Chancellor Alistair Darling has held a food summit at 11 Downing Street today (Thursday) to consider the threat to the economy posed by rising food prices.
NFU president Peter Kendall said the discussions were strictly “off the record”, but indicated that he had used the opportunity to get across the message that a profitable agriculture is essential to the wellbeing of the whole economy.
Rate of inflation
The meeting came in the same week that a report from the Centre for Economics and Business Research suggested rising global demand for food could force up food prices in the UK by 5%.
It is also estimated that around half the current 3% rate of inflation in the UK is due to food price hikes.
The Chancellor’s concerns about rising food prices were spelt out in a letter to other EU finance ministers last week.
In it he called for the winding down of all EU support mechanisms that keep EU prices above world levels and an end to direct payments to farmers.
Food import tariffs
He also demanded the suspension of food import tariffs.
But the letter has prompted a rigorous response from the NFU. In a detailed critique, seen by the Chancellor ahead of today’s food summit, it accuses Mr Darling of “political ineptitude”, coming just ahead of a major negotiation on the CAP health check.
Mr Kendall told FWi that the NFU had been working closely with DEFRA secretary Hilary Benn and his predecessor David Miliband, to keep the CAP evolving.
This attempt by the Chancellor to scrap the CAP would alienate the UK in Brussels and achieve nothing.
According to the critique, available on the NFU’s website, the EU is already winding down price support mechanisms, for example, milk quotas, export subsidies and intervention.
It adds that Mr Darling is wrong to try and remove direct payments too. “The elimination of direct payments would lead to a sudden contraction of the supply base, resulting in higher prices,” it says.