The farming unions from across England, Wales, Scotland and Northern Ireland have written to Food Security Minister Daniel Zeichner to raise concerns over possible changes to the new dairy contracts legislation.
It’s understood that these changes would relate to exclusivity and consequences of the tiered pricing provisions.
Despite the Fair Dealing Obligations (Milk) Regulations 2024 only recently coming into force, following intense campaigning, changes could see the supply chain allowed to interpret tiered pricing in a way that encompasses both a price bonus and penalty linked to seasonal milk volumes.
This would enable buyers to discount litres of milk, even where a contract is exclusive. In the letter, the unions write: “Historically, contracts have allowed milk buyers to have complete discretion over the price paid for milk and exclusivity over all of the milk produced on a dairy farm.
“The UK farming unions have always believed that the ability for milk buyers to control both price and volumes of milk on a dairy farm should be separated. We cannot see any reason why anyone would object to a farmer being free to market their excess milk to a third party should their primary purchaser be discounting it.”
Changes coming to Agricultural Property Relief
The NFU has also voiced concerns about possible changes to the Agricultural Property Relief (APR) as part of the forthcoming budget. The Treasury is reportedly looking into the legislation, which allows farms to be passed onto the next generation without inheritance tax.
Analysis by the NFU suggests that scrapping APR would only save around £120m per year while having a disproportionately negative impact on farming. In light of this, the Union has written to Chancellor Rachel Reeves and NFU president Tom Bradshaw spoke to her at the Labour Party Conference.
Mr Bradshaw said: “NFU members keep seeing these alarming media reports and they are understandably worried and upset. Major APR changes would put at risk many farming families’ succession plans and consequently undermine the government’s own ambitions for food and environmental security.
“I’m also very concerned that changes would damage the tenanted sector, as landowners will have much less incentive to let land to agricultural tenants. In short, this “Family Farm Tax”, which is what removing APR amounts to, could be too much for some farming businesses which are already struggling with numerous challenges.
“Farming is often a generational business, and APR is what makes it possible for small family farms to pass from one generation to another. We’ve given the Treasury the details and evidence for our concerns and we stand ready to meet ministers and officials again, at any time, to reinforce the point that a Family Farm Tax could push many small family farming businesses over the edge.”
A letter to the Prime Minister
Continuing to campaign against possible changes to APR, Mr Bradshaw has written to Sir Kier Starmer on behalf of the 45,000 NFU members, calling for the government to stand by commitments made to farmers.
It notes that while in opposition, the Prime Minister attended the NFU Conference and said that farmers needed a government that “seeks a new relationship with the countryside and farming communities… based on respect, on genuine partnership”.
He also said, “we can’t have underspends in the allocated money, we can’t have farmers struggling while they wait for the right Sustainable Farming Incentive (SFI) standards to be announced. We can’t have everyone burnt out by the bureaucracy and constantly moving goalposts, it’s too important”.
Mr Bradshaw said: “The Prime Minister’s words were warmly greeted at NFU conference. We finally heard recognition of the certainty and stability needed for a thriving food and farming industry – one that underpins the UK’s largest manufacturing sector food and drink which delivers £148 billion to the economy.
“However, reports that the government is considering cutting the agriculture budget due to the failure of the previous government leading to an underspend of £358 million, and a possible review of Agriculture Property Relief (APR) are incredibly concerning.
“We are asking for a renewed multi-year annual agriculture budget of £5.6 billion, not because it would be nice to have, but because it is an essential investment to deliver the government’s environmental goals, increase growth and support the economic stability of farm businesses. The loss of APR2 could mean family farms, who are vital to producing food for the country, providing jobs and looking after our countryside, having to be sold to cover the costs.
“At a time when farmer and grower confidence is at its lowest on record due to high production costs, extreme weather and uncertainty during the agricultural transition, we need stability and that genuine partnership with government which the Prime Minister spoke of.
“That is why on 30th October we’re asking for an increased agriculture budget and confirmation of no change to APR. This will deliver certainty to our food producing businesses and ensure our food security and environmental targets, all of which contribute to the government’s own missions for growth and prosperity.”