My Lords, I thank the noble Lord, Lord Redesdale, for initiating this timely and important debate and thank all noble Lords who have contributed. We are all acutely aware that these very specific extra agricultural costs are driving food inflation at a time when the cost of living crisis is already causing widespread hardship. More than 1 million people are already regularly using foodbanks and over 2 million are regularly forced to go without food. The impact of food insecurity at a household level is all too clear. It is a real and pressing issue for millions of people in this country.
The tragedy in Ukraine is more than a story of an illegal invasion and thousands of civilians being murdered at the whim of a Russian tyrant. It has also upset our reliance on international sources of fuel, food, fertiliser and labour, and has laid bare the weaknesses of our global markets. Arguably, given how fundamental food
security is to the welfare of our nation, the Government should have had more robust contingency arrangements. Instead, an air of complacency has been allowed to creep in.
While tensions were mounting between Ukraine and Russia last year, the Government’s landmark food security report concluded:
“Real wheat prices are expected to decline in the coming years based on large supplies being produced in the Black Sea region”.
So, we have to question what the purpose of this report is if it does not factor in the most obvious upcoming risks. Farmers are taking a major hit from the Government’s lack of effective contingency planning and reliance on world markets. This is why we have argued for a robust food security policy with a commitment to higher UK food production levels, to give better assurance that in a crisis we can feed the nation.
Meanwhile, as noble Lords have said, our farmers are suffering a double whammy on food and fertiliser costs. Prices for agricultural fertiliser in the last year have doubled, and in some cases trebled. As well as price increases, fertiliser is in short supply, with impacts expected to become more serious in the new crop year for 2023. This will lead to higher food prices and lower yields. That is why it is so frustrating that the Government have allowed the permanent closure of the Ince fertiliser plant to go ahead, leading to a major loss of production as well as 350 jobs lost. Removing a large proportion of the UK’s CO2 supply as a by-product is causing further food production chaos. The owner of the plant, CF Fertilisers, restarted its other operation in Billingham after the Government intervened. Why, therefore, are the Government not intervening on the Ince plant as well?
The fact is that the Government’s measures to address fertiliser inflation are too little, too late. Industry round tables, revised guidance and far-off plans to develop less gas-reliant fertilisers will do little to help the farmers struggling right now. We should use this opportunity to implement the growing scientific evidence that shows that farmers could continue to produce high-yield crops with far less artificial fertiliser if they adopted environmentally sustainable practices, such as rotating peas and beans, which we heard about earlier.
Meanwhile, the Ukraine invasion and the humanitarian tragedy are also impacting on feed costs. Ukraine and Russia produce 30% of the world’s wheat and 50% of its sunflower oil, seeds and meal exports. This is having a direct impact on the cost of animal feed in the UK: for example, the NFU has warned there will definitely be a turkey shortage at Christmas as a result of wheat prices doubling. Pig farmers have also seen a significant rise in costs, with feed prices now contributing up to 70% of costs. So, for a sector that has been struggling anyway, the outlook for pig farmers is dire.
What are the Government doing about this crisis? Obviously, it is welcome that the payments of the basic payment scheme have been brought forward. This might help with cash flow, but it is money to which farmers were entitled anyway; it is not new money. Other than that, the Government’s policy can best be described as “wait and see”. In response to a Question
from my honourable friend Daniel Zeichner in the Commons, the Minister, whom the noble Baroness also quoted, said:
“We continue to keep the market situation under review, by working closely with industry-led groups and key stakeholders to monitor the position on animal feed.”
This really is not good enough. This crisis is hitting not only farmers but consumers, as the price of food rockets, and it needs action now. Farmers have no option but to pass on the additional costs, which will fuel further inflation, food shortages and suffering. It should be a national priority to address these issues.
So I hope that, when the Minister responds, he is able to provide greater assurance the Government intend to act on these issues. I look forward to what he has to say.
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