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Improving food security will help farmers with credit crunch

October 28, 2008 11:24 AM

Shadow Secretary of State for DEFRA Tim Farron MP has urged the Government to protect British farmers from the credit crunch by introducing stricter regulation to guarantee Britain a sustainable food supply.

Last week Barclay's agriculture specialist confirmed the bank had been reviewing pricing in all industry sectors due to tighter availability of the credit in the financial markets. As a result, some farmers have seen rates increase, on average by up to 1%.

Farmers may be seen as higher risk customers by bankers; but are likely to feel the pinch just as aggressively as those in the city.

Mr Farron has warned farmers that banks still want to lend to agriculture, but that they're no longer prepared to take risks on the assumption that asset values will keep increasing.

In an article published in House magazine, Mr Farron urged the Government to protect farmers from the credit crunch by tackling supermarket greed and unregulated foreign competition.

Commenting Mr Farron said:

"We're facing fluctuating food prices partly because demand and production aren't keeping pace. These price peaks are hitting hard; but they don't just impact on households. Farmers are being forced out of the industry by a combination of supermarket greed and cheap foreign competition.

"The answer-as the banking crisis has all too readily shown us-is regulation. I am not anti market, but I want the market to be our servant, not our master. When you have huge fluctuations in production, short-sighted profit chasing from over-powerful supermarkets is pushing small farmers into a position where they are struggling to survive. The market isn't working.

"Proper regulation of prices within the food chain will give local farmers a fair price for their produce, while ensuring that supermarkets do not then pass on increased production costs to hard-pressed family food budgets.

"If we are to improve our food security we must insist on free; but also fair trade. A two-fold strategy to encourage British farmers and improve consumer awareness will move us towards a more secure, sustainable and environmentally safe food supply.

"The government reacted instantly to rescue the city; whilst the plight of local farmers appears to have gone unnoticed. The government has already sanctioned a bank bailout. We don't need a food bailout, but we do need regulation to protect and enhance our capacity to produce food."

Roger Williams MP, Liberal Democrat Food and Rural Affairs spokesperson, added:

"I have written to the major banks recently about the changing terms and conditions of overdrafts for small business accounts and have asked for meetings with these organisations.

"I have received a steady stream of correspondence from farmers informing me that banks are increasing the cost of banking and that a reduction in the base rate is having very little effect."