Agriculture Bill

Written evidence submitted Arla Foods UK (AB05)

1 Introduction


1.1 This document is the response of Arla Foods UK to the request by the Public Bill Committee on the Agriculture Bill for written evidence on the Bill.

1.2 Arla Foods UK is part of a pan-European dairy cooperative owned by around 11,200 dairy farmers across Europe, around 2,400 of whom , or a quarter of all British dairy farmers , are based in the UK. We are the UK’s largest dairy company by milk pool, and a leading supplier of fresh milk, butter, spreads and cream, as well as the country’s largest cheese manufacturer.

1.3 In the UK we have an annual turnover of £2.2bn (in 2017). A recent report from the Centre for Business and Economics Research calculated that the economic impact of Arla and our farmer owners in the UK was in excess of £6bn in terms of Gross Value Added (GVA), the equivalent of around 0.33% of UK GDP. We are linked to more than 119,000 UK jobs, or 0.38% of employment in this country.

1.4 The fact that we are owned by farmers naturally means that we take a close interest in the support given by Government to agriculture. At present, o ur concerns are heightened by the degree to which we are interconnected with foreign markets, and therefore could be affected by leaving the European Union: i n 2016 £75m of our farmer owners’ products were exported to 69 countries, including 21 within the EU ; and we import 30% of the dairy produce we sell in the UK from other European countries . Therefore , the policy environment that will exist after Brexit, as embodied in the Agriculture Bill, is vitally important to us and our farmer owners.

1.5 We are therefore delighted to respond to the Public Bill Committee’s call for written evidence, and we would be very happy to provide further evidence if it would be helpful.

2 C omments on specific Clauses of the Bill


2.1 As the Public Bill Committee has itself acknowledged, t he Agriculture Bill is enabling legislation. As such it is difficult to propose specific amendments: f or Arla Foods and our farmer owners the devil will be in the detail of the secondary legislation that will follow once the Bill becomes law . Our overall comment is that we welcome the direction of travel. Direct payments are an outdated way of supporting farming , and a system of payments that encourages farmers to deliver public goods and to invest in innovation and improved productivity and profitability w ill be a major step forward.

Clause 1

2.2 Clause 1 of the Bill sets out the Secretary of State’s powers to give financial assistance to the industry. Sub-Clause 1(1) lists a number of environmental grounds on which support can be given; 1(2) allows him to provide money to start up a new agricultural venture or to improve productivity. We are glad that both the environment and profitability are recognised in the Bill but hope that the fact that they are separated in the legislation does not mean that they are viewed in any way differently from each other.

2.3 For farms to be truly sustainable for the long term they must make money. We are encouraged by the Government’s statement elsewhere that its overall objective is to secure "practical gains for farmers that help them become more profitable and reduce their environmental footprint". [1] We would welcome a clear commitment during the passage of the legislation that the Government will exercise its powers under Clause 1 to promote a flourishing, successful and innovative agricultural sector that can deliver benefits in terms of the environment, landscape, animal welfare and so on, rather than put public goods first.

Clause 5

2.4 C hanging from one system to another will not be straightforward. Farming has unusually long planning cycles, and farming involving livestock, including dairy, even more so. We therefore welcome the seven-year transitional period provided for in Clause 5 of the Bill. This is what we and our farmer owners called for in the consultation which preceded the legislation, and we are glad that our voices have been heard. We hope that the Committee will ensure that this provision is not watered down during its consideration of the Bill.

Clause 25

2.5 Clause 25 of the Bill paves the way for the Government to change the way in which the market for milk (and other products) operates. There has been much discussion of the price paid to dairy farmers by processors, and the Government has indicated that it wishes to bring in a mandatory milk contract in place of the current voluntary code. A consultation paper will apparently be issued shortly , and without seeing the detail it is hard to comment properly . However , we are concerned that in seeking to address the problem of rogue producers who are not abiding by the voluntary code the Government may inadvertently disrupt the majority of the industry which is functioning well.

2.6 It would be particularly unfortunate if what emerges ends up undermining the ways in which we, and other cooperatives, operate, since our approach is welcomed by and has significantly benefitted our owner farmers. A nd a t a time when the UK should be looking for additional dairy exports after Brexit (and when we might be facing renewed competition from imports to this country) it would be regrettable if steps are taken following the passage of this Bill that t ake our industry backwards and make it uncompetitive. It would be helpful if the Committee could secure assurances from Ministers on these points, and in general ask that what might be proposed in the consultation closely matches the provisions of the existing voluntary code.

October 2018


Prepared 24th October 2018