Unacceptable delays to support payments are piling the pressure on farmers already battling low commodity prices, MPs have warned the government.
Farmers are at risk of suffering further cashflow problems unless the Rural Payment Agency (RPA) commits to fixing ongoing issues with its IT systems, the MPs said.
The warning is contained in a report published after a farmgate prices investigation by the House of Commons Environment, Food and Rural Affairs Committee.
See also: MPs launch inquiry into farmgate prices
The report blames the RPA’s “inadequate electronic application system” for delaying English farm grants administered by the agency.
Committee chairman Neil Parish said: “Many producers rely on CAP payments to turn a profit, so it is unacceptable that our farmers are still facing lengthy delays to financial support.”
He added: “The RPA introduced an IT system that wasn’t fit for purpose and subsequent errors made in the attempt to fix the problem only caused further delays and confusion for applicants.”
Mr Parish said the committee welcomed efforts being made by the agency to resolve the problem and reduce delays in payments to farmers.
But he warned: “It is crucial that the RPA works to at least match the target achieved by the previous scheme of 90% of payments made by the end of December each year.”
The past five years have seen an unprecedented period of price volatility, with the most recent period showing a downward trend, says the report.
MPs on the committee examined the UK dairy, lamb and pork industries in particular.
Average farmgate milk prices in the UK had fallen by more than 10p/litre from their peak in late 2013 to 23.71p/litre in December 2015.
Sheep producers had been similarly hard hit, with average farmgate lamb prices about 20% lower than in 2014.
In addition, British pig prices were 15-20% lower than they were a year ago.
The report says the government had recognised many farmers have been suffering financial difficulty as a result of low farmgate prices.
But market volatility was causing significant concern for farmers who needed the “right set of tools” to manage fluctuating prices.
Recommendations in the report include the need for farmers to work together to create opportunities for themselves.
“The agricultural industry has a significant responsibility for its own future and is generally better placed than the government to lead change and build a strong, resilient industry,” it says.
It adds: “In order to stop price volatility affecting them long term, farmers may need to change their thinking and develop mechanisms that allow them to develop long-term stability.”
Exports represents a huge opportunity for revenue expansion, the report suggests.
“The agricultural industry must move to new and innovative products that respond to new consumer needs and add value to the benefit of the whole supply chain.”
Producers, processors and purchasers must work together and develop a trust relationship, it adds.
“Now is the time for all parts of the supply chain to show their support for the agricultural industry. They must work together to develop a strategic relationship and to maintain a competitive edge.”
A Defra spokeswoman said it recognised many farmers were suffering financial difficulty in the face of volatile global prices.
It had pursued a range of measures to help farmers, including introducing a fairer tax system.
The department had also backed a futures market and the creation of producer organisations, and opening up new export markets.
More than 70,800 farmers – 80% of all those eligible – had now received their Basic Payment Scheme payment, totalling £1.11bn.
“Almost all farmers in England will be paid by the end of this month,” said the spokeswoman.