Memorandum submitted by the Regional Development
Agencies (DFoB 12)
1. England's nine Regional Development Agencies
(RDAs) have a common mission: to transform England's regions through
sustainable economic development. RDAs are uniquely placed to
understand the needs of business and to deliver immediate, effective
and appropriate financial support and advice to firms, especially
small and medium-sized enterprises (SMEs). As private sector-led
public bodies, RDAs are leading the regional response to the economic
downturn and are at the forefront of efforts to support business.
2. RDAs are delivering vital help and support
to businesses during the recession. RDAs have:
— Provided £110 million of funding
for national schemes to support business.
— Brought forward £100 million
of funding for regeneration projects to boost the economy during
the recession.
— Delivered over 51,000 free business
health checks, via the RDA-funded Business Link service between
October 2008 and May 2009.
— Launched Transition Loan Funds to help
businesses access finance and allocated nearly £17 million
of funding.
— Worked with Defra to increase the intervention
rates for funding available through certain measures of the Rural
Development Programme for England (RDPE) to provide further support
to businesses affected by the recession.
— Provided a fast and effective response
to economic shocks and large scale redundancies.
3. RDAs have substantial experience in helping
businesses, such as those affected by the collapse of Dairy Farmers
of Britain (DFoB), to recover from economic shocks. RDAs provided
significant support to business during the Foot & Mouth (FMD)
crisis of 2001 and the FMD outbreak in 2007. RDAs have helped
businesses respond to and plan for Bird Flu and Blue Tongue Virus
and in summer 2007, RDAs played a vital role in helping businesses
to respond to the flooding.
4. The potential impact of the collapse
of Dairy Farmers of Britain inevitably varied from region to region,
and therefore the RDA response was targeted to meet the needs
of their individual regions. Each Regional Development Agency
started from the same basis, identifying the likely impact of
the closure. This assessment was made through working closely
with DFoB and the regional National Farmers Union (NFU) and decisions
on how best to intervene were also subject to discussion with
the NFU. Where there was an identified need for assistance, the
RDAs intervened, ensuring that effort was targeted at meeting
needs and filling gaps. Where the consensus was that there was
no need for immediate intervention, the RDAs kept the situation
under regular review, ready to take action if the situation should
require it.
ADVANTAGE WEST
MIDLANDS
5. In the first few days of DFoB going into
administration, Advantage West Midlands was unable to find out
how many farmers in the region were affected as DFoB staff were
focussed on supporting affected businesses. Evidence indicated
there were c1600 dairy holdings in the region, which, if
10% of producers were with DFoB, would mean the West Midlands
had c160 farmers directly affected. AWM was aware, however,
that DFoB had a strong foothold in the region and the figure was
likely to be higher. It was difficult to estimate because the
West Midlands was covered by two DFoB regions which extended into
Wales. DFoB, working with AWM and the regional NFU, eventually
estimated that 250-300 farmers were directly affected in
the region.
6. The issue AWM originally identified was
that farmers holding DFoB contracts needed to find a new milk
buyer. The administrators enabled farmers to transfer contracts
quickly from DFoB. Through AWM's dialogue with NFU and DFoB, AWM
found that about half the affected farmers already had new contracts
and were within the resignation period prior to administration;
in West Midlands there were five or six active buyers contacting
DFoB farmers and the contact details were available through a
number of routes for farmers.
7. The AWM business model is structured
to provide business support, advice and planning to businesses.
In providing this service Business Link signposts businesses to
available grants and loans. In some cases, however, State Aid
rules may prevent some more mainstream business related grants
and loans being used to support agricultural businesses. Due to
these constraints, the Agency could not provide cash flow support
to affected businesses. AWM kept the situation under constant
review and was aware of a few "at risk" farmers who,
due to location and/or size of herd, may not attract a new contract.
Within a few days AWM established that these farmers were in dialogue
with dairy companies.
8. When Defra provided figures on farmers
without a contract, a couple of weeks after DFoB going in to administration,
there were 16 in West Midlands. These were being contacted
with support directly by PWC. Aware of the support and advice
going to farmers to secure a new contract AWM did not need to
intervene, although AWM has kept the position under review. RDPE
will be able to assist in the longer term.
EEDA
9. Of the circa 170 dairy businesses
within the East of England Region, the RDA working with Business
Link and the NFU, initially identified only around ten that were
DFoB members, of which half had already found new contracts prior
to the collapse. EEDA worked with Business Link and the NFU to
ensure that financial and business advice and other required support
was available to those impacted, should they require it, within
48 hours of the announcement. EEDA is currently in discussions
with the sector more generally about potential support through
RDPE
EMDA
10. 200 East Midland milk producers
were left not only with an immediate financial loss but also with
no potential market for their milk. The majority of these producers
were able to secure new supply contracts but a small residual
group of farmers, who were based in more remote parts of the region
(High Peak and Lincolnshire) were experiencing more difficulty.
Through the Business Link service, emda was able to quickly make
targeted business advice available to these farm businesses and
is proactively contacting them at what is a difficult time for
the industry and the individual business concerned. Emda was also
in almost daily communication with the NFU on the matter. The
NFU assisted with spreading Business Link details and confirmed
that they were content that nothing further could be done. Emda
is also exploring ways of strengthening the new supply chains
for those businesses affected.
NWDA
11. The Northwest Dairy Group met swiftly
following the collapse of DFoB to determine some short, medium
and longer-term actions relating to the failure of Dairy Farmers
of Britain. The short-term issues were addressed through the NWDA-funded
Business Link rural team. They were given the addresses of the
48 affected farmers in the region to contact. They also conducted
an analysis of the geographical location and litre-age of the
farmers. In addition, NWDA, Business Link and dairy industry representatives
met with the regional agricultural leads from the clearing banks
to gather information on their dairy clients, encourage their
ongoing support and help build confidence in the sector.
12. It was recognised that many of the issues
farmers were raising were logistical and will require a longer
timeframe to resolve. Business Link has been working with the
affected dairy farmers to encourage collaboration, whilst the
NWDA RDPE team has been looking into whether support can be provided
for consultants such as English Farming & Food Partnerships
to assist in this area. In addition, the NWDA RDPE team is exploring
whether RDPE funding can be used to support the School of Logistics
at the University of Cumbria to develop a model around haulage
routes and milk litre-age.
13. The Northwest Dairy Group has also agreed
to draft a letter to Jim Fitzpatrick, Minister for Food, Farming
& the Environment, to stress the fragile nature of the industry
in the North West and urge the Minister to intervene on the issue
of farmer guarantees.
ONE NORTH
EAST
14. One North East held lengthy discussions
with company receivers (PWC), the Secretary of State for the Environment,
Hilary Benn, and Blaydon Dairy management to try and save the
dairy at Blaydon. Along with Gateshead Council and Defra, One
North East prepared a package of financial assistance in an effort
to secure a Management Buy Out of the operation, including the
offer of a Rural Development Programme for England (RDPE) grant
to provide additional finance/leverage.
15. Following closure of the Blaydon site,
One North East focussed its attention on supporting the regional
milk supply chains. One North East gave an £80,000 RDPE
grant to Rock Farm Dairy in order that it could increase its capacity
from 50,000 litres to 150,000 litres per day and recruit
16 people who were made redundant at Blaydon. In addition
the Agency proactively encouraged farmers affected by the closure
to contact Business Link to receive advice from Rural Account
Managers for financial planning support and to identify opportunities
under the RDPE programme such as farm diversification and skills
development. One North East also worked closely with English Food
and Farming Partnerships (EFFP) and the National Farmers Union
(NFU) to try to match dairy farmers in the region without a market
to local dairies.
16. In addition, One North East has funded
a dairy redevelopment skills project through the RDPE Landskills
project, to train 30 regional dairy farmers.
SEEDA
17. SEEDA worked with the NFU and CLA to
try and establish the number of directly affected businesses in
the region. It is SEEDA's understanding that very few farmers
had contracts with DFoB and those that did have mostly found new
markets. There were no processing or distribution businesses affected
in the region.
18. In view of concerns raised over the
future of dairy farming in the South East by the industry representatives,
SEEDA has undertaken to review the situation and any assistance
available through RDPE for the sector for those considering leaving
it. Business Links have been made aware of the situation and are
up to speed on providing advice that may be requested.
SOUTH WEST
RDA
19. The implications of the collapse of
DFoB in the South West were fairly limited. DFoB's Lubborn cheese
plant near Chard was sold in early June to Lactalis McLelland,
a major French dairy company, which will secure approximately
95 jobs on site. This will also provide an opportunity for
existing suppliers—mainly located in Somerset—to renegotiate
supply contracts. Apart from Somerset, the main concentration
of DFoB members/suppliers in the South West is in Gloucestershire,
supplying DFoB's Bridgend Dairy in South Wales. Plymouth-based
farmer co-operative Milk Link has already acquired a DFoB cheese
plant in North Wales, and is one of a number of potential buyers
looking to extend their supplier base. As there is currently a
shortage of milk being produced in the UK, this should put DFoB
suppliers in a relatively good negotiating position.
20. The immediate problem faced by DFoB
members is the loss of the milk cheque, in practice covering five
week's supply, leading to potential cash flow problems in the
short term. In liaison with the NFU, South West RDA has asked
South West REG (Business Link's specialist structure for land
based businesses) to explore how they can support farmers affected
by the demise of DFoB, both through the provision of business
support and, as appropriate, facilitating access to RDPE funding.
In addition South West RDA has asked Duchy College, who manage
RDPE skills funding in collaboration with other training providers
in the region, to assess the need for any specialist training
support required.
YORKSHIRE FORWARD
21. Yorkshire Forward, in partnership with
industry representatives, obtained a list of dairy farmers in
the Yorkshire & Humber region who were deemed to be "at
risk" ie they did not have alternative milk contracts following
the cut off point from DFoB. Week commencing 26 June, Yorkshire
Forward wrote out to 78 farmers offering immediate advice
and an offer of up to three days of advice and guidance from a
choice of agri-based consultants who had already been contacted
by Yorkshire Forward. The farmers were all (78) contacted again,
along with the wider DFoB farmers (186) on 8 July offering
advice during the Great Yorkshire Show which ran from 14-16 July.
They were also offered one to one clinics at three different venues
around the region. These were held on 28, 29 and 30 July.
22. The feedback to date is that only approximately
ten farmers out of the original 78 took up the offer of the
three day advice and 32 farmers attended the clinics. Yorkshire
Forward has agreed that those 32 will be offered the three-day
advice package. Beyond September 2009, there will be no further
action with DFoB farmers as a result of the crisis and all enquiries
will go through the normal channels to RDPE funding where applicable.
Regional Development Agencies
September 2009
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