The Government is working closely with our agriculture sectors to manage the impact of COVID-19 and is determined that our dairy sector will emerge from the current COVID-19 crisis with a sustainable future. While the vast majority of Britain’s dairy farmers continue to supply their contracts at the usual price, between 5 and 10 per cent of total milk production goes to the service trade, and these farmers have been impacted by the significantly reduced demand following the closure of the food service sector.
To support the sector we have temporarily eased of some elements of competition law to make it easier for the dairy industry to come together to maximise production, processing and storage efficiency and ensure as much product as possible can be processed into high quality dairy products. This approach will allow the market for milk to adjust to the change in demand for milk while allowing production to be restored when shops, restaurants and pubs are able to open again. Exempted activities have been developed in conjunction with the dairy industry.
Moreover, in recognition of the unprecedented challenges facing this sector on 7 May we announced a new fund to support those dairy farmers who have seen decreased demand due to the loss of the food service sector. Eligible dairy farmers in England who have lost more than 25% of their income over April and May due to coronavirus disruptions will be eligible for funding of up to £10,000 each, to cover 70% of their lost income during this qualifying period. This will enable these producers to continue to operate and sustain production capacity without impacts on animal welfare.
The Agriculture and Horticulture Development Board together with Dairy UK have launched a new £1 million campaign running over 12 weeks to drive an increase in the consumption of milk. Defra and the devolved administrations are jointly contributing towards the financing of this campaign.
The dairy industry can also access various Government backed loan schemes. The COVID-19 Business Interruption Loans scheme is available to farmers, milk buyers and milk processors. In addition, the new Bounce Back Loan scheme, which will apply to businesses including those operating in agriculture, will ensure that the smallest businesses can access up to £50,000 loans.
In the longer term the Government is keen to see greater levels of collaboration between producers and we will continue to support farmers who want to harness the benefits of working together. Our Agriculture Bill includes powers to introduce a new domestic system for recognising producer organisations, which will be better tailored to the requirements of UK producers.
The Bill also includes powers to introduce and enforce statutory codes of practice to address unfair trading practices which can occur between milk producers and purchasers. We will carry out a full consultation on dairy contracts to take account of the range of stakeholder views and anticipate launching the consultation later this year.
British food and drink are renowned around the world for its quality and integrity and we want consumers, including public service organisations, to be able to benefit from our nutritious dairy and other agricultural products. Respecting our World Trade Organization commitments on public procurement, central Government and its executive agencies in England are mandated to source produce that meets UK minimum production standards, as outlined in the "Government Buying Standards for Food and Catering”.