Two years ago, I was last on the stage to address the NFU. Two years have passed since then and we’ve experienced extraordinary disruption due to the COVID epidemic. First, I want to acknowledge the incredible efforts of the food industry in helping us combat that pandemic, especially when we had panic buying.
It was truly remarkable to see the industry’s efforts to manage some of the strains and stresses in the supply chain. I want to thank Terry, Minette, and the entire NFU team for all their hard work and dedication during this difficult period and since.
I want to also thank the NFU team and Minettes team, for their work with Defra. It helped me to formulate our future policy. This is an area where, despite all the distractions from the pandemics, we have maintained our progress and delivered the changes that we want during the agricultural transition.
And I know Minette published the blueprint for the future agriculture this week.
This blueprint document is absolutely correct when it states that food production and environment protection must go hand-in-hand. I’ve always maintained that these are two sides of one coin. We want sustainable agriculture. We want to partner with farmers to achieve some of our environmental ambitions.
The context in which we operate is one that is constantly changing. Oil and gas prices and exchange rates have been the main drivers of agricultural commodity prices. However, we have seen some healthy increases in some commodity prices since 2016. Prices of lamb and beef are moving towards new heights. Recent price increases have been welcomed by some of our cereal crop varieties.
In recent years, farm incomes are now higher as a result. Some of these changes could be mitigated. These things happen in cycles, and commodity prices could fall again. However, some elements of this change could be more fundamental or structural.
There is also the context of a growing world population, which will reach 9 billion people by 2050. The context of climate change will lead to water scarcity in some parts of the globe. This means that areas of the planet that have good and versatile land for agriculture may have a harder time producing crops in the future. This will mean that the produce from the temperate regions of this world, including the UK, could be in high demand.
However, I am aware that agriculture faces many challenges. These include high oil prices, high gasoline prices, sharp rises of input costs, large rises in fertiliser and energy costs, and rising costs for tractor yields. These costs will have a negative impact on businesses’ profit margins and will be worrying for many of you today.
As always, it is also true that not all sectors are thriving and enjoying high prices. Our pig producers have faced a difficult 12 months due to disruptions to China’s markets. We responded to the industry’s requests last October. They requested a Private Storage Aid Scheme, which would allow them to increase Saturday kills to clear the backlog. Also, they wanted a temporary visa system. Both of these are now in place.
Unfortunately, the uptake of these has not been as great as we would like. Victoria Prentis, my colleague has been working tirelessly with the NFU, NPA and the industry to find ways we can improve the Private Storage Assistance Scheme. We made it clear that the Agricultural Act gave us powers to bring transparency and fairness to supply chains. We have already taken steps to introduce regulations in the dairy industry. We are currently reviewing the pig market sector in order to use the Agriculture Act’s powers to ensure fairness in the future supply chain.
The future agriculture policy should support the individual choices made by farm enterprises. We want to end top-down guidance from the EU. Instead, the approach is modular and flexible. Farmers can choose what works best for their particular holding and enterprise, and they can choose the level and ambition they wish to adopt in each area.
We have always been clear that we want policy development to be iterative. We wanted it to be adaptable. We wanted the ability for it to respond to farmers for policies that work and allow them to adapt to those that do not.
We opened the Farming Investment Fund in late 2013 and small technology grants in 2014, with an initial fund of 17 million. This was to help farm productivity investment. This fund was highly oversubscribed. Today I am happy to announce that the fund for small-scale technology grants will be increased from 17 million to48 million. This will allow approximately 4,000 applications to farmers to be processed successfully.
Today, I want to talk about the Animal Health and Welfare Pathway. In many ways, the livestock sector is world-leading. Over the years, we have exported animal genetics all over the globe. My grandfather used the opportunity to export prize winning cattle from as far as South Africa, the United States, Australia, New Zealand, and New Zealand. We are still the world’s leaders in animal genetics to this day. We have Europe’s largest sheep sector and are one of only three major exporters and producers in the world.
We have a competitive poultry and pork sector. We also know that financial performance of livestock enterprises is closely linked to animal health. The AHDB has done extensive analysis of the cost of animal diseases and animal health problems in our livestock sectors. They estimated that these endemic diseases were costing over a billion dollars per year. The sheep sector alone is responsible for more than 8 million cases of sheep scab. The sheep sector loses 24 million annually to lameness. Our cattle sectors will suffer from BVD every year, which is estimated to be between 14-16 millions.
We also know that dairy can be cost-effective by ensuring good lameness production and good management practices like mastitis. Kingston’s research shows that this can result in a cost savings of around 110 pounds per cow if the animal health outcomes are right.
As I mentioned, the AHDB has done some very important analytical work. I know that Nicholas Sapphires is looking at that work again and they are updating some of those figures. This is a critical piece of work.
We are making changes to allow farmers to be more involved in the future strategies of the AHDB for certain sectors. I encourage you all to register with the AHDB if you work in those sectors so that you can be part of their consultation for their next five-year program.
The Animal Health and Welfare Pathway, however, is intended for farmers who are looking to increase their profitability and improve their health outcomes. It all starts with an annual vet check. Farmers can choose the vet they trust and the government will pay 372 to 684 depending on their species. This is because each test costs different and it is necessary to cover an annual visit to the vet. It will remain confidential between farmer and vet. That vet will be able assist the farmer in putting together a plan for improving animal health and profitability.
It will include key disease diagnostic tests as part of that plan. So, in cattle, we are most interested in BBD. In sheep, we will use a Drench to test for resistances and in pigs, PRRS will be tested. This is only the first step. We will continue to offer grant support to farmers once they are involved with the Animal Health and Welfare Pathway in subsequent years. For example, we will make grants available to help improve ventilation, improve buildings, and provide housing so that they can have better welfare and health outcomes. We will also support specific approaches that we know to work.
We have always stated that we want to transition from the old system – known as the Common Agricultural Policy – to the new system gradually. We want this to be an evolutionary process, not a revolution. This was something we were clear about from the beginning. The Agriculture Act explicitly provides for a seven-year transition period. This will be applicable to every component of our policy.
As part of the Sustainable Farming Incentive, we have already announced that there is a soil-health module. Farmers can be rewarded for growing green cover crops and basic soil analysis. We will continue to add modules on integrated pest control and hedgerows to the Sustainable Farming Incentive in future years. We will also offer farmers the chance of doing more in each of these modules.
I’m sure I’ve heard it said that the first year payment is a small one, the first step. It is the first step. I know there are people who want it to move faster and to have more modules sooner. However, we must realize that the only way to do that is to reduce the BPS payment quicker than we are. Given that we’ve promised people a seven year transition, I don’t think this is the right decision.
We do recognize that some farmers want to move faster and embrace the changes faster. That is why we have increased Countryside Stewardship payment rates by 30%. And we encourage farmers who aren’t already in CS, to get involved with that program. It gives them the chance to engage with the schemes in a more ambitious way than the Sustainable Farming Incentive may allow.
We believe that Countryside Stewardship can be a stepping stone for Local Nature Recovery. It will be very simple for farmers to convert Countryside Stewardship agreements into a future Local Nature Recovery program.
There are already 40,000 farmers involved in Countryside Stewardship, which is a 40% increase from last year. I encourage those who aren’t already involved to get involved.
So I believe agriculture has a bright future. Defra is committed to working with industry to design its future policy. We have established a principle of codesign, with groups of technical experts from each sector working with us to develop the future policies. We know that we will not get everything right the first time. This is why it is important to be flexible and allow for an iterative change in policy.
But I believe agriculture has a bright future. We can be globally competitive. The government wants to help farmers achieve a more profitable future. We are grateful.
