AQW 49044/11-16
Ms Claire Sugden
Independent
East Londonderry
Tabled Date: 23/09/2015
Answered On Date: 06/10/2015
Priority Written: No
Question:
To ask the Minister of Agriculture and Rural Development to detail the ways in which her Department is encouraging stakeholders in the agricultural sector to consider long term approaches to mitigate against market volatility.
Answer:
My Department’s advisers have, over time, encouraged farmers to consider matters that would help to mitigate the risks that can be inherent in the farming industry. These include an efficient production system linked to farm resources; business and financial management through benchmarking; prudent expenditure; a cash flow plan covering the whole year; and hedging contracts. I know that hedging contracts and insurance cover are used by the farming industry in other countries, but at this stage there does not seem to be an appetite to go down this road by our industry. This matter is however still on the table for discussion. Hedging contracts were among the issues identified by the Agri-Food Strategy Board’s Dairy Sub-group for consideration in the medium term. While hedging contracts do not lead to an overall increase in the price received by those farmers for their produce, they do provide a means for farmers to even out cash flows and mitigate against volatility in the market. As contracts are a commercial matter you will appreciate that my Department cannot engage directly in discussions between individual purchasers and producers on taking this matter forward. This is something that only the various industry interests can do. Nevertheless, I do believe that it is something that individual producers may wish to explore further and I have openly encouraged farmers to talk to their milk buyers about this. In addition, following my engagement with the previous Finance Minister, Simon Hamilton and with the industry, I was pleased that the British government decided to extend the period for which self-employed farmers can average their profits from two years to five years. This is a very welcome move that will, from April 2016, play a part in mitigating the impacts of price volatility. Looking ahead, we need to critically examine how we can best ensure that our agri-food industry is sustainable and profitable in the future and the actions that can be taken going forward by government and industry to support this. At a strategic level I have tasked the Agri-Food Strategy Board to establish a Supply Chain Forum, covering all sectors, focussed on supporting the industry in developing a sustainable future, through enhanced collaboration and effective communication. I will be a strong advocate of this work and fully intend to be closely involved. On a wider stage the European Commission recently announced plans to establish a new High Level Forum for a Better Functioning Food Supply Chain at EU level to assist the Commission with the development of industrial policy in the food sector. Amongst other issues, the Forum will examine hedging instruments, such as new futures markets for agricultural products. I would encourage local representatives to plug into the work of the Forum so that the industry in the north of Ireland can benefit from any lessons learned or new initiatives that it identifies.
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