Farming’s position as a critical industry may have been undermined by the UK Government in its review of the Energy Bill Relief Scheme, further impacting the nation’s food security.
High energy businesses, likely to include those who manufacture and process food, have been offered support for electricity that amounts to £89 per megawatt hour (MWh) with a price threshold of £185 per MWh; while on gas the relief is £40 per MWh with a price threshold of £99 per MWh.
NFU Scotland is awaiting the publication of further guidance but are deeply concerned that farming businesses are to be classified as non-high energy businesses where the relief for electricity drops to £19.61 per MWh with a price threshold of £302 per MWh with gas relief to £6.97 per MWh with a price threshold of £107 per MWh.
The Government website indicates that it will publish further information on the relief scheme by the end of March 2023, including guidance for firms that believe their operations are not correctly classified by Standard Industry Classification (SIC) code.
NFU Scotland will continue to press for all agricultural businesses to be eligible for the higher rate of relief as it believes that failure to extend the highest level of support to agri-businesses would condemn consumers to a further escalation in food prices. Farming businesses, particularly those heavily reliant on electricity to rear livestock and store fresh produce safely, will struggle to absorb the huge hikes in energy that they face in the year ahead.
The Union’s Intentions survey, which closed this week, is likely to illustrate the significant changes already taking place within farming and crofting businesses in response to unprecedented input prices and flat-lining output prices. Not qualifying for the higher rate of relief could significantly impact the plans of those heavily reliant on electricity.
As President Martin Kennedy explained: “Having farmers and crofters potentially missing out on the highest level of support with electricity prices beyond March has the potential to further undermine the nation’s ability to produce its own food.
“Support at processing and manufacturing level for electricity costs is most welcome but unless you back that up with the same level of support at farm level for production and on farm storage, then providing the raw materials for our processing and manufacturing sectors will further decline.
“The case for including farming at the highest level is robust. Last year, NFU Scotland submitted a response to the UK Government review on business energy support. As we demonstrated throughout the pandemic, agriculture, and the commitment to keep food and drink on the table, was clearly a key part of the Critical National Infrastructure (CNI). The UK Government must choose to fully recognise that.
“Providing that level of support to our sector will keep the nation fed and help to dampen down further food price inflation. We look to the UK Government to clarify that this opportunity to benefit to our hard-pressed consumers has not been missed.”
Notes for editors
- A membership survey, conducted in the autumn, highlighted what a burden un-capped electricity prices would be. The cost increase faced by many sectors, including the use of cold stores for our potatoes, fruit and veg, was a main focal point within NFU Scotland’s submission on the energy bill. It included an example of one vegetable grower reporting a rise from 12p per unit to 71p per unit, predicting that, were support to be removed, their electricity bill would jump from around £140,000 to over £800,000.
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Contact Bob Carruth on 07788 927675