Farmer scale is needed to compete in food chain, says EFRA Committee

A report from the cross party Environment, Food and Rural Affairs (EFRA) Committee of the House of Commons into farmgate pricing recommends that farmers collaborate to build a stronger position in the marketplace.

The  latest EFRA report is the culmination of an inquiry into the current problems in the dairy and red meat sectors, and measures that could improve prospects for agriculture. It started hearing evidence in September last year.

The report notes that farmers face short-term uncertainty, with unpredictable demand in global markets affecting worldwide prices for agricultural products. But it expects a longer term recovery with worldwide demand growing in line with population size and economic growth.

Key conclusions are that farmers work together better to create opportunities, rather than expecting government to lead change.  Producer Organisations would be one way for small businesses to mitigate volatility, as would futures markets for more products.

Sales can be increased through developing new and innovative products that meet consumer needs, while exports also represent a huge opportunity for revenue growth. Closer working - and trust – across the whole supply chain will help develop a strategic relationship and maintain a competitive edge.

Recommendations to help meet these objectives include a call for clearer origin labelling – “ a growing interest in the provenance of food and in British products requires a move towards clearer labelling”;  more support from the retail sector: “Supermarkets may choose to sell milk cheaply as a loss leader, but farmers must not be the victims of the supermarket wars currently taking place in the UK”;  longer-term contracts between farmers, processors and retailers to provide predicable income levels and encourage secure financial planning and investment decisions; more effective co-ordination between Defra and the devolved administrations to prevent unsustainable price inequalities emerging at a national level and an extension of the Groceries Code Adjudicator's remit to incorporate, and thereby protect, both direct and indirect suppliers to the major UK retailers.

"Many people in Britain want to support a British agricultural industry, concludes Mr Parish. “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."

Posted on March 3, 2016 and filed under UK Policy & Regulation, News.