The coronavirus pandemic presents this country with one of its greatest challenges in decades. In response the Government has taken unprecedented action to support the economy, jobs, communities and families across the country. I wanted to write to you to explain in particular how that unprecedented support will have an impact on farming, fishing, food and horticulture.
Fisheries
The fishing sector has seen considerable impacts because of the closure of restaurants both here and in Europe and severe market disruption. Last week we announced a new £10 million support scheme to help the catching and aquaculture sector in England and boost local supply chains. Vessel owners and aquaculture businesses will receive payments to help cover their fixed costs. On Monday we began to contact eligible vessel owners. The MMO has published the details of the scheme which can be found here. Many in the fish processing sectors facing difficult times will have benefited from the Coronavirus Job Retention Scheme, Coronavirus Business Interruption Loan Scheme, and the Small Business Grant Scheme and support for the self-employed.
Dairy
In particular, the dairy sector has felt a significant impact as a result of the coronavirus pandemic. I am aware of this and DEFRA is doing all it can to support the sector. Between 5 and 10 per cent of total milk production goes to the food service trade and there is therefore a small proportion of milk production that currently has no home. The vast majority of Britain's 10,000 dairy farmers continue to supply their contracts at the usual price and larger processors have been largely unaffected by the market disruption because of their scale and diversified nature.
In order to support the affected farmers, on Friday we announced that we will we set aside some elements of competition law to make it easier for processors to come together and voluntarily work out how to ease production down in order to create the space in the market for that milk that currently has no home and to support a recovery in the spot price. We have asked the Agriculture and Horticulture Development Board (which supports the interests of dairy farmers and the wider farming industry) and Dairy UK (which represents the processors) to coordinate a proposal and discussions are already underway. We stand ready to support them throughout this pandemic. This approach will allow the market for milk to adjust to the change in demand while allowing production to be restored when shops, restaurants and pubs are able to open again.
Some stakeholders have been arguing for a different approach where the Government funds a "production reduction" scheme similar to that which we deployed in 2015. We have considered their proposals carefully but have concluded that they would not work in the current circumstances. This situation is very different to 2015.where there was a structural oversupply and a prolonged period of low prices. We are currently dealing with a temporary dislocation in the market that is affecting a minority of farmers; deploying the same scheme as in 2015 would not ease production across the board and would incentivise the culling of cows. We have therefore decided to work with industry experts on a better approach.
Livestock sectors
There has been a drop in demand in various cuts, for example steaks, leading to carcass balance problems in the beef, poultry meat and pig meat sectors. We have encouraged supermarkets to put steaks on promotion and, while the price of beef cattle has reduced in recent weeks, retailers are also reporting an increase in meat sales. Although the price of beef cattle, poultry and pigs has dropped, it still remains higher than in previous years. Quite a lot of beef, poultry meat and pig meat has gone into storage so we continue to monitor this market closely.
In the case of lamb, this is a time of year where UK production is at a fairly low level but there has been severe disruption to lamb exports. The price of lamb is currently running at about £2.20 per kilo which is about 10 pence per kilo lower than the same period last year. Although there are no major problems at the moment, production will increase as we move into the summer and if European markets remain severely disrupted then there could be problems to come in this sector. We are therefore monitoring the situation closely and stand ready to work with this sector, and all sectors, to address any further disruption in these markets.
Most other sectors of agriculture have continued to produce food for the market and have seen only marginal issues. We are working on plans to ensure that the fruit and vegetable sector have access to the labour they need for this year's harvest. We have worked with industry to create an online hub for job opportunities and we will work with the sector to promote them.
Waste sector
The waste sector has been impacted by social distancing, staff shortages and an increase in waste produced by households compared to a decrease in demand for commercial collections. Defra has published guidance to local authorities to help them prioritise their waste streams to keep important services like black bin bag collections moving, and worked with the waste sector to develop an online platform called WasteSupport which facilitates the sharing of resources between local authorities and commercial operators. This was launched by the sector at the end of last week. We are looking at how we can keep other services operating such as household waste recycling centres, and are aware of reports of increases in fly-tipping.
Supermarkets
Following a significant spike in consumer demand, we have now seen stock levels in supermarkets improve and panic buying has stopped. To support the food sector, the government temporarily relaxed competition law and regulations relating to driver hours and delivery times so that the sector could work together to keep putting food on the shelves.
Ornamental horticulture
The closure of garden centres has had an impact on some specialist plant producers in the ornamental horticultural sector. Online sales have been able to continue and the Government is keeping the situation under review but concluded last week that it was too early to ease any restrictions on such retail environments. Last week, the First Secretary set out the five tests on which the Government would base any assessment of easing the current measures. We must all continue to stay at home, in order to protect the NHS and save lives.