In a meeting with Liz Truss, the Secretary of State for Environment, Food and Rural Affairs in London, which was facilitated by Diane Dodds MEP and David Simpson MP, Ulster Farmers’ Union President Ian Marshall, highlighted the cash flow concerns being experienced by many Northern Ireland dairy farmers.
Speaking after the meeting, President Ian Marshall said: “We used this meeting to highlight directly to the Minister the fact that NI dairy farmers are facing more volatile milk prices than our GB counterparts, such is our exposure to commodity markets. Commodity prices have been falling since the beginning of the year, with the drop exacerbated by the Russian import ban and rising world milk production unmatched by demand. We also raised our concerns in relation to the 5p per litre difference between NI and GB farmgate milk prices at present.
"Due to its nature, NI dairying often faces a volatile profit and loss cycle, with high prices dropping quickly in a relatively short period of time and as seen currently, even falling to below cost of production levels. Unfortunately it was very clear from the outset that the Minister would not support the meaningful introduction of the more usual EU market measures such as intervention at a more realistic price level, but I did put forward a number of alternative proposals to Mrs. Truss as to how current cash flow pressures on dairy farms could be relieved.”
Ian continued: “One of our proposals was for increased awareness of an accounting practice known as “Farmers’ Averaging”, where profits for two consecutive years are added together and divided by two. The idea is that when prices have fallen, rather than paying a hefty tax bill following a good year, you can spread it out over a longer period. Indeed, the Republic of Ireland have gone further in their recent budget and now allow “Farmers' Averaging” to be spread over a 5 year period and we asked for parity with this. Another proposal discussed was the introduction of a Farm Management Deposit (FMD) Scheme similar to the one currently operating in Australia. We believe that if implemented, the FMD scheme would allow farmers to set aside pre-tax profit from a year of high income which can then be drawn down in a low income year. This would be a new scheme in the UK and one which could be of great benefit to Northern Ireland dairy farmers. Finally, we urged the Minister to call on the banks to offer credit flexibility in the form of a ‘Capital Holiday’ in structured loan repayments which could offer some farmers much needed breathing space as far as their borrowings are concerned as we enter the winter months."
Ian concluded: "While it was useful to have been able to discuss all of these issues directly with the Minister, I was disappointed with her response. We have however been asked to provide her with additional more detailed information on our proposals which we will do and will also be following this up to ensure that we get a quick reply."
