Storm clouds and rainbow over Welsh farmland© FLPA/Richard Becker/REX/Shutterstock

Urgent action is needed by the government to provide farmers with the tools needed to ride out the slump in commodity prices, say MPs.

A host of recommendations are contained in a report published following an inquiry by the House of Commons environment, food and rural affairs committee into low farmgate prices. 

Farm leaders have welcomed the report, saying low prices and poor cashflow are major challenges for the industry. 

Recommendations published on Wednesday (2 March) include:

1. Prompt payments

Delays to basic payments are unacceptable, says the report, and risk exacerbating already serious cashflow problems on farms.

It is crucial the Rural Payments Agency settles at least 90% of claims by the end of December each year.

2. Better labelling

Legislation surrounding country-of-origin labelling has the potential to mislead consumers and cause confusion, says the report.

MPs found a growing interest in the provenance of food and in British products requires a move towards clearer labelling.

3. A fair deal from retailers

The committee questions assurance from the retail sector that there is no link between the price at which supermarkets sell to their customers and the price supermarkets pay to farmers.

Farmers must not be the victims of supermarket price wars, it says.

4. Joined-up thinking

More effective co-ordination between Defra and the devolved administrations is necessary to prevent unsustainable price inequalities emerging at a national level, the report says.

Otherwise farmers in different parts of the UK will be left at a disadvantage to their neighbours.

5. Working together

Farmers must recognise the strength they can achieve through being part of a producer organisation.

This is particularly the case in the dairy sector, where thousands of farmers are at the mercy of low farmgate prices.

6. A futures market

Futures markets for dairy and livestock could help the industry to lessen the impact of unanticipated price volatility, says the report.

Although such markets are long awaited, the committee encourages the industry to continue working with Defra to take forward work on futures.

7. Secure contracts

The report says Defra should encourage farmers, processors and retailers to agree more long-term contracts.

Doing so would provide predictable income levels to encourage secure financial planning and investment decisions.

8. More exports

British farmers and producers must seize opportunities for domestic and global market growth.

To be able to trade in a global economy, the agricultural industry needs to look at developing global products or adapting traditional products to meet changing demands.

9. A coherent long-term plan

The committee says it is concerned that much of the government’s forthcoming 25-year strategy for food and farming will be about developing a plan for England, while also including an export strategy for the UK as a whole.

For the sake of clarity, it says the export strategy should be published separately.

10. A watchdog with teeth

The government should consider urgently how to extend the remit of the Groceries Code Adjudicator to protect both direct and indirect suppliers to the major UK retailers.

The committee asks Defra to include this in recommendations following a review later this year.

(Source: Farmgate prices, Third Report of Session 2015–16, House of Commons environment, food and rural affairs committee, 2 March 2016).