Question to the Department for Environment, Food and Rural Affairs:

To ask the Secretary of State for Environment, Food and Rural Affairs, whether he has plans to provide financial support to dairy farmers whose milk payments have been deferred by milk processors.

Defra is working closely with the dairy industry to manage the impact of Covid-19. Though demand for milk and some dairy products has increased in supermarkets, farmers supplying milk to processors that sell into the food service sector have seen a significant reduction in demand.

About 5 per cent of total milk production goes to the service trade and there is therefore a small proportion of milk production that currently has no home. The vast majority of Britain’s dairy farmers continue to supply their contracts at the usual price. In order to support affected farmers, we have set aside some elements of competition law to make it easier for processors to come together and voluntarily work out how to ease production down in order to create the space in the market for excess milk and to support a recovery in the spot price.

We have asked the Agriculture and Horticulture Development Board (which supports the interests of dairy farmers) and Dairy UK (which represents the processors) to coordinate a proposal and discussions are already underway. We stand ready to support them throughout this pandemic. 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.

The Government’s Covid-19 Business Interruption Loans scheme is available to the dairy industry. Defra has held urgent discussions with the major banks to ensure they understand that farmers, milk buyers and milk processors are eligible for this scheme and communications are being prepared to increase awareness across the dairy industry.

We will continue to engage closely with representatives from all parts of the dairy supply chain to support the sector throughout this challenging period.