Jeremy's Blog 25th November 2022: Government is now Moving
This article by Jeremy Moody first appeared in the CAAV e-Briefing of 24th November 2022
Government in London is now beginning to take decisions again. Civil servants have briefed their fourth set of ministers since the end of June and markets have been calmed after the fallout from the September Financial Statement. The backlog is large, the time left to this government even more limited and many of our issues laid out more starkly than before.
From DEFRA, we have the good news of the announcement of the first round of the Slurry Infrastructure Grant, open to dairy, beef and pig farmers with slurry systems who do not have six months covered storage. With grants of up to £250,000, this supports achieving what may well become an increased legal requirement, helping manage now more valuable nutrients and avoiding water pollution and ammonia emissions. Farmers are not immune to the increased pressures faced by water companies.
As with other DEFRA capital grants, the claimant is expected to have use of the facility for 5 years from the last grant payment which will be after the store is paid for. With such significant support for a critical facility and however the balance is to be funded, tenants and landlords may want to ensure that the tenant has an agreement long enough to cover this period, as well to justify the investment the tenant may be making.
With that offering money to reduce risk and future-proof some livestock businesses, many high value sectors, face sustained pressures from increased costs, increased risks and squeezed rewards. In total, pigs, poultry meat, eggs, field vegetables, potatoes, fruit and glasshouses form 31 per cent of our agricultural production output by value but with many operators now looking at scaling back. The position for eggs has been well publicised, many potato growers consider switching area to cereals and reductions in milk prices are mooted.
The British Onion Producers Association reports a 9 per cent fall in area and, with the drought, a 25 per cent drop in production. Even though Spain and Holland face the same issues, the prices received have not matched the increased cost and risk, prejudicing the sector. The AIC Conference last week was told of producers who now find better margins in export markets than here. At present, global markets support commodity growers better than buyers support their higher value produce suppliers, with clear risks for those sectors, their downstream processors and their contribution to the economy.
November’s Financial Statement, with its £100bn swing in financial stance in just 55 days, may be when we have looked most clearly at our real situation. The economy, going sideways since 2008, is now drawing comparison not with the 1860s but the years after Waterloo. Little in the measures directly affect farming. With their role in necessary growth, CGT and infrastructure were partially shielded and the Annual Investment Allowance re-confirmed at £1 million on a permanent basis. Work should now turn to achieving growth, much of that hard and challenging comfort. However, backbenchers forcing the government to defer Monday’s vote on housing numbers bodes badly.
More active decisions are needed while the overnight evaporation of $32bn in the crypto-exchange FTX shows that risk is now alive and active.