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Farming

Dairy crisis update

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Rebecca Evans

Rebecca Evans

THE DEPUTY MINISTER FOR FARMING AND FOOD, Rebecca Evans, visited Dyffryn farm in Powys to meet owner Jonathon Wilkinson and Russell George AM

discuss some of the issues facing the sector.

Discussion covered a range of topics, including the current situation facing the dairy industry in Wales, restrictions on cattle movement and changes to the Basic Payment Scheme.

The Deputy Minister said: “It was really useful for me to speak with Jonathon and his colleagues about the issues affecting them and their businesses. It is important I continue to meet and speak face-to-face with farmers to hear their concerns.”

A recent reduction in milk prices and the prices paid to farmers has put further pressure on dairy farmers and the Deputy Minister was keen to explore how the Welsh Government can continue to help improve resilience in the sector.

“This is of course a difficult time for dairy farmers across the UK. Confidence on dairy farms had been building over the last year, with a better milk price and lower cost of production, leaving a margin on production. But we have seen further turbulence recently and a return to volatility in milk prices. By working together with the dairy sector and dairy industry as a whole, I remain convinced that we can ensure our vision of a modern, professional and profitable industry in Wales can be achieved. I am keen to explore how resilience can be increased in the Welsh dairy supply chain and am expecting to receive a report back to me on the Dairy Review in the coming weeks. We are also considering how we may increase processing capacity in Wales, but also a range of other measures relating to product development and marketing, which will be of benefit to our dairy farmers.”

In October the Deputy Minister announced that Andy Richardson, who sits on the Dairy Task Force, was to lead the review of the dairy sector in Wales. The review is to provide a strategic direction for the dairy sector across the whole supply chain, offering recommendations that Government and the industry can put in place to deliver resilience, economic growth and the creation of additional jobs within the Welsh industry.

The day after visiting Powys, Rebecca Evans met Sir Jim Paice MP for First Milk talks.

First Milk, one of the largest dairy farmer co-operatives in the UK, announced recently that they were to delay payments to producers by two weeks.

First Milk also decided to reverse the 1.1 pence per litre of the planned February milk price reductions for the manufacturing and liquid pools, increase members’ capital investment and increase members’ capital investment target from 5 to 7 pence per litre.

Following their announcement on January 8, the Deputy Minister said she would be seeking urgent talks with First Milk.

Following the meeting at First Milk’s Haverfordwest Creamery, Rebecca Evans said: “I have spoken to farmers who tell me how concerned they are about what the deferred payments mean for the cash flow of their farming businesses. I sought an urgent meeting with First Milk to better understand how the co-operative had found itself in this position, and to satisfy myself that the suite of actions taken by First Milk will be enough to put them on a sound footing. First Milk say that the actions they have taken have helped to raise enough capital to stem their own cash flow problems and put the business on a sound financial footing once again. Sir Jim assured me he had spoken with the banks in light of their decision and had found them to be sympathetic to the farmers’ situation.”

First Milk is a farmer-owned GB milk co-operative with around 1,600 members. It deals with smaller and more geographically remote farms. There are 400 Welsh dairy producers in the co-operative and the vast majority of milk produced in Wales goes to Haverfordwest Creamery to produce cheese and other milk products.

In December, the Deputy Minister announced a review of the dairy sector in Wales, which is being led by Andy Richardson. The review aims to set out a long-term strategic direction for the dairy industry, taking views from all in the Welsh supply chain and is due to report in the coming weeks.

Around 200 farmers attended a meeting in Llandisillio where they were addressed by Sir Jim Paice.

Sir Jim told farmers the business was secure. However, farmers reported that the co-operative’s decision was yet another setback after months of falling wholesale prices.

The Cambridgeshire MP said that he hoped farmers felt reassured following the meeting, adding: “We’ve had to rebuild cash in the business so that our cash flow is fine. First Milk is a perfectly solvent business and we have a long-term future, but we needed to recapitalise the business and that is what we’ve done.”

The decision affects around 400 Welsh farmers.

First Milk operates a number of milk production facilities in England, Scotland and Wales, including the Haverfordwest Creamery plant.

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Farming

Warning to dog owners following recent attacks on livestock

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POLICE and Crime Commissioner Dafydd Llywelyn has issued a warning to dog owners that they face being prosecuted if they fail to keep their dogs under control when out walking the country side.

His warning comes following reports of several recent incidents whereby livestock have been attacked or killed by dogs in rural parts across the Dyfed-Powys Force area.

As a result of the recent incidents and the ever increasing concerns within local Farming Communities, Police and Crime Commissioner Dafydd Llywelyn has moved swiftly to organise a meeting with NFU representatives and the Dyfed-Powys Rural Crime team which will take place on 11 January 2021.

Police and Crime Commissioner Dafydd Llywelyn said; “This is a critical time in the rural community as farmers go into the lambing season, and in light of these recent, concerning incidents, I will be meeting with NFU representatives and our Rural Crime Team in the Force to identify ways of working collaboratively to tackle the problem.

“Dog owners need to take responsibility for ensuring dogs are kept under control while out walking the country side, especially as we enter the lambing season.

“They may think it is fun to run around animals in fields, but this is not the case and these animals often get scared, injured or killed as a result.

“We are grateful to the majority of responsible dog walkers in our communities, but we want to remind all owners that dogs should be kept on leads at all times around livestock – it is an offence to allow your pet to worry, kill or maul sheep, their lambs, or any other livestock”.

PC Esther Davies of Dyfed-Powys Police Rural Crime Team said; “Since the Rural Crime Team was formed some two and half years ago, we have received regular reports of livestock worrying throughout the force. These are incidents that occur throughout the year and can have a devastating effect on farmers and rural communities.

“Dog owners must take responsibility for their dogs and ensure that they are kept under control at all times. If dogs are being walked be it on the road, through a field or on a footpath, and especially somewhere where there is likely to be livestock, they should always be kept on leads. Incidents like this can and should be avoided.”

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Farming

NFU Cymru President’s New Year message

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NFU Cymru President John Davies provides his New Year message, looking back over an unprecedented 12 months and assessing what lies ahead in 2021.

 

“2020 was a year the likes of which we’ve never seen. The Coronavirus pandemic has challenged all of society. My condolences go out to all of those who’ve lost loved ones to this disease. My thoughts are with all whose livelihoods have been affected by the knock-on effects that the pandemic has had on businesses and our general way of life. I’d like to place on record my heartfelt thanks to our NHS workers and those supporting them on the front line for their courage in tackling this global health emergency. So often the term ‘hero’ is attached to those in films or on the sporting stage, but if this year has taught us anything it’s that, in fact, the real heroes are those people in our communities who have gone to work – putting themselves at risk – to care for the sick and keep the rest of us safe. Diolch yn fawr iawn pawb.

“The initial impact of the Covid-19 outbreak and the overnight closure of the hospitality sector had severe consequences for the food supply chain. The resilience of those systems was stretched to the limit as the supply chain frantically sought to redirect produce that would usually be destined for the out-of-home market to the retail sector, where panic-buying had resulted in empty shelves in many stores. I thank all our farmers who have worked throughout the chaos of the Covid-19 fallout to keep the nation fed. I know that for many businesses and sectors this hasn’t always been easy and some experienced significant losses as those supply chains struggled to adapt to new demands. However, the role the entire industry has played during such a fraught period will live long in the memory of many, and indeed recent polls suggests farmers’ favourability with the consumer is higher than it has been in a decade.

“I very much hope that lessons can be learned from this tumultuous year and if the past few months have taught us anything, it’s that the safe, reliable supply of high quality affordable food is now of paramount importance to the public. As farmers we are ready and committed to ensuring that the nation remains fed during this difficult time and through future challenges, too. Our farming systems, underpinned by a fantastic, natural asset base, mean we are well equipped to be the providers of the most climate friendly food in the world. NFU Cymru will continue to lobby Welsh Government to see the importance of food production recognised and protected as a cornerstone of future policy.

“Looking ahead and, with significant changes to how Wales and the UK trades with the EU and the rest of the world, one of the biggest challenges for 2021 is going to be making sure that Welsh farmers have the widest possible range of markets freely open to them, on the best possible terms. We are, of course, relieved that that a deal has finally been agreed between the UK and the European Union, providing some much-needed certainty for the farming sector and allowing Wales’ farmers to continue to send products to the EU27 free of both tariffs and quotas. All efforts must be now be focussed on finding ways of minimising the impact of red tape on the movement of our produce to the EU.

“A heartfelt thanks must go to the one million people from all walks of life who backed our food standards campaign. Their support was instrumental in delivering legislation to ensure that food standards will now have a ‘stronger voice in UK trade policy’.

“Of course, away from the pandemic and agricultural policy, there are still major issues that are affecting the nation’s farmers every day. Bovine TB continues to blight so many businesses across Wales – all too many times this year I have again learned of families’ heartbreak and herds, generations in the making, being decimated due to this horrific disease. Please be assured that NFU Cymru will continue to pressure government to act upon the science and take notice of the proven strategies adopted by so many other countries – an approach that seeks to tackle bovine TB across all its vectors.

“NFU Cymru maintains that a heavy-handed and inflexible approach to water quality through the proposed all Wales Nitrate Vulnerable Zone (NVZ) designation will not deliver the enhancements to water quality that we all want to see. NFU Cymru is committed to helping to deliver these improvements via an effective and proportionate framework that supports farmers to take action to improve water quality where it is needed. I am heartened that our Minister has recognised that these are not regulations to introduce at a time of crisis.

“Climate change remains a major challenge for all of us in society and the farming industry is putting its best foot forward to deliver on its net zero 2040 ambition. With the prestigious COP26 summit rescheduled to be held in Glasgow in 2021, it is clear this topic will, rightly, remain high on the news agenda next year. As a farmer, it’s important to me that farming’s contribution to mitigating the effects of climate change is fairly reflected in this debate. Recent research has pointed to the fact that Welsh livestock production systems are amongst the most sustainable in the world, but we know that there is much more we can and will do.

“With a Senedd election scheduled for May 2021 we will be speaking to candidates from across the political spectrum to push home the importance of Welsh food and farming. We are committed to working with the next government to deliver our ambitions for a productive, profitable and progressive farming sector that delivers for the people and communities of Wales.

“It has been a year like no other. With the vaccine rollout now underway I hope we will soon be able to consign the last pandemic-hit year to the history books and return to some form of normality, where we can soon meet at the agricultural shows and events that we all hold dear to our heart. Let us look ahead to 2021 and what we hope will be a bright, healthy and safe future.

“Blwyddyn Newydd dda.”

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Farming

Farmers face hidden tax hike

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POTENTIAL changes to rules on Capital Gains Tax could lead to a tax hike for those inheriting farmland and assets, financial advisers at NFU Mutual have warned.

Many farmers can potentially pass on farms to their children free from Inheritance Tax due to Agricultural Property Relief and Business Property Relief.

As capital gains are wiped away on death, children inheriting can sell and only face Capital Gains Tax on any rise in value between the date of death and a sale.

However, in a review ordered by Chancellor Rishi Sunak, the Office of Tax Simplification has recommended that gains should no longer be wiped away on death where the estate has claimed Agricultural or Business Property relief to reduce Inheritance tax.

Sean McCann, Chartered Financial Planner at NFU Mutual, said: “Many farmers choose to hold on to their farming assets until death on the basis that not only might they be free of Inheritance tax, but also escape Capital Gains Tax if sold shortly after death.

“The Office of Tax Simplification’s recommendation that gains should no longer be wiped on death where Agricultural or Business Property relief has been claimed to reduce inheritance tax will mean bigger tax bills for some farming families.

“The biggest impact will be on those who sell farming assets they’ve recently inherited. Those that retain the assets and continue to farm won’t face any immediate tax liability under the proposed changes.

“The Office of Tax Simplification also recommended a hike in Capital Gains Tax rates that would align them to Income Tax rates, leading to larger tax bills.

“However, it’s likely that any change would be accompanied by an allowance to take account of the rise in value caused by general inflation, so any tax is only levied on ‘real’ gains.

“It’s important to stress Rishi Sunak has not yet confirmed he will agree to these recommendations, but many farming families will be watching the March Budget with interest.”

[INSET BOX]

EXAMPLE

A farmer owns a farm worth £1m which he bought 25 years ago for £300,000. He dies and leaves it to his children, who sell for £1m shortly after his death. Under current rules, if he met the criteria for 100% Agricultural and Business Property relief, they would pay no inheritance tax on the £1m and no Capital Gains Tax on the sale.

Under the proposal to abolish the tax-free update on death, while there would still be no inheritance tax due – if the farmer’s children sold shortly after his death, they would face a Capital Gains Tax bill on the £700,000 gain. Based on the existing rate (20%) that would trigger a Capital Gains Tax bill of £140,000.

“It’s important to stress Rishi Sunak has not yet confirmed he will agree to these recommendations, but many farming families will be watching the March Budget with interest.”

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