This article was updated on 10 July 2020
Spring is normally a busy time in the farming calendar, but in spring 2020 farm business activity has been significantly affected by coronavirus.
This article provides examples of some of the challenges farmers are facing and sets out the actions being taken to support them.
We’ve published a separate article on how the food retail sector is responding.
Markets
Buying patterns changed considerably at the start of lockdown.
Consumer buying shifted even more to supermarkets, and to certain products (e.g. mincemeat rather than higher quality meat cuts). Demand from the food service sector (schools, restaurants etc.) also dropped off significantly.
These factors have contributed to price volatility in the dairy and red meat sectors in particular over the last months.
There was a 30% decrease in the price of bulk cream between March and April from £1280/tonne to £900/tonne. There was a 13% decrease in the price of skim milk powder in the same period from £1990/tonne to £1730/tonne. However on 25 June, the Agriculture and Horticulture Development Board (AHDB) reported that markets are bouncing back as demand starts to return.
FUW reported in April that some farmers had no option but to dispose of their milk due to processors being unable to collect it.
NFU has published a dairy sector and coronavirus Q&A.
In terms of red meat,NFU Cymru stated that the scale of disruption in the supply chain was “truly unprecedented”. Hybu Cig Cymru’s (HCC) Average Weekly Great Britain Market Price data shows the price for steers, heifers, young bulls and prime cattle to be recovering following a drop at the start of the pandemic. For example, the price for prime cattle fell from 193.8p/kg on 21 March to 184.9p/kg the following week whilst on 4 July the price had increased to 194p/kg.
Both farming unions (NFU Cymru and FUW) have called upon the UK and Welsh governments to intervene to support the industry during these exceptional times.
The UK Government temporarily relaxed elements of competition law, a move welcomed by the Welsh Government. The intention was to enable further collaboration between dairy farmers and producers to avoid surplus milk going to waste and harming the environment. This could include sharing labour and facilities, temporarily reducing production or identifying opportunities to process milk into other products such as cheese and butter.
FUW cautiously welcomed the measures highlighting that although there needs to be accurate information on surplus milk, there is a danger of it having a negative effect on the spot prices, which many dairy farmers depend on.
On 9 May the Welsh Government announced a support scheme for the dairy sector. This followed the announcement of a similar scheme for England. Eligible Welsh dairy farmers who have lost more than 25% of their income in April and May, will be entitled to up to £10,000 to cover 70% of their lost income. The application window opened on 18 June and will close on 14 August.
On 6 May, AHDB launched a £1m UK-wide campaign to boost consumer demand for milk in response to the closure of the food service and hospitality sectors. The campaign is led by AHDB with additional funding from Dairy UK, the governments across the UK, retail and wider industry. It aimed to increase consumer demand for milk by 3% over a 12 week period. This equates to 450,000 litres of liquid milk per day.
In response to the changes in demand for red meat, HCC launched a consumer campaign to encourage people to purchase larger cuts of meat to “bring the restaurant experience” to the home.
The Minister for Environment, Energy and Rural Affairs, Lesley Griffiths, told the Senedd’s Climate Change, Environment and Rural Affairs (CCERA) Committee that she had no immediate plans for intervention for the red meat sector, but was monitoring the situation. The Agriculture Resilience Group, the Sheep Focus Group and Beef Focus Groups have been meeting for this purpose (PDF 461 KB).
Farmers have not been eligible for the Welsh Government’s Economic Resilience Fund. The fund provides extra support to businesses experiencing a sharp drop in trading as a result of coronavirus.
NFU Cymru requested an urgent review of the eligibility criteria to allow farmers to access the fund, saying that farmers are “justifiably distressed” at “the absence of bespoke support for farming from Welsh Government”.
When questioned on this issue the Minister for Economy, Transport and North Wales, Ken Skates, highlighted that farms that have diversified and have additional businesses can apply to the fund. Those that have not diversified are not eligible because they receive Common Agricultural Policy (CAP) payments.
Farmers can apply for the Coronavirus Business Interruption Loan Scheme (CBILS). This scheme supports primarily small and medium-sized businesses to access bank lending and overdrafts, and is delivered by the British Business Bank.
NFU Cymru has called for Wales Rural Development Programme (RDP) funds to be allocated to support the farming industry. This followed the European Commission announcement that a Covid-19 measure will be included within the European Agricultural Fund for Rural Development. Other support measures for EU farmers are detailed in a European Parliament Research Service briefing.
NFU Cymru also stressed that “farming can’t be furloughed” because “it is in the national interest that farm businesses continue to operate to provide food for the nation during times of crisis and beyond”.
We’ve published a separate article on business support during the coronavirus emergency,
Farm payments
Given the additional pressure on farm finances, FUW raised concern about those who have not yet been paid their Basic Payment Scheme (BPS) or Glastir payments under the CAP, either in part or in full.
The union also highlighted that some farmers might not be able to meet the deadline for submitting their Single Application Form (SAF) given the extraordinary circumstances. For example, because outstanding inspection reports could delay SAF completion. The SAF is required for farmers to receive their payments. Late applications usually face financial penalties and some can be refused.
NFU Cymru raised the issue of arable farmers meeting the CAP crop diversification requirements due to added pressures of coronavirus and flooding earlier this year. This is the two crop and three crop requirement to qualify for the BPS greening payments.
The Welsh Government responded to these issues on 1 April by:
- Allocating an extra £5.5 million to the BPS and Glastir to alleviate cash-flow problems. The schemes reopened on 1 April for farmers who are yet to receive their 2019 payments.
- Giving farmers an extra month to submit their SAF by extending the deadline from 15 May to 15 June. NFU welcomed the extension but does not want to see payments delayed as a result.
- Removing crop diversification requirements for the BPS for 2020. This followed a similar change in England.
Statutory instruments were subsequently laid to put these commitments into effect: The Common Agricultural Policy (Payments to Farmers) (Coronavirus) (Wales) Regulations 2020 and The Direct Payments to Farmers (Crop Diversification Derogation) (Wales) Regulations 2020.
The Rural Payments Wales website provides the latest information on payment services affected by coronavirus.
Bovine TB testing
Concerns have been raised about the risk of overdue TB tests, for reasons including a potential shortage of vets.
Concerns include whether usual cross-compliance penalties for overdue testing (such as reduced BPS payment) would apply, or whether limited testing would impact cattle movement.
Lesley Griffiths said on 8 April that testing “will only continue if it can be done safely”. She also clarified that cattle movement restrictions will be applied for overdue tests, but keepers will no longer be referred for cross-compliance penalties.
On 4 May the Animal and Plant Health Agency (APHA) announced (PDF 242KB) a temporary exclusion of TB testing in calves (under 180 days) if testing cannot be done safely. Exempted calves would still need a pre-movement test if they are to move off a holding, where that move would normally require it. These guidelines apply in England and Wales.
The TBhub provides up-to-date information on Animal and Plant Health Agency contingency planning on TB testing.
Public access to farmland
Significant visitor numbers to the countryside at the end of March sparked apprehension within farming communities about spreading coronavirus, especially where public rights of way pass through farmyards.
NFU Cymru and FUW have urged people to behave responsibly and called on the Welsh Government to review countryside access policies.
The Welsh Government introduced emergency regulations to require local authorities, Natural Resources Wales, national parks and the National Trust to close public rights of way and access land where that access could increase the spread of coronavirus.
The Ramblers and other organisations have asked people to respect the closures but also urged against any unnecessary closures.
The Welsh Government published guidance for landowners on the regulations on 7 April.
Seasonal workers
Many farming businesses rely on seasonal workers from abroad, such as fruit pickers and shearing teams. NFU is concerned that travel limitations and difficulties in accessing visas will mean that the demand for seasonal workers will not be met. It says that up to 70,000 fruit and vegetable pickers are needed across the UK.
There has been a drive to recruitboth domestic and international seasonal farm workers across the UK.
The Welsh Government commissioned LANTRA to develop an online service to match employers with jobseekers looking for agricultural, land and veterinary work. The Air Charter Service is scheduling flights for eastern European workers. There are also other initiatives taking place.
Furloughed workers can take up employment elsewhere and retain their furlough payment under the UK Government’s Coronavirus Job Retention Scheme.
It has been raised in Plenary that seasonal workers may not be eligible for furlough. Employees must have been on an employer’s PAYE payroll “on or before 19 March 2020”.
The CCERA Committee has been carrying out work on the Welsh Government’s response to coronavirus regarding the agriculture and food sectors.
Next steps
The coronavirus pandemic has taught the industry, governments and the public about pressures on the supply chain from food production to retail. Plans for the future of agriculture post-Brexit are being developed and all concerned will be acutely aware of the challenges and opportunities the sector faces, following this time of disruption.
Further information
Article by Katy Orford, Senedd Research, Welsh Parliament
We’ve published a range of material on the coronavirus pandemic, including a post setting out the help and guidance available for people in Wales and a timeline of Welsh and UK governments’ response.
You can see all our coronavirus-related publications by clicking here. All are updated regularly.