War in Ukraine: UK Farming and Food Production — [Dame Angela Eagle in the Chair]

– in Westminster Hall at 9:30 am on 20th July 2022.

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Photo of Angela Eagle Angela Eagle Labour, Wallasey 9:30 am, 20th July 2022

While the heat remains at this level, although in this room it is perfectly nice and a bit more survivable outside, I am content for Members not to wear jackets or ties in Westminster Hall. Those Members who have ties on might get to be even less formal, but apparently, there will be a lot more application of the dress code when we get back in September, both in the Chamber and here.

Photo of Chris Matheson Chris Matheson Labour, City of Chester

I beg to move,

That this House
has considered the effect of the war in Ukraine on UK farming and food production.

It is a great pleasure to see you in the Chair, Dame Angela, and thank you for your kind guidance on the dress code. I will make do at the moment, but we will see how we go when the heat of debate ratchets up.

For me, the debate had its genesis in discussions with many of the farmers in my constituency, and I start by paying tribute to them for their help with my preparations for today, and also to the National Farmers Union, which has given me so much information. The war, which in many respects came out of nowhere, has piled additional pressures on a sector that was already facing great difficulties. At the outset, however, I want us to turn our thoughts to the brave defenders of their Ukrainian homeland and the colossal humanitarian disaster that they face in Ukraine. I am afraid to say that we now also need to remember the countless victims, it would seem, of war crimes, the evidence for which mounts daily.

The invasion exacerbated existing inflationary and supply chain pressures, which will have lasting consequences for the scale of UK agricultural production. Globally, the conflict will exacerbate the pressure on food supplies in the poorest parts of the world. British farmers are growers, and they are price takers. That means they are exposed and vulnerable to the challenges of rising inflation in times of economic pressure. The cost of producing food in the UK has increased drastically in recent months. The cost of all agricultural inputs is going up, including fuel, feed, packaging, transport, energy and, of course, labour costs.

I pay tribute to all those who work in farming and food production. It is a tough sector to work in, and for people in such vital sectors, conditions have rarely been tougher. Costs are spiralling and profit margins are falling, but they keep going every day. The farmers from Cheshire I spoke to were absolutely clear that they love what they do, and they keep going because agriculture sits at the heart of the Cheshire economy and at the heart of the British economy. They do that to keep the country fed, and if we do not give them help—the help that they need—they will not be able to do it for much longer.

The humanitarian disaster in Ukraine is being felt across the globe. Large parts of the Ukrainian breadbasket are in conflict zones and crops cannot be harvested, or if they can, the grain and the produce cannot be exported, or, as we are seeing, they are being stolen by Russia.

We are seeing the crisis impacting across the world, especially in developing countries. Ukrainian grain feeds 400 million people. The UK is also affected. Brexit has not helped, with large reductions in the labour supply, but I was astonished to hear that last year an incredible 60% of the seasonal agricultural workforce came from Ukraine.

Photo of Margaret Ferrier Margaret Ferrier Independent, Rutherglen and Hamilton West

I thank the hon. Member for making that point. Ukrainians did indeed make up 67% of seasonal workers between 2020 and 2022—a huge contribution to the British farming sector. With more men staying in Ukraine to fight the war, does he share my concerns about the knock-on effect that that will have on UK food production?

Photo of Chris Matheson Chris Matheson Labour, City of Chester

I absolutely do, and the hon. Lady is right. Many of those workers are back defending their homeland—who can blame them for that? The resultant labour shortages have been met with an inevitable demand for increased wages. One Cheshire farmer told me of an 11% increase in this year alone. Without sufficient labour, farms simply cannot be profitable and, frankly, sometimes cannot work. As one farmer put it, “We’re all running hand to mouth.”

I am not going to query or reject the idea that farm labourers should not get a decent pay rise. I am a trade unionist and I absolutely support that, but the costs need to be shared fairly across the sector and borne by the whole chain. Day-to-day costs are rocketing. Fertiliser, which can increase crop yield by about 30%, has become cripplingly expensive. One Cheshire farmer estimated to me that his fertiliser costs had risen by 300% in just over a year, while another suggested that he was being optimistic and it was more than that.

The situation has not been helped by the closure of the CF Fertilisers factory in Ellesmere Port. I know how hard my neighbour and hon. Friend Justin Madders has been working to find a solution to keep the factory open, and he has told me that he is in regular contact with the Minister and her Department—I thank her for that. I desperately hope that we get a solution to the problem, and I thank them both for their work.

Without fertiliser, crop yields will fall. I remind the House that farmers do not tend to buy fertiliser on the spot. They are already ordering their supplies for next year, just as they are already planning crops, ordering animal feed and securing energy deals for six, 12 and 18 months ahead. The uncertainty globally and domestically is impossible to live with.

One of the big asks of the NFU is to have a gas fertiliser price index. Fertiliser markets are opaque, meaning that farmers have low trust in those markets, and are receiving poor market signals to enable them to be responsive. That is a threat to confidence, because farmers do not want to invest in fertiliser, which is stalling fertiliser sales, as well as threatening farmers’ productivity and the UK’s productive capacity. The NFU wants farmers to have access to proactive forward prices on fertiliser, allowing producers, distributors and farmers alike to manage their risk. That will require Government to establish a trusted gas fertiliser index with the industry, to drive transparency in fertiliser markets.

In addition, the industry needs to be able to see clearly where the market is relative to the global benchmark prices. That is well established in the grain, dairy and meat markets. It is also a fact that much of the gas that was used to produce the fertiliser came from Russia. I welcome the fact that we are reducing—I hope to zero—any dealings that we have with Russia, including buying gas from it, but we have to recognise that that will have a major impact on this market.

Fuel costs are also on the rise. Red diesel is more expensive, with one farming contractor I know of having to increase their cash reserve by an astonishing £50,000 to pay for fuel costs. Meanwhile, farmers pay more than ever to fill up the machines that keep their businesses going. Those affected ask me why crude oil prices fall, but their costs go up. The answer is sadly clear: this is a broken market, and without action to address it, things will only go downhill.

Food production relies very much on the packaging available, much of it specialised for certain foodstuffs. Even essentials such as cardboard and the necessary plastics for meat storage are in short supply, before we consider more specialised materials such as silage. British food has some of the lowest carbon footprint in the world, due to how efficient British farmers are, but there is only so much they can do on their own. Such businesses are starting to feel that they are, almost literally, at the bottom of the food chain.

As things stand, the risk is entirely with the farmer. For example, a potato farmer stored his crop from the 2021 harvest until June 2022—just last month—without earning an extra penny from the processer. One grower was paid £200,000 for potatoes, which sold in the supermarket for £4.2 million, so the grower received only 4.7%. Free-range eggs have also gone up at least 20p per dozen in supermarkets, but only 5p of that increase goes to the producer. Farmers want to grow, to survive and to flourish, but we must have a market that allows that. We need to take the bottlenecks out of the system, so that it flows more smoothly. Only by threatening to withhold supplies did dairy farmers secure a slightly better deal, and they are still struggling.

This period of unprecedented agricultural inflation coincides with the introduction of the agricultural transition plan from the Department for Environment, Food and Rural Affairs, under which the old direct support payments to farmers in England under the common agricultural policy are being reduced. Farmers have already received significant cuts to those old direct payments, with further to come this year. The largest farms will receive cuts of 40%.

The Government are in the process of rolling out new support schemes, but the NFU is seriously concerned that the new schemes simply are not ready for farmers to be able to access them and start to make up the shortfall. That is not just the view of the NFU; it has been echoed by the National Audit Office, the Public Accounts Committee, and the Institute for Government. Vital farm supplies sit inaccessible in Ukraine, and veterinary medication sits undeliverable in Northern Ireland because of the problems with Brexit. Alternative options are becoming scarce.

When British farmers suffer, so does the rest of the world. As the crisis in Ukraine hits other nations, one farmer asked me why Britain, as a leading member of the G7, does not consider its own agricultural sector to be part of the solution. The farmers who told me their stories also tell a sorry tale about the future of the sector. One simply asked, “Where is the future?” Every year, 8% of dairy farmers quit their business. Previously, others would step in to replace them. That, it seems, is no longer the case. As confidence falls, young farmers find that they cannot get loans. They cannot get started and cannot continue this proud British tradition.

I wish to finish on a positive note on behalf of the UK farming sector. I want to celebrate the success of the sector and the hard work and 365 days a year commitment of our farmers and farm labourers. Let us make every day Back British Farming Day and let us resolve to get a fair deal for farmers. The future could be positive. As I have said, British food has one of the lowest carbon footprints in the world. Our farmers tell me they want to adapt to further change—certainly moving away, for example, from carbon-intensive fertiliser—but they want to be able to do so in a managed way and not in a way where they are faced, as they currently are, with the shock brought about by the war. They want to reduce emissions and move to more sustainable fertiliser, as I have said. They want to reduce antibiotic use and further increase animal welfare, but they are doing that now on wafer-thin margins. As one farmer put it in what is probably a very agricultural farming way, “We have no fat on our backs right now, and we need this.”

Farmers want to grow, survive, flourish and contribute to the success of our nation. The war has put intolerable pressure on them at a time when the prevailing situation was already difficult. They feel that all the increasing cost pressures are being borne by the farming sector when they should be shared across the entire food chain. We must have a domestic market that allows that contribution to flourish.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health) 9:42 am, 20th July 2022

Thank you, Dame Angela. It is unusual for me, although I am very pleased, to be called first. You almost knocked me off my stride there. May I first of all thank Christian Matheson? He is a dear friend—he knows that—and I support all that he said in his introduction. He set the scene very well. We are all here today because we understand the importance of farming. For me and my constituents, it is critical. I live on a farm. I declare an interest as a farmer and a member of the Ulster Farmers’ Union, so I thank the hon. Gentleman for securing this debate.

I do not have the time to work on the farm as I would like to. If not for my father’s illness many years ago, I would probably have been a farmer. Unfortunately, at that time it coincided with the purchase of the farm. My job on the farm—my mother still owns the farm that I live on—is to look after the buildings and maintain the structures and roads and so on. It is quite a job. On Saturday afternoon my job is to go about and make sure those tasks are done. Next week when I am off during recess I will have more time, and will be doing all those wee jobs at night-time as well. It is an absolute pleasure and privilege to live on a farm, so I am pleased to contribute to the debate on behalf of my farmers.

I am well placed, as others are in this Chamber, to highlight the needs of the farming community. I really am pleased to see the Minister in her place. She has an incredible understanding of the issue, and I know that when we speak to the Minister and ask her a question, we push at an open door because she always responds. I mean that genuinely and seriously, because every one of us appreciates that opportunity to contact the Minister about issues that are so important to us. I mostly contact the Minister about fishing, but I have occasion to ask about farming issues today.

Russia is the world’s biggest exporter of wheat, producing around 18% of international exports, and Ukraine produces around 12% of the world’s wheat. Ukraine also produces 17.5% of the world’s supply of maize, as Farmers Guide recently outlined:

“The war in Ukraine has added another layer of uncertainty for British farmers after an already tumultuous couple of years. Recent weeks have sparked concern over the supply and spiralling cost of input and supplies, with the market changing on a day-to-day basis.”

The hon. Gentleman referred to that: there is a change almost every week, a price increase and hike, which presents lots of problems.

Photo of Margaret Ferrier Margaret Ferrier Independent, Rutherglen and Hamilton West

Global food supply chains were already facing significant pressure before the outbreak of war in Ukraine. Today, inflation has hit an astronomical 9.4%. There have even been reports that food banks are struggling to maintain enough resources. Does the hon. Gentleman agree that there needs to be swift action, to ensure that vulnerable people have access to affordable food?

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

As so often, the hon. Lady makes a very sensible and helpful point. I wholeheartedly agree, not because she says it, but because I can see the practical issues for food banks in my constituency. The week before last we had a collection at the Tesco store in Ards, where people were incredibly generous. That helps the food banks to sustain their coffers, cupboards and shelves, but they tell me they see incredible pressures they have never seen before—and there have been some difficult times over the past while.

The Farmers Guide also points out:

“the market changing on a day-to-day basis—making business planning for the future extremely difficult…Livestock farmers buying in feed will have been hit by the wheat price increases from around £220/tonne to nearly £300/tonne, while fertiliser prices have reacted very strongly, rising from £200-300/tonne a year ago to around £1,000/tonne.”

That is something that farmers tell me. That is an increase of almost 400%, which is astronomical and leads to concerns about availability.

I spoke to a neighbour last Sunday on my walk at about 7 o’clock in the morning, which is always a nice time. I passed him in the lane and asked how he was getting on. He told me he does not put as much fertiliser on the ground because it is too costly. The only way to compensate is to cut back and use less fertiliser. He told me they had been fortunate this year. The first cut was not a good one, but the second cut was equal to last year, because of the weather, which has been incredibly warm, but there have been showers of rain as well. Less fertiliser is a godsend in a way; it means that the second cut of silage, and probably the third, will be good with less fertiliser. Maybe the soil had lots of fertiliser in it; I guess that might be part of the reason.

The main thing is that there is an incredible problem for farmers, who are in a precarious state at present. One local man said,

“The price we get has risen.”

That is the beef price, which is good at the minute. Lamb prices are not too bad, either. The hon. Member for City of Chester referred to poultry and eggs. Egg prices are under pressure; they are not matching the outgoings and are not sustainable. There is an onus on supermarkets to give a better price to egg producers. I am fortunate that I start every day with two eggs. Dame Angela, you are probably of the generation who remembers

“Go to work on an egg.”

I go to work on two eggs every morning, and would do that during the day, as well. I say that because of the importance of the egg sector. I thank the hon. Gentleman for mentioning that.

That local man said,

“The price has risen but the money in our pocket has not.”

One of the greatest farm economists, Mark Berrisford-Smith of HSBC, has suggested that we are now in a position reminiscent of 1973, with the OPEC crisis and the Yom Kippur war. In 1975, we saw up to 25% inflation resulting from our inability to deal with the quadrupling oil prices. There was some encouragement in the press yesterday—if it is correct—that the price of filling a car may fall by £10. I hope that is right, and the cost keeps on reducing. We need that help.

Our farmers are facing long-term problems, and now is not the time to pull back on support. Indeed, it is the time to step it up. We need to sustain and help our farmers at this present time. Our farmers are not able to fill the breach from Ukraine and Russia—it is impossible; the gap is too large—but we need to look at how to help them. To be able to fill the gap, they need support. We need to be raising new generations of farmers who are trained in the old ways and who also want to push for the new ways that enhance production and the environmental protections, providing the best of both worlds. I am a great believer in the need for farmers to protect the land and have environmental schemes in place. I know the Minister is as well. There is a balancing job to do between the two. There is land that perhaps should be in farming, and there are some concerns about some projects by some of the bigger charities, for instance the National Trust, who want to set land aside and not use it for farming. I do not want to be critical, but I make that point. That is sometimes not the right way to do it.

The impact of the Ukraine and Russia war has been large and it will continue. This House, this Minister, our Government and ourselves as MPs on behalf of our constituents must play our part in the short term, as well as the long term.

Photo of Margaret Greenwood Margaret Greenwood Labour, Wirral West 9:51 am, 20th July 2022

It is a pleasure to serve under your chairmanship, Dame Angela. I congratulate my hon. Friend Christian Matheson on securing this debate and on his excellent opening speech. I join him in expressing solidarity with the people of Ukraine.

Last week, I met a group of farmers in my constituency of Wirral West, along with representatives of the National Farmers Union. I heard from them about the pressures that farmers are facing. We are in a time of severe economic pressure that has been exacerbated by Russia’s invasion of Ukraine. British farmers have been left exposed and vulnerable to the challenges of rising inflation. The cost of agricultural inputs such as fuel, feed, packaging, transport, labour and energy is increasing.

As the House of Commons Library has noted, the cost of feeding livestock has risen considerably in the past six months, with many farmers dependent on feed prices set on a global market. Feed prices for livestock were stable in the first half of 2021, but increased by 18% between August 2021 and April 2022. Energy input costs for farms increased by 34% between January and April this year. Farm motor fuel costs increased by 30% over the same period. All that means, of course, that the cost of producing food in the UK has increased considerably in recent months, and that affects the availability and affordability of food to consumers.

This period of unprecedented agricultural inflation coincides with the introduction of DEFRA’s agricultural transition plan, under which direct payments, the old support payments to farmers in England under the common agricultural policy, are being reduced. Farmers have already experienced significant cuts to direct payments, with further to come this year.

The Government are in the process of rolling out new support schemes, but farmers have expressed concerns about the timescales for their implementation and whether they will provide farmers with enough support. The Public Accounts Committee has criticised the Department for what it calls its “blind optimism” about the introduction of the schemes and the insufficient detail about how they will make up for the ending of current approaches. Can the Minister tell us what action the Government will take, as a matter of urgency, to address those concerns?

The UK’s food self-sufficiency has reduced significantly in recent years. In 1990, we produced 74% of our food; by 2000, that figure was 67%, and in 2021 it was down to 60%. The NFU is calling on the Government to commit to maintaining the UK’s food production self-sufficiency at 60% and helping to create an environment for farm and food businesses to thrive and compete in the coming years.

The NFU points out that we cannot be a global leader in climate-friendly food if we allow our own production levels to drop. The UK is only 18% self-sufficient in fruit, 55% in fresh vegetables and 71% in potatoes. For both veg and potatoes, that figure has fallen by 16% in the past 20 years. While the nation is encouraged to be healthier and eat more fruit and veg, our domestic production of those products falls below our potential. What assessment have the Government made of the UK’s declining food self-sufficiency?

In December last year, the Government published the “United Kingdom Food Security Report 2021”, in which they concluded that

“Global food supply and availability has improved since 2010” and was “expected to recover” from the problems caused by the covid-19 pandemic. Of course, that was before Russia’s invasion of Ukraine, so can the Minister tell us what assessment the Government have made of the UK’s food security in the light of that?

As the Minister will know, the UK food security report also listed several factors that threaten the stability and long-term sustainability of global food production, one of which was climate change. The report stated:

“Longer growing seasons and warmer temperatures may have some positive effects for particular crops and regions, but overall risk magnitude is assessed to increase from medium at present to high in future. Increased climate exposure (including heat stress, drought risk, and wetness-related risks) is modifying productive capacity and will continue to do so in future in line with the degrees of warming experienced.”

Over the past few days, we have seen stark warnings in this regard, with record temperatures recorded across the UK, fields and buildings on fire, and emergency services facing unprecedented challenges. I hope the Minister and her colleagues will impress on the new leader of the Conservative party—and our new Prime Minister—the critical importance of addressing climate change as a matter of urgency. I have to say that the lack of concern put on this issue by the leadership candidates in recent days has been extremely worrying. The future Prime Minister bears a huge responsibility in this regard, not only for this generation but for future generations.

It is vital that we build resilience in farming and food production in England and across the UK, and I look forward to the Minister’s response to the many important points raised by Members in this debate.

Photo of Ben Lake Ben Lake Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Environment, Food and Rural Affairs), Shadow PC Spokesperson (Education), Shadow PC Spokesperson (Digital, Culture, Media & Sport), Shadow PC Spokesperson (Health and Social Care), Shadow PC Spokesperson (Housing, Communities & Local Government), Shadow PC Spokesperson (The Constitution and Welsh Affairs) 9:56 am, 20th July 2022

It is a pleasure to serve under your chairmanship, Dame Angela. I congratulate Christian Matheson on securing this important debate. Having spoken in other debates with him recently, I know just how passionate he is about UK agriculture and food production, and I thought that he conveyed that, and his understanding of the sector, very well.

It is also a real pleasure to follow Margaret Greenwood, who eloquently emphasised how much the cost of imports has increased, and the different impacts that is having across different sectors of the agriculture industry. That is presenting a challenge not only to farmers but further down the line, through food inflation, for household budgets, which is pertinent to this debate.

Today’s debate is very timely. Across the UK, over the decades, we have perhaps become a bit complacent when it comes to our food security and self-sufficiency. Members have already set out how the UK’s self-sufficiency has declined. It is worth repeating that, at the moment, UK agriculture produces some 60% of domestic food by value, and some 45% is exported. We import some 46% of the food that we consume. That compares unfavourably to the situation back in 1984, when we were 78% self-sufficient. The hon. Member for Wirral West detailed how that figure has declined over the ensuing decades.

I am willing to acknowledge that part of that reduction is a result of our changing dietary preferences and habits, and it is important to reflect that in the debate. We now enjoy a lot of foods that are not produced in the UK, or cannot easily be produced in the UK, and we want to consume them out of season. I may return to that at the end of my speech; it is a particular bugbear of mine.

It is worth pointing out that the self-sufficiency percentage is a general figure, which does not really tell us the story for different types of food produce. It would be remiss of me, as a Member of Parliament from Wales, not to point out that we produce more lamb in the UK than we consume. We also produce more milk than we consume, for that matter. Although we are still well below self-sufficiency in the fruit and veg sectors and the poultry sector, as has been mentioned, it is important to reflect that our self-sufficiency has increased somewhat in recent years even in those sectors.

Russia’s invasion of Ukraine has a massive impact on UK food production as well as global food production. We are interlinked: pressures on the global level are felt at the farm gate in Ceredigion, as well as in other parts of the UK. That is particularly challenging after two years of covid-19 and the disruption of the pandemic, not just for food producers but for the associated supply chains, and after a turbulent period before covid-19 for farm-gate prices in a whole range of sectors. We come to this debate at a time of unprecedented immediate pressures, having recently suffered another unprecedented shock to the global food system on the back of difficult and lean years before that. The UK food production industry is in a challenging and precarious situation.

I was struck by the definition of food security in the Government’s food security report, which reflects the fact that it is a complex concept. It states that food security

“encompasses the state of global agriculture and markets on which the UK is reliant;
the sources of raw materials and foodstuffs in the UK and abroad;
the manufacturing, wholesale, and retail industries that ultimately bring food to shelves and plates, and their complex supply chains of inputs and logistics;
and the systems of inspection that allow consumers to be confident their food is safe, authentic, and of a high standard.”

I will not touch on all those aspects, although it is important to note them, but I will say that the shock that we are experiencing now, with the price of farm imports in particular, risks destabilising many of the other dimensions encompassed by food security.

The most pressing issues are import prices and the significant increase in the price of raw materials. We have already heard how the war in Ukraine has had a massive impact in that regard. That is reflected in the agricultural price index, which show that in the 12 months to April, the price for agricultural imports increased by 28.4%. A further assessment by the independent consultant Andersons suggests that the most recent estimate of inflation in agriculture is 25.3%.

We recently had a debate in this Chamber on some of those challenges, but it is worth repeating that the rate of general inflation is running slightly below that of agriculture inflation. Agflation is an acute problem and I am sure that other hon. Members share my concern not only that that is putting immense pressure on our farmers, but that it may well feed into further food inflation and pressures on household budgets down the line.

In my remaining time, I will focus on the way that price hikes in the immediate term pose a serious challenge to our production in the longer term. Having spoken to many farmers in Ceredigion, I fear that the true impact on the UK agricultural industry of Russia’s invasion of Ukraine will not be truly felt until next year. As has been mentioned, a lot of that has to do with farmers having to plan their future feed and import fertilisers at the moment, many of which are on onward prices. Farmers are having to make difficult decisions that will have an impact on their productive capacity in forthcoming years.

Let us look at fuel and energy. The hon. Member for City of Chester mentioned the impact of the price of red diesel on farmers. Indeed, if we compare the average price per litre from January this year with the most recent average price from the end of June, it has increased by 25p. We know that Russia is a major supplier of oil and gas to the European market, which has seen an almost fourfold price increase since the invasion. That in turn is having an impact on fuel costs and, more specifically, fertilisers.

Other hon. Members present today were here for a previous debate in this Chamber in which we discussed the real challenges that increased fertiliser costs pose for farmers. I will not repeat myself, other than by noting that the increased cost of fertilisers is forcing farmers to make difficult decisions about their business models and practices. I acknowledge that the impact might be felt quite differently in different sectors of the agriculture industry—it might be different for certain arable farmers and livestock farmers.

It is also worth pointing out that, at least at the outset of the invasion, many arable farmers may well have been covered for their fertiliser requirements for this year, and may not have had to expose themselves to the price hikes that we saw thereafter. As I mentioned, however, farmers have to plan ahead, and I know that many—even in the arable sector—are looking ahead and thinking, “Do we need to carry over some of our fertiliser for this year and therefore use less in the current season, so that we can buffer ourselves a little bit for what promise to be very expensive prices next year?” It is a real headache for other sectors—livestock and beef in particular—and many farmers have told me that their fertiliser bills have increased from £200 to £700 per tonne before VAT. Of course, if we add VAT on top of that, it is an eye-watering sum.

The tragedy of the situation is that these price hikes have come after a turbulent period, with covid-19 and a decade of rather difficult times for farm-gate prices. Although prices have increased for some produce in the last few months—it is fair to say that dairy prices have increased significantly, and I am told that the lamb price is holding up fairly well, as is the price for beef—certain farmers will not have the reserves to shoulder and absorb a lot of these costs in the long term. I am worried that farmers and growers are having to adapt to higher costs and anticipate the impact of a prolonged period of turbulence, which they have to assume will be the case, by taking very difficult decisions regarding their farming practices, which in turn will have an alarming impact on UK food production.

NFU Cymru recently conducted a survey of more than 700 farmers in Wales, and it found that 71% intend to reduce production in the next year. To break that down into different sectors, 54% of beef farmers said that they will reduce stock numbers in the next 12 months, which will result in an estimated 10% cut to the beef herd. Some 46% of sheep farmers also said that they will reduce their stock in the next 12 months, and 39% of arable farmers said that crop production levels will reduce over the next year. That is already happening, and those decisions will probably have been made in order to be implemented by next year. That is a significant drop in our productive capacity at a time when we already know that we are not self-sufficient at the levels that we would like to be.

As well as not having enough productive capacity to become more self-sufficient for our dietary needs, we will find ourselves even more vulnerable in the long term to the global agriculture market and any external shocks that happen there. The war in Ukraine has led to tonnes of grain, sunflower oil and other produce being blockaded at Black sea ports, which is already having an impact in the horn of Africa. It is said that Ukraine feeds approximately 400 million in the world. That pressure will not go away; indeed, there is a strong argument that the real impact will be felt next year, when the harvest has not been harvested and the grain cannot get out. This is a very serious issue, which will weigh heavily on import prices for our own farmers. If we are to become more exposed to and dependent on the global market for many of our staples, that will mean higher prices for the consumer.

Ultimately, this debate has brought to the fore the need for us to think again about how we increase our self-sufficiency in the UK for the food that we consume and, therefore, for our food security. A few things have been mentioned already, such as the establishment of a fertiliser price index in order to have greater transparency and to allow farmers to plan with greater confidence and avoid having to make difficult decisions about the use of fertiliser. I repeat the plea for us to look again at fertiliser plants, and at whether there is a need for the Government to intervene to acknowledge them as strategically important pieces of infrastructure.

Finally—this is a debate for another day, but it is one that we must have in the near future—we need to shift our food production to a more local and seasonal basis. That will not always be popular, but perhaps we have reached the point where we need to face up to the reality. Is it sensible that we can go into our local supermarket on Christmas eve and buy fresh strawberries? I think we have come to the point where we can no longer afford that illusion of sustainability. Perhaps the future is more local and more seasonal.

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Trade) 10:10 am, 20th July 2022

It is a pleasure to serve under your chairmanship, Dame Angela. I congratulate Christian Matheson on securing a really important and timely debate on the situation that our farmers are facing just now. This is a time of real pressure for people working in the agricultural industry and the food sector, for lots of reasons. The hon. Member covered some themes that were repeated by other hon. Members: the cost of fertiliser, the cost of fuel, and farmers leaving the business. The theme progressed throughout the debate, and it would be well worth the Minister paying heed to the warnings that have been laid out very clearly in the Chamber. The Government fail to act to support farmers at their peril, given some of the issues that have come up.

Jim Shannon, who is a farmer himself, talked about the investment required by farmers. That is an experience that he has shared with me in conversations about his developments. Farmers have to make choices about investment, and quite often the money and reserves are not there for them to do so. There are ongoing costs. He talked about the importance of farming, which should be underlined: it is an important industry and an important business for people to be in. It supports us. He also talked about the need for investment in training and development, and for policies that take that forward. That is critical. We should look at farming as an essential career. That goes for all the nations of the UK: it should be considered as an essential industry and supported.

Another theme from the hon. Member for Strangford was the gap in world food production caused by the war. That is a pressure we must think about in relation to another recurring theme: food security. In her intervention, Margaret Ferrier talked about the need to think about vulnerable people’s access to food, and she is absolutely correct. When we have these high-level discussions about what is happening, we forget that the issue affects people in houses and homes across our communities, who are now facing previously untold hardship—things that they have not had to face in their lifetimes. That is happening right now. It is all part of the cause and effect that is in place here.

Ben Lake talked about changing dietary habits, and he is absolutely correct. That is a complex matter. We need to talk about what we must encourage people to do; about what kind of healthy eating and supply we must look at in future. Another theme was pressure for raw materials leading to longer-term impacts, which again need to be taken into consideration. There must be a longer-term plan for dealing with that. He talked about farmers making reductions and repeated the theme of farmers leaving the industry.

Thank goodness somebody—Margaret Greenwood—raised the issue of climate change. It is an issue that we do not address enough in this Parliament—when I say “enough,” I am being very generous. It is another impact in the heady mix that we have to pay some attention to. We had record temperatures yesterday and houses burning as a result. This is something we are living with now, and hon. Members should be talking about it all the time. It is another impact that farmers are having to deal with; they are seeing changes to their environments, their farms and their livestock, with different ways of having to manage them. Again, that brings costs and puts pressures on the industry, including whether the farmers have the will to keeping working in it sometimes.

The hon. Member for Wirral West also talked about domestic food production declining—a theme I will come back to—rising prices for energy, feed and fuel; and the significant cuts to support that have been imposed on farmers over the past decade or so of austerity. Those are all important themes.

The Scottish Government are aware and are acting where they can, but the UK Government have a duty to act to safeguard domestic food security by supporting farmers, producers and consumers. I repeat that the Minister should take this warning and speak to colleagues about abandoning the laissez-faire policy on trade deals and protecting domestic food production.

The hon. Member for City of Chester brought up the effect of labour shortages. It seems to have gone quiet but it is a real effect. It is a Brexit-induced problem. We have a mad rush for dodgy deals with New Zealand and Australia, which are going to impact farmers directly. It is not just my opinion that it will harm the farming and food sector; it is also the opinion of the National Farmers Union of Scotland, the National Farmers Union, trade experts, academics and the UK Government’s own departmental advice about the deals. However, they are still going to impose it on farmers on this isle.

We have talked about the cost of fertiliser—which has trebled—the cost of feed and energy, and farmers selling off livestock and cutting production. As a consequence of Brexit, UK farmers are set to miss out on access to a proposed €1.5 billion emergency fund. The UK Government were warned before this crisis that their policies are undermining domestic production of food and forcing reliance on more food imports, and the New Zealand and Australia deals do not help that. As we have heard, UK food self-sufficiency is now below 60%. A couple of decades ago it was 80%. That is a red flashing warning light about what is happening. Food security must not be considered a thing of the past.

The UK Government must now correct their course and deliver a UK food security fund proportional to what UK farmers would have received as part of the EU, to be administered by the devolved Governments. Failure to do so in the face of denying financial powers for the Scottish Government to act, such as simple borrowing powers, only reinforces the glaring need for Scotland to have the full powers of independence in order to protect our own farmers and food sector where this place fails, and continues to fail. Unless there is a change in course, it will continue to fail farmers across the nations of the UK.

Photo of Alex Sobel Alex Sobel Shadow Minister (Environment, Food and Rural Affairs) 10:18 am, 20th July 2022

It is a pleasure to serve with you in the Chair, Dame Angela. I congratulate my hon. Friend Christian Matheson on not only securing this important debate but making an eloquent speech, which I agreed with entirely.

I will start by acknowledging my own family history with Ukraine. My paternal side is from Lviv and lived there for hundreds of years. I had cordial discussions with the Minister in the run-up to the debate, and I will take up the recommendation to read “East West Street” by Philippe Sands. Labour stands unshakably with Ukraine and our NATO allies in supporting Ukraine against an unprovoked and unjustified invasion by Russia. We have supported the Government’s measures to provide greater military and aid assistance to Ukraine, but on the subject of this debate—the effect of the war in Ukraine on UK farming and food production—we are somewhat critical.

Ukraine is a beautiful country, with some of the most productive agricultural land in Europe, and indeed the world. It is the breadbasket of Europe and its hard-working farmers produce much of the world’s grain and sunflower oil. Ukraine and Russia, as significant producers of sunflower seeds, barley, wheat, maize, rapeseed and soybean, are collectively responsible for 29% of the world’s wheat exports. The World Food Programme estimates that Ukraine grows enough food to feed 400 million people. This is not a short-term problem. The fact that there are Russian mines sitting in the fields of Ukraine will be with us for many years to come.

This debate is focused on the impact of the Russian war in Ukraine on food and farming in the UK. The UK’s food supply chain has been under intense strain over the past months and years, from spiralling food price inflation to the fertiliser crisis and labour shortages. These shocks impact businesses, workers and people up and down the country, who are forced to choose between putting food in the fridge or money on the meter, with those on the lowest incomes hurting the most.

The impacts on the food system go far wider, as much of the developing world is plunged into food insecurity and the risk of famine. The UN’s Food and Agriculture Organization projects that the war in Ukraine will cause an increase in global food prices in 2022 of between 8% and 22%. The UK food sector has been raising its concerns over several months. The Food and Drink Federation has said that the invasion of Ukraine was likely to impact negatively on the trading ambitions of its businesses, and I feel that is somewhat understated. Food supply chains in the UK are already under intense strain, now exacerbated by war. Producers are struggling with a lack of availability of key ingredients, such as sunflower oil, which is used in many products on supermarket shelves. The price of alternatives is rising dramatically.

The impacts are stark and clear, and many experts have been warning of the situation we might face, yet the Government have been at best late, and at worst absent from this crisis. While tensions were mounting between Ukraine and Russia last autumn and analysts were warnings about what could be coming, the Government’s food security report cited Ukraine as a country with a high market share of the global maize supply and said they did not expect any

“major changes…in world agricultural commodity markets and the top exporting countries of these commodities.”

Early in December, the US released intelligence of Russia’s invasion plans. Later in December, the Government released their food security report, which said:

“Real wheat prices are expected to decline in the coming years based on large supplies being produced in the Black Sea region”.

Were the Government simply unaware of the potential for the situation to impact our food supply and global wheat prices, or were they just ignoring it? It is clear that there was a severe lack of planning going on in DEFRA. Labour called on the Government to reconvene the Food Resilience Industry Forum—something they eventually did and which we welcomed; we just wish it had happened sooner. The Government maintain that they do

“not expect significant direct impacts to UK food supply as a result of the Russian invasion of Ukraine”,

but the sector is seriously worried, as are consumers, who are facing rising prices. To no one’s surprise, except perhaps the Government, food price inflation hit 6.8% in the year to May 2022 and has continued to rise—a point well made by my hon. Friend Margaret Greenwood and Ben Lake.

The Government delayed their promised response to the national food strategy, citing the invasion of Ukraine as a reason. I understand they were facing a changing situation, but I reiterate that it was not an unexpected one. Are they suggesting that the necessary planning for possible impacts began only after the invasion was first declared in February this year and not when the first warnings were put out by reputable intelligence analysts? Perhaps if we had seen a proper White Paper from the Government when it was originally promised, there would have been a more robust and effective framework for dealing with the shocks that the sector is facing.

The war in Ukraine is placing significant pressure on British agriculture. This sector has suffered crisis after crisis in the past few years, from the pig backlog, which saw tens of thousands of healthy pigs culled on farms, to the botched roll-out of the environmental land management scheme. During these difficult times, when other nations in the UK and in mainland Europe stepped in to help, our Government have consistently refused to lend a hand to English farmers. The message is they are on their own and the market is the final arbiter. Some of them will go bust but, as the Government see it, that is the way things have to be. Now the conflict in Ukraine poses one of the biggest challenges yet. I would like to say that the Government have finally come to understand that their approach is the wrong one and they are willing to step up and provide meaningful support, to farmers and protect British food security. Sadly, they have been so far unwilling to intervene.

The Opposition take a different view, however, because intervention is not alien to us. Labour has routinely raised its concerns that many farms will be unable to cope with the war in Ukraine pushing up the price of agricultural inputs. The agricultural prices indices for inputs and outputs in the UK increased dramatically from the end of 2021 to the beginning of 2022, and the Ukrainian conflict has resulted in significant gas price increases throughout the world. At the start of 2021, growers were being charger 40p per therm, but prices have since surged as high as £8. The Lea Valley Growers Association has issued a warning that UK harvests of sweet peppers and cucumbers will halve this year after many glasshouse growers chose not to plant in the face of surging energy prices. Producers have warned that yields of other indoor crops, such as tomatoes and aubergines, will also be hit.

Fertiliser production is reliant on gas, and as the international gas price soars, so does the cost of fertiliser. In January 2021, the cost of ammonium nitrate was £200 per tonne. That figure now stands at £900 per tonne. That is simply unsustainable for many agricultural businesses. The Government’s recently announced measures to address fertiliser inflation are too little, too late. CF Fertilisers’ announcement that it will permanently close one of its factories in Ellesmere Port is yet another blow to the farming sector—another point eloquently made by my hon. Friend the Member for City of Chester. After months of dither and delay, can the Minister set out the steps the Government are taking to help farmers access affordable energy and fertiliser, and how the Government intend to curb agricultural inflation?

At the same time as farmers are contending with sky-high inflation, they must deal with a shortage of seasonal workers. The shortage is, in part, a consequence of the war in Ukraine; in 2021, 67% of seasonal agricultural visas went to Ukrainians, while a further 11% were awarded to Russians and Belarusians. However, the blame for the worker shortage lies squarely with the Government. It was originally announced that there would be 30,000 horticultural seasonal worker visas this year, a figure that was then increased to 40,000, with 2,000 of those visas awarded to poultry workers—an increase that many farming bodies have said is too little, too late. The National Farmers Union has predicted that there will be demand for 70,000 seasonal worker visas this year. A farmer confidence survey conducted by the union in January found that 86% of respondents expected low or very low levels of worker availability.

The shortages have had enormous consequences for farmers and keep pushing up prices at the till, at a time when 7.3 million households are experiencing food poverty. Industry experts claim that the labour shortage on British farms has resulted in “catastrophic food waste” of home-grown fruit and vegetables. Many farmers face bankruptcy if they cannot access the labour they need to harvest the crops.

We are in this dire situation because the Government have once again stumbled their way into a crisis, refusing to listen to warnings from farmers, industry and the Opposition, who have been raising the alarm about worker shortages for months. Their refusal to listen has left the Government pursuing a failed post-Brexit approach to agricultural labour that will see food rotting in the fields while millions of households go hungry. Can the Minister say how she intends to help farmers struggling to find seasonal labour, and what plans the Department has to put an end to the shortage?

The war in Ukraine has further exposed Britain’s flawed food system. Despite ample opportunities to take action, the Government have failed time and again to strengthen the system. I fear that the change in management in the Conservative party will not result in any real change, as its MPs have been more than happy to support Government inaction for months. Looking at the contenders left in the leadership race, we are likely to see even more zealous commitment to the market fundamentalism that is happy to let British agriculture go to the wall.

While the Conservatives may be unwilling to support British farmers and food producers, Labour will. On the shortage of seasonal workers, through our five-point plan to make Brexit work, Labour will deliver. We will sort out the poor deal that the Prime Minister negotiated and seek to find new, flexible labour mobility arrangements for those making short-term work trips. On inflation, Labour will support struggling agricultural and food production businesses to make, buy and sell more in Britain, investing in jobs and skills and using the power of public procurement. We will also look at using a windfall tax to support farmers and food businesses.

Photo of Victoria Prentis Victoria Prentis The Minister of State, Department for Environment, Food and Rural Affairs 10:27 am, 20th July 2022

Thank you very much for your sensible approach to the heat, Dame Angela. I am sure we all felt for the farmers who were harvesting yesterday, in extraordinarily hot conditions. I know that many of them will have harvested all night in order to have a slightly more comfortable time. I would like to reassure Margaret Greenwood that climate change is a very large part of the discussion about leadership in the Conservative party at the moment, and rightly so.

I, too, thank Christian Matheson for securing this important debate, and indeed colleagues across the House for their engagement. It is right to say at the outset that we all condemn the Russian state’s outrageous attack on Ukraine, and that we remain absolutely committed to standing with the people of Ukraine as they defend their country and their democracy.

The Government are certainly not unaware of the situation in Ukraine. I have talked to Alex Sobel about his own family links; my daughter lived in Ukraine until December. We now have a Ukrainian woman living with us at home, and five Ukrainians living in a cottage on the farm. We were aware that war was coming, but I do not know that we were aware of all the consequences or how severe that war would be—a feeling that is probably global. I do not think any of us were expecting Russia to behave quite in the way that it has.

We are here today to discuss UK food security and the effect on farmers. As the agriculture Minister, and having had to travel a great deal in order to deal with the consequences of the war, I feel very strongly that we are fortunate in the UK, as we have a highly resilient food supply chain that is built on strong domestic production as well as imports through very stable trade routes. When I look around those international fora, I feel blessed with the food supply that we have in the UK. That is not at all to say that we are complacent; as Ben Lake said, it is important, and our food security depends on not being complacent about this. We are not complacent, but we are very lucky.

Our food strategy sets a goal for the first time—a real win, which I am pleased about—that the level of food security in this country should be broadly where production is at the moment. Currently, 74% of what we can grow here we do grow here, and about 60% of what we eat altogether is grown here. That has been stable for about the past 20 years and it is important that we maintain that sort of level and always keep an eye on where our trading routes are and their stability. I could not agree more with hon. Members that the future should be more local and more seasonal—that is an important point.

In summary, our food import dependency on the eastern European region is low, and we do not expect any significant direct impact on overall supply as a result of the conflict in Ukraine. We are very much in touch with food and farming industry figures, who remain confident that our food supply chain remains stable.

However, there is, of course, the matter of increasing costs. The global spike in oil and gas prices has affected the prices of agricultural commodities, which are always close to energy costs. Gas prices were rising as we emerged from the pandemic anyway, and the invasion of Ukraine has caused some additional turbulence in international commodity markets—for example, the global prices of wheat, maize and vegetable oil have all increased substantially since the start of the war.

Rising food prices are dependent on a combination of factors, including agrifood import prices, domestic agricultural prices—which are, as the hon. Member for Ceredigion noted, quite high in some cases, although the farmer is still struggling with rising input costs as well—and domestic labour and manufacturing costs. In the farming sector, increased costs are particularly affecting fertiliser, animal feed and fuel, and that is undoubtedly creating short-term pressures on cash flow for farmers. To help, this month we are bringing forward half of this year’s basic payment scheme payment as an advance injection of cash to businesses. Subsidies will be paid in two instalments each year for the remainder of the agricultural transition period.

On the agricultural transition generally, unlike the NFU and Opposition Members I simply cannot justify the current BPS payments situation, whereby 50% of the payments go to the 10% of largest landowners. I remain convinced that there are fairer and better ways to support farmers. I reassure the House that the yearly £3.7 billion pot of money available to support farmers remains the same. Where we take from farmers in BPS payments—which I am afraid I cannot justify, and in the long term I am sure there are better ways to do it—we give back in other schemes. I am pleased that farmers are voting with their application forms: 52% of farmers are now involved in stewardship schemes of some kind, which pay well, and farmers are now applying to the sustainable farming incentive—the lowest tier of our new schemes—which was rolled out gently a couple of weeks ago, and significant numbers of applications are already being approved.

On fertiliser, we have issued statutory guidance to provide clarity to farmers on how they can use slurry and other manures during the autumn and winter. Although global fertiliser prices have risen, the UK has remained quite dynamic in sourcing products, and CF Fertilisers continues to produce ammonium nitrate at its plant in Billingham. We remain concerned about the Ince plant, and remain in touch with the hon. Members for City of Chester and for Ellesmere Port and Neston (Justin Madders).

I reassure the House that we are working closely with the Agriculture and Horticulture Development Board, the Agricultural Industries Confederation and the NFU on how best to establish fertiliser price transparency. I have a large follow-up roundtable on fertilisers tomorrow, as part of a long-term piece of work we are doing with the industry to see what more we can do and to assist the partial change—it is never going to be a complete solution—from chemical fertiliser to bio-fertiliser. We have also delayed the changes to the use of urea fertiliser until spring 2023 and introduced new slurry storage grants.

We know that feed is a substantial input cost. On 1 June we concluded the removal of section 232 tariffs, allowing us to remove the 25% tariff on imports of US maize, which is a key ingredient for animal feed. That went down well with the sector.

I know that farmers need seasonal labour; we are the only sector with an immigration carve-out in that regard. An extra 10,000 visas were announced in the Government’s food strategy, so this year we have 40,000 seasonal visas. I have been working with the contractors throughout the year and am aware that last year around 80% of our seasonal agricultural workforce came from Ukraine, Russia or Belarus. The operators who help us to source the workforce are confident that they will be able to find the workers they need for this season, and all the indications are that those visas are being taken up.

As well as farmers, we work closely with the food and drink manufacturing sector, through strong industry and cross-Government relationships. Despite the ongoing supply chain challenges in global inflation, our manufacturing sector has maintained a stable food supply. Some specific commodities, including sunflower oil and white fish, have been badly affected by the invasion of Ukraine. The Government are supporting the industry to manage those challenges.

We work closely with the Food Standards Agency to adopt a pragmatic approach to enforcing the labelling rules so that alternative oils can be used in place of sunflower oil in certain processed goods without requiring changes to labels. On white fish, we continue to engage with the seafood sector, including the fish and chip shop industry, to monitor impacts and encourage the adoption of alternative sources of supply other than Russia.

It is very important that we maintain our sanctions against Russia. We recognise that it is very difficult for some of our sectors. Our global partners are feeling a far greater impact from the war than we are. Russia is once again using food—or the lack of it—directly as a weapon of war. It is not just a weapon of war in Europe; it is a weapon that is firmly targeted at Africa, where there is already starvation caused directly by Russia’s invasion of Ukraine and the resultant increase of the global wheat price. There is now insufficient wheat for certain areas of Africa to have enough to eat.

We are engaging with like-minded partners through multilateral global forums, including the World Trade Organisation, the UN and the G7, to build important consensus on keeping markets—particularly the grain market—open to support global food security. I have worked closely with the Ukrainian Agriculture Minister, both at the UN global food summit and at various G7 meetings. I am pleased with one achievement we have been able to make ourselves directly—in fact, it was paid for by DEFRA—which is the establishment of a global grain sampling library. In itself, it will not stop Russia stealing grain, but it will have a chilling effect on those buying grain from Ukraine that is clearly stolen.

There is a great deal more work that the world needs to do and I reassure the House that as a Government we are determined to play our part in that work globally. We are aware of the pressures caused by the knock-on effects of this war. We continue to work in partnership with farmers and food producers to ensure that the UK is well equipped to respond to the global forces that continue to drive the supply and price issues that we are facing.

Photo of Chris Matheson Chris Matheson Labour, City of Chester 10:40 am, 20th July 2022

Thank you, Dame Angela, for calling me to speak again and for your stewardship of this debate. I also thank the Minister for her response and all hon. Members who have taken part. We have heard contributions from England, Wales, Scotland and Northern Ireland—from all parts of the UK—but they have all had similar messages about the same types of issues that our farmers and food producers are facing.

I accept the gentle admonishment from my good friend Drew Hendry about not putting the climate crisis at the forefront of this debate. He is absolutely right about that. One of the potato farmers in my area tells me that when potatoes are growing and it gets too hot, they stop growing, so the current temperatures will affect this year’s potato crop. As I say, the hon. Gentleman is absolutely right and I thank him for that gentle kick up the backside.

The message from this debate is that we do not know how long this war will go on for and we do not know how long its effects will last, so we need to start planning now, because our farming communities are certainly planning now.

Question put and agreed to.

Resolved,

That this House
has considered the effect of the war in Ukraine on UK farming and food production.

Sitting suspended.