Richmond MP writes to Leadsom over dairy futures market

Richmond MP Rishi Sunak has written to the Minister a year after the financial instrument was listed among his 10-point plan to save the long-suffering dairy industry from price volatility - a plan that was published exclusively in The Yorkshire Post.

Both the MP and agricultural industry bodies have called for a futures market that would allow some dairy products to be traded at prices set in advance.

In his letter to the newly installed secretary at the Department for Environment, Food and Rural Affairs (Defra), Conservative MP Mr Sunak said: “I urge you to continue driving forward Defra’s good work in this area and take the swift action our farmers need by making a British Futures market a reality as soon as possible.

“If you would be kind enough to write to update me on the activity currently being undertaken by the Department in this field I would be immensely grateful.”

Last year, Farming Minister George Eustice told Mr Sunak that Defra, working with the Agricultural Horticultural Development Board (AHDB), had recruited a financial futures market and hedging specialist to work on the project.

A futures market is used by sellers to protect themselves from big swings in prices by entering into a contract to sell produce at a set price at a future date.

In his letter to Mrs Leadsom, Mr Sunak writes of the “extreme hardship” faced by many dairy farmers both in his own constituency and across the country because of the record low farmgate prices paid for milk.

He said that his experience of global business before entering Parliament had demonstrated to him the effectiveness of futures markets and he hoped that with Mrs Leadsom having a similar financial background she would grasp the opportunity to create a UK dairy futures market.

A Defra spokesperson said Mrs Leadsom would respond to the letter in due course and insisted that the department had shown its support for the British dairy industry during the current, lasting price downturn that has affected farmers across the country.

The spokesperson said: “We want a dairy industry that is resilient to the kind of volatility the market is experiencing. We are looking at practical applications of financial instruments to see if they can contribute to longer term resilience in the dairy industry, and we are working with AHDB’s Volatility Forum to develop best-practice models.

“We have already introduced extended tax averaging, allowing farmers to choose whether to spread their tax over a two or five-year period, and government departments have made significant progress under the Plan for Public Procurement - all fresh milk and more than 90 per cent of the butter and cheese bought is made from British milk, generating £11m of business for local dairy firms.

“The Secretary of State looks forward to receiving the letter from Mr Sunak and responding in due course.”