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In order to further support the dairy industry during the Coronavirus pandemic, the government announced that a new fund would be available for eligible dairy farmers to access up to £10,000 each. The fund will open on for applications on 18 June and farmers will be able to apply for a single payment from the fund. Applications should be submitted directly to the Rural Payments Agency (RPA) and the funding will be paid out from 6 July.

The fund is designed to cover 70% of dairy farmers lost income during April and May, which will help ensure they can continue to operate without impacting animal welfare.

To be eligible to receive the fund, dairy farmers must have lost more than 25% of their income over April and May due to coronavirus disruptions. There is no limit on the total funding available or the number of farmers who can receive the funding.

The government has also backed a £1 million promotional campaign to encourage the public to drink more milk and therefore help increase sales of dairy products.

Dairy industry joins together as government temporarily relaxes UK competition law

These announcements come just weeks after the government announced they would be temporarily relaxing the UK competition law.

It’s hoped that the farmers and producers in the dairy industry will be able to work together to address the current market challenges and avoid any unnecessary waste of milk.

Farmers calling for help from the government

Just a few weeks ago dairy farmers had begun asking the government for help as demand for milk plummeted. Although milk has seen a sharp rise in demand from supermarkets, mainly due to consumer panic buying in the lead up to the lockdown, demand has fallen elsewhere. Since the UK government ordered the closures of all non-essential businesses, many hotels, restaurants and retailers have no longer needed to order the amount of milk they usually would.

Some farmers have even reported having to pour away milk from their cows as demand fell.

The UK’s dairy farmers are the country’s largest farming sector, producing over 40 million litres of milk every day, which accounted for 16.85% of total agricultural output in the UK in 2018.

What will the new legislation mean?

This new legislation is expected to be announced shortly and will allow the dairy industry to better adapt to changes in the supply chain, avoid waste, and loss of income.

In simple terms, it will allow farmers and producers to implement strategies such as sharing labour and facilities, cooperating to temporarily reduce production or identify where milk could be produced into other in-demand dairy or food products.

Therefore, dairy farmers who usually produce milk for businesses that are no longer requiring it, such as the hospitality sector, will be able to redirect that milk to higher demand industries such as milk, butter or cheese in supermarkets.

Dairy UK and the Agriculture and Horticulture Development Board (AHDB) are working to bring the industry together in order to help identify any spare processing capacity, how to stimulate demand and how or where to temporarily reduce production to avoid waste.

Environment Secretary, George Eustice said:

“Our dairy industry plays a crucial role in feeding the nation and it is essential that they are able to work together at this time.

 

We’ve heard loud and clear our dairy farmers’ concerns which is why we are further suspending competition rules law to allow dairy farmers to work together on some of the most pressing challenges they are facing. I am also urging farm businesses to access the loans that are available from their bank to support them in this period.

 

We welcome our farmers’ heroic efforts in ensuring food supplies remain resilient and will continue to support them through this difficult time.”

Business Secretary, Alok Sharma said:

“COVID-19 presents an enormous challenge to the country. We must be adaptable and help businesses implement creative solutions to new problems.

 

Temporarily relaxing competition law for the dairy sector will mean farmers can work together to minimise waste of milk, and use it to make other essential dairy products.

 

This important step will help our dairy farmers weather this storm, providing support to a key sector in the British economy.”

The announcement on 17 April will support the dairy industry to adapt to a reduction in demand, helping ensure fresh milk does not go to waste by identifying opportunities for processing the milk into storable milk products such as butter, cheese and skimmed milk powder.

We can help your farming business

We have been advising local dairy farmers for over 50 years and our team of agricultural accountants can help you to navigate the government help currently on offer to farmers. This includes COVID19 support packages, such as the Coronavirus Business Interruption Loan Scheme, and any tax relief or exemptions you may be able to claim. We can also help you to minimise your business risk by implementing various strategies including diversifying your portfolio and getting you set up on cloud accounting.

Take a look at our COVID19 hub for the latest news and support from the government.

If you are concerned about the impact of Coronavirus on your farming business, please get in touch with us here or contact your usual Ellacotts contact.