CHALLENGES and problems that farmers in the UK face are not so different to those faced by farmers in Malawi, a delegation of Farmers’ Union of Wales officials has heard.
Visiting a Welsh organic arable and dairy farm – Allan Saidi a sugar farmer from Malawi – told FUW president Emyr Jones that the challenges of trying to achieve a fair price for their produce in order to provide a brighter future for their children are just the same in Africa as they are here in Wales.
The delegation was joined by the deputy minister for farming and food, Rebecca Evans AM, as they explored FUW Ceredigion county chairman Aled Rees’s150-acre organic dairy farm at Trefere Fawr, Penparc, Cardigan.
Following the visit the deputy minister for farming and food, Rebecca Evans AM said: “It was a pleasure to meet Allan last week and hear about how Fairtrade is transforming lives and helping people out of poverty in Malawi. Becoming the first Fair Trade Nation was a huge moment for Wales. It showed the world that we are an outward-looking, compassionate country which cares about ensuring farmers and food producers receive a fair deal wherever they are.”
“It was an absolute pleasure to show Allan around the farm and hear about the challenges a farmer on the other side of the world faces. It has become quite clear that even though we tend land many miles apart we worry about very similar things –floods, prices, cost of production and how to improve the lives of our families on a day-to-day basis,” said Mr Rees.
“It is easy to forget how fortunate we are living in the western world and take things like running water, safety, health care and education for our children for granted. What Allan and his fellow sugarcane farmers have achieved over the years can only be admired and must be supported in whatever way we can.
“Achieving a fair price for our produce plays a major role in this. Of course we have to take responsibility for running efficient businesses and producing a quality product but if we don’t get paid fairly for our efforts we cannot expand and further invest in the industry,” added Mr Rees.
Speaking after the visit, FUW president Emyr Jones added: “As much as the union and every farmer in the UK want a fair price for dairy, meat and arable produce in the market place we also want to see farmers like Allan get a fair price for his products. The two principles should have equal priority worldwide.”
Mr Saidi, 27, who has been farming sugarcane for over ten years, is also secretary of the Fairtrade Premium Committee – the elected committee which manages projects chosen by Kasinthula Cane Growers’ Association (KCGA) members. The members decide what community projects should benefit from the Fairtrade Premium received, with funds being invested in services such as communally owned agricultural machinery, school buildings and a community leisure centre.
“Malawi’s sugar sector is vital for the country’s economy – in 2013 sugar exports were worth $114m, making it the second most important export commodity after tobacco. Sugar is grown as a mono-crop and is generally the main source of income for smallholder producers, who also grow food crops and keep livestock. Agriculture provides a livelihood for over 85 percent of the population, of which around 90 percent are smallholders,” said Mr Saidi.
“KCG is a smallholder sugar cane project located in an inhospitable region of southern Malawi. Long droughts occasionally result in famine, and the twice-yearly rains often bring floods – in January 2015 many farmers were affected by Malawi’s worst floods for fifty years that killed several hundred people, displaced thousands more and caused extensive damage to crops, livestock and infrastructure.
“Literacy levels are low and poverty is widespread in the region. Most people live in basic mud huts with thatched roofs and few can afford to keep livestock. Families make a living growing maize, cassava or rice, while others earn cash from sugar cane or cotton, or by labouring on nearby sugar plantations. Other challenges faced by farming communities include high input costs, poor rural infrastructure, inadequate health facilities, and a lack of agricultural extension services and appropriate technology,” added Mr Saidi.
FUW policy officer Helen Ovens, who has previously worked with farmers in Uganda, said: “I have seen first-hand the benefits of growing a cash crop -even on a very small scale-alongside crops grown to feed the family.
“Sugarcane is a high value crop, bringing in much needed income into deprived rural communities, and helps to pay for essential services. Allan and his fellow farmers produce a particularly high value product – that being organic, fair trade sugar.The quality of this product, and the real tangible benefits to his community that arise from us purchasing products with a Fair Trade logo should not be underestimated.”
“Farmers across the world need to receive a realistic financial return for their products, whether that be sugarcane from a small farm in southern Malawi, or milk from a dairy farm in west Wales. It has been a pleasure to see Aled and Allan exchange farming experiences, increasing each other’s understanding of their own farming circumstances,” added Helen.
Farmers should prepare for IHT changes
There are less than six months before the Spring Statement, and changes to the IHT format – based on recommendations originally outlined by the Office of Tax Simplification (OTS) in July 2019 – are likely. “The recommendations were primarily geared towards streamlining IHT administration but may have the secondary effect of reducing some of the favourable reliefs available to farmers,” explains Catherine Vickery, associate director at Old Mill.
“Current IHT legislation can be very beneficial for farmers, giving confidence that they can pass down agricultural business and property assets to the next generation tax free on death,” she adds. “Unfortunately, the coronavirus pandemic has left the Government with a very large debt, so there’s potential that it will implement any OTS recommendations to increase tax revenue.”
So, with the Spring Statement anticipated for March, what can farmers do to mitigate any potential changes?
“Under the existing rules, agricultural land and property qualify for Agricultural Property Relief (APR) from IHT at up to 100%,” explains Mrs Vickery. Other land and property assets, like diversified enterprises, can qualify for up to 100% Business Property Relief (BPR) as part of an overall farming business which is at least 50% trading. “These reliefs can apply on lifetime transfers as well as on death where the conditions are met.”
Transfers on death currently also qualify for Capital Gains Tax (CGT) free uplift so that gains are effectively washed out. Lifetime transfers of agricultural land, property, and businesses which are at least 80% trading qualify for gift holdover relief, meaning gains can be deferred until a later disposal.
However, a key OTS recommendation is to remove the CGT free uplift on death when IHT relief is also available. This would mean that the next generation would inherit the farm at an historically low base cost, leading to higher CGT on any future sale.
“The most tax efficient option has often been for farmers to continue to actively farm and hold onto assets until they die,” says Mrs Vickery. “Now, given speculation about potential changes, the best course of action is to get a succession plan in place as soon as possible and start implementing it.
“Plans need to be arranged based on what is right for you, your family and the farm right now, rather than how things might stand at a later date.”
This means establishing who is taking on the assets and if they have the skills needed to drive the business forward. “Pass over this responsibility while you still can and while you can be on hand to guide and support your successor,” advises Mrs Vickery.
It’s also important to review partnership or shareholder agreements, and consider the handing on of other assets. Additionally, farmers should collate any trust and gift deeds, so that paperwork is on hand to be reviewed.
“Though we suspect the new IHT rules won’t be favourable, farmers need to make use of the rules we have now as these are a current certainty,” says Mrs Vickery. “Succession planning is so easy to put off but it’s a vital tool in safeguarding the future of farming businesses.”
Eustice turns in a useless performance
GEORGE EUSTICE has all the qualifications to be DEFRA Secretary of State in the Westminster Government.
He owns a pair of green wellingtons, corduroy trousers, a smart tweed jacket and a wax jacket.
He must be very good at his job. He’s been a Minister in DEFRA for most of the last six years.
CAR CRASH INTERVIEW
Which makes his catastrophically ignorant performance on Sunday’s Andrew Marr programme all the more baffling.
After six years as a Government minister, four of which have come after the result of the 2016 Referendum and ten months of which have come after Boris Johnson ‘got Brexit done’, Mr Eustice appears to have little or no grasp of the realities of agricultural production and food processing.
His nonsensical remarks about sheep farming – which he has sought to clarity – have received a lot of attention.
Of equally worthy attention is how George Eustice regards the interaction between markets.
In Eustice World ™, tariffs will have no effect on the UK’s dairy industry because tariffs will also be applied to EU goods coming into the UK. Which would be an interesting take if in the last reported year the UK didn’t operate a surplus of dairy trade with the EU. In short, EU countries buy more of ours than we do of theirs.
No doubt the gap in exports will be taken up by exporting blue cheese to the notoriously lactose-intolerant population of Japan.
ARLA RESPOND WITH HUMOUR
As an illustration of the Eustice Doctrine the DEFRA Secretary claimed that if producers like Arla wanted to continue to trade in the UK, they would have to relocate their production of Lurpak to the UK.
Arla explained in a subsequent tweet, doubtless to George Eustice’s amazement after only six years in DEFRA, Lurpak is subject to legal origin protections. Those mean that Arla can only produce Lurpak® in Denmark with Danish milk. It can’t be produced in the UK.
Arla helpfully added: “Don’t panic, whatever happens with Brexit, we’re sure we’ll be able to find a way to keep Lurpak coming into the UK.”
Dairy production was only a small part of George Eustice’s monumental achievements during his interview.
He went on to anger sheep farmers with a crass assertion so wrong-headed that even his subsequent attempted gloss on his words rubbed salt into their wounds.
FEELING THE HEAT OVER SHEEP MEAT
Andrew Marr asked George Eustice about the effect on sheep farmers. In a no-deal Brexit, red meat exporters face tariff barriers to trade with their largest export market. Over 40% of sheep meat is exported to the EU and that accounts for 90% of all UK sheepmeat exports. The largest market for British sheep meat in the EU is France, which takes around half of all exports.
In the event of a no-deal Brexit, the tariffs on lamb exports would make UK production uncompetitive in the EU market. Worse, the prospect of a trade deal with New Zealand raises the dual prospect of imports carving UK farmersout of their home markets.
Mr Eustice blithely asserted that UK sheep farmers would face only short term price drops and farmers who farmed sheep and cattle together could diversify into beef as imports from Ireland and the EU would fall due to increased tariffs affecting imports to the UK.
He subsequently clarified: “In my comments on the Andrew Marr Show, I did not say that all sheep farmers should diversify into beef. I said that if tariffs were applied then some mixed beef and sheep enterprises might choose to diversify more into beef because Irish beef would become subject to tariffs, creating new opportunities for British producers.”
That is not what Mr Eustice said. He said mixed cattle and sheep farms could diversify.
Mr Eustice’s suggestion would only have force if he thought most sheep farmers farmed cattle. Otherwise, his answer on sheep tariffs would make no sense in context.
On the latter point, farming organisations expressed dismay and bemusement at Mr Eustice’s ignorance.
FARMERS RESPOND TO USELESS DISPLAY
Phil Stocker, CEO of the National Sheep said: “Mr Eustice’s comments will have angered many of our nation’s sheep farmers, failing to identify the unique and varied nature of sheep enterprises across the country.
“To begin with, to suggest that many of our sheep farmers are mixed farmers is wrong. This assumption will enrage sheep farmers across the UK who have structured their farms to focus on sheep, and it will particularly antagonise our devolved nations where the landscape includes more remote areas of countryside, especially suited to sheep, and where buildings, machinery and farminfrastructure simply would not suit a sudden switch to cattle farming.
“The fact we have many sheep farmers, especially younger farmers and new entrants to the sector who run their sheep on arable farms and on short term grass lets was completely ignored – simply switching to cattle would be impossible for them.
“I find it hard to think that George Eustice really believes what he said This interview leaves us thinking his comments could either be part of creating a ‘we don’t care’ attitude to bolster trade negotiations, or, and this would be highly concerning, it exposes an underlying willingness to see our sheep industry go through a restructure to reduce its size, scale and diversity.”
FUW President Glyn Roberts said: “The reality is that failure to reach a trade deal would have a catastrophic impact for our key agricultural sectors that would hit home very quickly, with the sheep industry likely to feel the impact most acutely.
“It would also cause untold disruption to food and other supply chains and complete anarchy at our ports.”
Mr Roberts said that such a failure would also have devastating impacts for EU businesses and that it was therefore in both the EU and UK’s interest to ‘pull out all the stops’ to reach a deal.
Mr Roberts also rebuffed claims by Prime Minister Boris Johnson that the UK ‘will prosper’ without an EU trade deal.
“You cannot cut yourself off from the worlds biggest economy and trading block in the height of a global pandemic, the worst recession for a century and having borrowed a quarter of a trillion to cope and think it’s going to go well.
“Not only would this amount to catastrophic self -harm from an economic point of view, but also at a practical level the country is woefully unprepared to cope with the flow of goods over our borders and all the paperwork and checks that this requires.”
Mr Roberts said that while EU ports facing the UK had undertaken significant changes to prepare for different Brexit scenarios, many UK ports were still in the early stages of planning new infrastructure and would not be prepared to cope with the movement of goods until at least July next year.
“Even if a deal is reached, we are facing significant additional costs and disruption as a result of non-tariff barriers due to the UK’s decision to leave the Single Market and customs union.
“A no-deal will severely escalate these and must be avoided at all costs,” he added.
NFU Cymru President John Davies said: “Ahead of the EU Referendum and ever since, NFU Cymru has been consistent in its messaging that a ‘No deal’ Brexit outcome, which would see the UK trading with the EU on WTO terms, would be a catastrophic position for Welsh farming. The reason for our strong position is that the EU market has been – and remains – the nearest, largest and most lucrative export market for many Welsh products. It is a marketplace where our customers recognise and value the Welsh brand and the high standards it represents.
“Only a year ago the industry was told that the odds of a ‘No deal’ Brexit were ‘a million to one against’ and there was an ‘oven-ready deal’, yet here we are only weeks before the end of the transition period, facing the prospect of ‘No deal’ and high tariffs on our exports.
“The comments made by Secretary of State George Eustice serve to further underline why it is so important to Welsh agriculture that UK Government agrees on a deal that secures access to the EU without tariff barriers and with minimal friction.
“The Secretary of State’s view that Welsh sheep farmers could diversify into beef production to offset the impact of a ‘non-negotiated outcome’ will be of major concern to our sheep farmers, who are some of the most efficient and innovative in the world producing a quality product. The reality is that changing production methods involves long-term production cycles and for many, the significant investment required makes it an unviable option.
“The Minister’s comments on the dairy sector are also concerning and do not account for the fact that we are net exporters of some dairy commodities and that the profitability of some domestic sectors, like liquid milk, is tied closely to the timely export of high-value co-products to the EU, like cream. The idea that many of the major EU dairy processors will have to relocate their operations to the UK is fraught with difficulties and is, in many cases, unviable.
“Being priced out of our nearest and most important export markets for even a short amount of time would have severe consequences for the food and farming sector in Wales.”
TFA National Chair Mark Coulman said: “To suggest that dairy farmers will be saved by forcing Arla to produce its popular Lurpak brand in the UK when it is legally bound to keep its production in Denmark and that dedicated and successful sheep farmers should consider diversifying into beef production, if export markets for our high-quality lamb become closed to us, were not helpful, to say the least. The farming community was hoping for much better than this.
“Somehow, we need to use the short time available to garner the strength to pull victory from the jaws of defeat. This will require a concerted effort with the Government and the farming industry working together to achieve that. Although late in the day, the TFA is committed to engaging in that work,” Mr Coulman concluded.
Brexit and Covid-19 dominate NFU Cymru Conference
NFU Cymru President John Davies used his address at the union’s annual conference to warn that it is a ‘pivotal time’ for the industry with changes and challenges on the horizon.
With a little over 50 days until the end of the Brexit transition period and Covid-19 continuing its severe impact on all of society, the virtual NFU Cymru Conference on Thursday. November 5, titled ‘Welsh Food and Farming: Moving Forward’, explored the major issues affecting the industry now and in the future.
The event featured discussions with Welsh Government Minister for Environment, Energy and Rural Affairs, Lesley Griffiths MS, as well as Secretary of State for International Trade, Liz Truss MP. The conference also hosted panel discussions on future Welsh agriculture policy and Wales in the global marketplace.
Opening the event, NFU Cymru President John Davies stressed that ‘there is much to do and very little time’ if UK Government is to ensure a favourable trade deal with the EU – a market of supreme importance to the Welsh farming industry.
Mr Davies said: “With Covid-19 dominating our thoughts and the media headlines, it could be easy for us to forget that it is just over 50 days to go until the ending of the Brexit transition period. Our negotiators must have total focus on securing a comprehensive deal with the EU that will come into force at the end of the transition period. We cannot afford to face eye-watering tariffs, even for a short time, on the bulk of our agri-food exports.
“Let’s be clear, while the elimination of tariffs is the big-ticket item there remain many other matters that could and will place friction on the movement of goods to the EU, whether that be customs checks, export health certification, third-country listing and organic equivalence, to name a few. There is much to do and very little time for the UK Government to finalise a deal with the EU.”
The NFU Cymru President will also highlight the important role farmers have played and will continue to play, in keeping the nation fed throughout the Coronavirus pandemic.
Mr Davies will say: “Covid-19 has impacted on all our lives in 2020, the announcements of recent days make it clear that its impact will be with us for some time to come.
“Despite the challenges we faced, it was pleasing to see how the supply chain came together to keep the nation fed. I applaud the work of livestock markets in adapting overnight to the restrictions to keep trade flowing; to our vets in continuing to provide support in caring for our livestock and to our agricultural merchants in keeping us supplied with the key inputs required to keep us farming.
“We have to recognise the challenge of Covid-19 is still very much with us: in Wales, is coming out of a ‘firebreak’ lockdown, England is back in full lockdown. What impact will this have on the marketplace?
“Empty supermarket shelves and ensuring food is provided to the most vulnerable in society has reminded us all of the fundamental importance of access to safe, high quality, affordable food as the most basic right for all people in society.
“It is important that we reflect on these matters and understand that the world has very much changed since last year’s Sustainable Farming and our Land consultation. We need to pause and reflect on all that has taken place, learn the lessons of this past year, the importance of domestic food production and the value that society places on our high standards. NFU Cymru is fully committed to working in partnership with Welsh Government on a future food and farming policy that can secure our food supplies and support Wales’ green economic recovery, whilst sustaining our rural communities and culture.”
Coverage of each of the NFU Cymru Conference sessions is now available on the NFU Cymru website.
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