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Posted on April 14, 2016
The agricultural industry is an ever expanding and changing industry, with a lot of outside factors that have a massive effect on our industry: weather, retail and consumer demands, and even the whims of politicians.
The start to 2016 has already seen a lot of news and proposals for change in the agricultural industry, so let’s take a look at a couple of the more hotly debated topics and the recent developments you need to know about.
The Ongoing Milk Debate
The UK has a huge liquid market – but the size of the market means there are divides between farmers, resulting in as much as a 12p per litre gap in payment being received between the competitors. The average price per litre in the UK as of January 2016 was 23.13p. But, those receiving below 20p for long periods of time could see a dramatic cut back in their production, or worse, force a complete shutdown.
Put simply: it is costing farmers more money to produce milk than the amount they are able to sell it for. Average production costs are 62p, at a top price a farmer might be paid 48p which would still be a 14p loss, whereas the retailer will mark up to the average retail price of 94p and make over 50p of profit. Farmers argue that the price war with retailers has permanently devalued milk in the eyes of the consumers and any future price increase would be met with negative backlash. On the opposite side of the picket fence, supermarkets claim that somehow there is no connection between what farmers are being paid and the price they sell their milk for.
Recently, EU farm commissioner Phil Hogan revealed plans for a radical plan that would help the struggling milk industry; he called for a “speedy implementation” of these plans during a speech on 12th April. It would mean an activation of Article 222 of the Common Market Organisation, which would allow farmers, co-operatives and other producers to restrict milk output. Theoretically this would lead to a hike in the price of milk which would allow for farmers and producers to recover the cost of losses currently being experienced in the milk market.
There has been a lot of confusion as to what will happen to farm funding if the UK leaves the EU after the referendum being held on Thursday 23rd June. Recently, the Country Land and Business Association (CLA) have written a letter to Prime Minister David Cameron stating that the current level of funding must remain in place until 2020 no matter the outcome of the referendum.
The farming minster George Eustice claims that “we would still support farming to the same level, possibly even more than now,” but other government officials have been quick to intercede that these are the beliefs of Mr Eustice (who is a known supporter of the Leave campaign) alone and the government itself could not promise the maintaining of the EU funds.
As it stands, the future levels of support that the farming industry can expect from the government are unknown. It has to be acknowledged that no government official can make promises either way, due to the nature of the government it is unknown which party will be in power in the future and the agricultural policies that they will follow. But, the CLA states that civil servants should begin making plans for the event of a leave vote despite remaining neutral on whether the UK should leave the EU.
Here at RE Buildings we are dedicated to providing you with the best agricultural buildings and livestock equipment to make sure that the farming industry prospers, whatever else may pop up in the news this year. If you would like any more information about the services we provide, don’t hesitate to get in contact with our friendly team who are more than happy to take your enquiries today.
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