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FUW’s cautious welcome for Gove speech

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Michael Gove: Clarity sought following keynote speech

THE FARMERS’ Union of Wales (FUW) has welcomed commitments by Secretary of State Michael Gove to focus on supply chain policies and his acknowledgement of the need for an appropriate balance between devolution and common UK frameworks post Brexit.

Speaking at a National Farmers Union conference in Birmingham, Michael Gove gave a number of commitments to English farmers, while also acknowledging the need for Brexit to be considered in terms of entire supply chains which operate across the UK.

Michael Gove also said: “Leaving the EU requires us to develop new policies on food and farming. For the first time in almost half a century, we are free to design policies from first principles that put British farmers, and consumers, first.”

Responding, FUW President Glyn Roberts said: “In light of Brexit, there is an understandable focus on farming, environmental and land use policies, but the FUW has been arguing for entire supply chains to be considered – be it the supply chain for food, carbon, green energy or wildlife.

“Farmers are key links in lengthy supply chains which involve all sorts of industries and deliver a host of public benefits – not least the food which arrives daily on supermarket shelves. We need holistic Government policies which deliver benefits for consumers and fair rewards for farmers, and interventions where there is market failure.”

Mr Roberts said it was therefore welcome that the UK Government has accepted the need to consider entire supply chains, including those which extend across the UK and further afield.

“There has been welcome engagement by UK Governments with farming and environmental bodies over the past eighteen months, but there is concern that government engagement with others along supply chains needs to be stepped up,” he added.

Mr Roberts also welcomed the Secretary of State’s acknowledgement of the need for devolved powers over agriculture to remain firmly in the hands of Wales, Scotland and Northern Ireland – but for there to be a balance between such powers and frameworks which prevent distortions within the UK and wider markets.

“The FUW is an emphatic supporter of devolution, but all mature governments recognise the importance of agreeing frameworks with other nations and countries. The alternative is a free-for-all which distorts markets and leads to inequality between producers which damages relationships and compromises trade.”

Mr Roberts said agreement on such frameworks needed to be reached urgently given the thirteen or so months before the UK left the EU. He therefore welcomed Mr Gove’s assurance that UK Governments were “…working together to ensure there will be UK-wide frameworks on areas of common concern like animal and plant health and no decisions are taken that harm our own internal UK market.”

Responding to the UK Government’s plan to introduce a cap on English farm payments, Mr Roberts said that capping payments had been FUW policy since 2007, and that as a result Welsh payments had been capped under new regulations introduced in 2015.

“However, we have already written to DEFRA minister George Eustice to highlight our concerns that the benefits of capping would be lost if no limit is applied to agri-environmental payments, as large estates and charities would cream off money which would be better spent on family farms,” he added.

“The FUW has made it clear since June 2016 that Wales’ funding should continue at at least current levels, and clarity on this and other matters is essential. England seems to have had these assurances, yet Wales is still in the dark.”

Mr Roberts said the FUW welcomed Mr Gove’s assurance that devolved powers would not be diluted, and that UK Governments were working together on common frameworks, but highlighted the degree to which planning in Wales by both farmers and government was hampered by a lack of certainty.

“With the budget for the 2019 BPS due to be finalised in October this year, there is a real sense of urgency.”

Mr Roberts also highlighted the need for well-meaning policies to be carefully assessed rather than taken at face value.

“Well intentioned policies set out in lengthy sentences must be thoroughly investigated in terms of actual figures and their likely impacts on our farms, rural communities and supply chains,” he said.

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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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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.”

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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Consumers ‘sleepwalking’ away from meat

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A LACK of inspiration, rather than a conscious reaction to trends such as veganism, was at the heart of the pre-Covid-19 reduction in meat, fish and poultry consumption, new AHDB research has suggested.
Before the pandemic struck, some 7.8 million (35%) households in Great Britain had unwittingly purchased less meat, fish and poultry products, according to AHDB analysis of Kantar data [52 w/e 26 January]. This figure accounted for 99% of the 1.3% volume drop in retail sales.

However, the twenty per cent of households which had at least one ‘conscious meat reducer’ accounted for just 1% of the losses, with the majority citing other reasons for reducing consumption.

The unconscious reducers were said by the report to mostly be of retirement age and living with fewer people. They were found to be much less likely to experiment with cooking or refer to themselves as a ‘foodie’, preferring more traditional dishes. They were also found to be unsatisfied with shopping for meat, with just 29% of the unconscious reducer group saying they enjoyed browsing meat aisles and only 31% find them to be inspiring.

The report urged the meat industry to focus its efforts on winning this group back as they offered a better route to boosting meat consumption than conscious reducers.

“How unconscious reducers think and feel about meat isn’t any different to those people who are actually increasing their meat consumption – they’re not turning away on purpose so there is a chance to re-engage them with the category,” explained one of the report’s authors, AHDB senior retail insight manager Kim Malley.

“The biggest opportunity is at the point of purchase. The key thing the report highlights is those people are wanting a better in-store experience. There could be simple messaging in-store to remind people why they enjoy meat, give them a bit of inspiration and remind them it’s versatile and convenient.”

Malley added the meat-free category is “excelling” in innovation and convenience through ready-meal and marinated NPD – products which the report said the meat industry had invested less heavily in.

She also praised the packaging of meat alternatives, which tended to be “very colourful and brought recipes and flavours to life” for shoppers, and urged the meat industry to do its own innovation in these areas in a bid to win back “distracted” consumers.

According to the report, distractions included negative media coverage of the meat industry and the prominence of plant-based ranges in stores.

But in positive news for the sector, it found the coronavirus pandemic had seen sales volumes of meat, fish and poultry rise 8% year-on-year in the 52 weeks to 6 September. Unconscious reducers were discovered to have accounted for 35% of this uplift.

Malley said meat “benefited massively” from the rise in in-home occasions this year and consumers thinking more about their food choices. “It has highlighted that it’s quite easy to re-engage people,” she said.

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