Lord Bishop of Exeter asked Her Majesty’s Government what assessment they have made of the impact of the Russian invasion of Ukraine on the dairy sector in England.
Lord Benyon (Con): Global gas prices have a major impact on agricultural commodities. We are very aware of the significant turbulence in international commodity markets following Russian’s invasion of Ukraine and are closely monitoring the market situation.
The Government does not underestimate the level of pressure that our dairy farmers are facing. While substantial increases in farmgate milk prices paid by milk purchasers are helping dairy farmers to offset increased input costs and to maintain production, we are aware that input cost pressures are leading to a period of significant uncertainty and adjustment across the sector.
The Government has recently announced steps to assist farmers with the availability of fertilisers for the coming growing season to help address uncertainty amongst growers and keep costs down for farmers. These include delays to changes to the use of urea; revised and improved statutory guidance on the use of slurry; and the publication of further details of the Sustainable Farming Incentive. The Government has announced that it will pay farmers to help with the costs of sowing nitrogen fixing plants and green manures to reduce dependence on manufactured fertilisers, and that farmers will be further supported through new slurry storage grants.
On 31 March, Minister Prentis hosted the first meeting of the Fertiliser Roundtable with key industry bodies to discuss potential mitigations to the challenges which global supply pressures are causing. Ministers will continue to meet with key industry bodies for further fertiliser round-table sessions in the coming months, to help identify and mitigate potential risks
We are working closely with the industry to identify where mitigations are available to the challenges they face. We continue to keep the market situation under review through the UK Agriculture Market Monitoring Group, which monitors UK agricultural markets including price, supply, inputs, trade and recent developments. We have also increased our engagement with industry to supplement our analysis with real time intelligence.
The Lord Bishop of Exeter asked Her Majesty’s Government what assessment they have made on the impact of supply chain inflation on the English dairy sector’s productive capacity.
Lord Benyon (Con): The supply chain inflation seen in the dairy sector in recent months, driven significantly by increased global gas prices, Russia’s invasion of Ukraine and the consequential increase in costs for feed, fuel and fertilisers has created challenges across our dairy and wider food and farming sectors.
It is too early to understand the impact of increased input costs on the longer-term productive capacity of the dairy sector. While farmers have recently seen a substantial increase in the farm gate milk price that they receive, helping them to offset their increased input costs and to maintain production, we are aware that input cost pressures are leading to a period of significant uncertainty and adjustment across the sector.
The sector operates in an open market and the value of dairy commodities, including the farm gate milk price, is established by those in the supply chain – including farmers, processors, wholesalers, retailers and consumers. Defra will continue to work closely with industry to monitor and understand evolving market developments, including dairy production trends.
The Lord Bishop of Exeter asked Her Majesty’s Government what assessment they have made of new environmental regulations, such as the Clean Air Strategy and Farming Rules for Water, on the future of the dairy sector in England.
Lord Benyon (C0n): Defra develops regulations with the involvement of stakeholders from the affected industry.
Before the Farming Rules for Water were introduced in 2018, an impact assessment was produced and a consultation conducted to ensure the effect of the regulations on specific farming sectors, including dairy, were taken into account. The assessment concluded that overall, and for the dairy sector specifically, the benefits of actions required under the rules outweigh the associated costs.
Defra has recently produced statutory guidance for the Environment Agency on how aspects of the Farming Rules for Water should be applied over the coming years. This guidance was developed in line with the original impact assessment. Representatives of the farming industry, including dairy farmer groups, were closely engaged in development of the guidance to ensure that the analysis of impacts on farming sectors was robust.
Full impact assessments will also be published alongside all regulatory policies to implement the Clean Air Strategy when they are introduced.
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