European policy consultants
Rural development and renewable energy

Dairy grant fund is open to applications

Projects will be considered that encourage the establishment, development or expansion of co-operation structures and for adding value projects by such structures that will improve the profitability of its farmer members.

The central objectives of the cooperation activity must be to strengthen members connection with their market(s), enable dairy farmers to explore and develop new market opportunities and ultimately improve farm profitability and long term sustainability of the dairy sector.

This follows the PM's announcement in July '12 that £5m would be made available to the dairy sector under the RDPE to help dairy producers increase their competitiveness and achieve added value to boost their market returns.

The Dairy Fund application process is competitive and projects offering the greatest return on grant investment will be more likely to be successful. The application process includes two stages, an outline application stage and a full application stage.

All Dairy Fund applications must be fully approved and contracted by the end of December
2013, and fully delivered (including submission of final claim) by the end of March 2015.

Further information on the Dairy Fund and application process is available in the Dairy Fund Handbook and the relevant outline application forms are also available for download:
rdpenetwork.defra.gov.uk

See also EU Dairy package: www.eurinco.eu

The Dairy Fund's principal aim is to of support activity that 'facilitates a resilient and
competitive dairy sector through projects that enable dairy farms across England to improve
competitiveness, access new markets and strengthen their position in the supply chain through
co-operation'.

This will be delivered through grant support for the costs of exploring formal co-operation such as:
• Bringing together those farmers with an interest in co-operation structures;
• Enabling individual producers to explore the practicalities of formal co-operation;
• Facilitating the formation of groups with similar objectives;
• Supporting groups to formally establish, develop or expand;
• Pilot projects for innovative systems that add value to primary dairy produce;
• Adding value projects by formal co-operation structures that will improve the profitability
of its farmer members.

The Dairy Fund has the principal aim of supporting activity that facilitates a resilient and
competitive dairy sector through projects that enable dairy farms across England to improve
competitiveness, access new markets and strengthen their position in the supply chain through
co-operation. This aim will be delivered through grant support for the costs of exploring formal
co-operation such as:
• Bringing together those farmers with an interest in co-operation structures;
• Enabling individual producers to explore the practicalities of formal co-operation;
• Facilitating the formation of groups with similar objectives;
• Supporting groups to formally establish, develop or expand;
• Pilot projects for innovative systems that add value to primary dairy produce;
• Adding value projects by formal co-operation structures that will improve the profitability
of its farmer members.

The aim of the Dairy Fund is further supported by knowledge transfer activity for emerging
opportunities for the English dairy sector offered under the National RDPE Skills Framework.
This provides the information tools for individual farm businesses looking for ways to improve
the value of their product(s) and/or reduce costs through new market opportunities.

Some elements of activity under the Skills Framework are specifically aimed at assisting dairy
farmers to develop marketing opportunities such as exports and options for collaboration.

Other areas of activity included under the wider skills framework include developing business
management skills, animal health and welfare workshops and supply chain efficiency and
benchmarking.

Further information on skills training can be found at:
rdpenetwork.defra.gov.uk

The Dairy Fund is open to dairy farm businesses in England, and also to industry stakeholders, trade associations, levy boards and research establishments as well as non-farming businesses.

The benefits of funded activity must fall to 'multiple English dairy farm businesses', rather just to individual farms.

If successful at full application stage, applicants will ultimately become the funding contract holder, and will be required to bankroll the project, as RDPE funding can only be claimed retrospectively once invoices have been paid in full.

It is anticipated that there will be three types of applicants:
a) Existing formally constituted groups/organisations;
b) An individual business (non farming or farming) acting on behalf of multiple dairy farming
businesses; or
c) A group of individual dairy farming businesses.
Applications will need to be based on a single funding agreement, under which all project costs will need to be invoiced to and paid by the applicant. The specific businesses/members involved will need to set out in the application, and at full application stage the applicant will need to evidence availability of any private match funding and their ability to meet the full costs prior to grant payment.

The Dairy Fund will consider projects that encourage the establishment, development or expansion of co-operation structures whose central objectives are to strengthen members’ connection with their market(s), enable dairy farmers to explore and develop new market opportunities and ultimately improve farm profitability and long term sustainability of the dairy sector.

As part of a wider project, co-operation structures may wish to undertake activity that reduces
their members’ production costs, however, traditional joint venture activity with the sole purpose
of reducing production costs is not a priority under the Dairy Fund.

Individual farmers, groups of farmers and existing structures can make applications for assistance with the following areas of activity:

Activity that will complement activity under the skills framework and disseminate knowledge
and information on what co-operation is, the different options available and what is involved.

Costs that will be considered include staff costs wholly associated with organising and
running the events, venue costs, literature, speakers and contributions to study tours (travel
and accommodation costs only) with the specific aim of studying practical examples of
agricultural co-operation relevant to co-operation within the English dairy sector.

Funding of up to 100% will be considered.

This could includre seminars and technical information, and should enable dairy farmers to identify their individual objectives and requirements of co-operation and explore the potential options applicable to them.

The activity should provide an environment for groups of at least five and should facilitate the establishment of working groups to develop through such activity (see item c below).

Costs that will be considered include staff costs wholly associated with organising the
activity and associated knowledge transfer and contributions to study tours (travel and
accommodation costs only) with the specific aim of studying practical examples of agricultural
co-operation relevant to co-operation within the English dairy sector.

Funding of up to 100% will be considered.

The purpose and operations of any structure need to be agreed and clearly understood by
all members from the outset. This support will actively encourage identified groups with a
minimum of five members to take the next step towards formal establishment.

Activity will be expected to facilitate working groups to agree the basic concept of the
structure such as its purpose, objectives and operations and set out the associated timeframe
and required member actions should they establish.

Costs associated with facilitation such as dedicated staff, administration, venue hire,
development of business plans, professional advice and farmers’ time will be considered.

Funding of up to 100% will be considered.

Those costs wholly associated with the formal establishment of the co-operation, for example:
• Legal constitution and associated legal advice;
• Preparation of required legal documents such as members agreements, sales contracts,
employment contracts, loan agreements;
• Costs of establishing the by-laws of the co-operation;
• Dissemination of information to members;
• Venue costs for required group meetings; and
• Farmers’ time (on a case by case basis).

Funding of up to 100% will be considered.

Maximum grant rate of circa 40%, dependent on activity

For example, the development of new products and markets and the associated capital
infrastructure.

Defra can only consider funding that is limited to activity involving ‘Annex 1’ products – agricultural and horticultural products which have been subject to no or limited processing.

RDPE cannot support any activity to comply with Community Standards/Minimum Standards.

David Heath launched a separate scheme allowing English dairy farmers to apply for £5 million-worth of grants to develop new market opportunities through co-operation.

Defra is consulting on new rules allowing English dairy farmers to come together and form producer organisations to sell their combined milk to processing companies rather than negotiate as individuals.

David Heath said "negotiating as groups rather than individuals will give dairy farmers a ... louder voice to get their just rewards from the marketplace."

The £5 million dairy fund is intended to allow producers to develop other means of cooperation. The plans on producer organisations are part of a six-week consultation on how to implement the European Union’s Dairy Package in England. Scotland, Wales and Northern Ireland will hold their own consultations.

Currently farmers negotiate with processors as individuals, but under the new plans, producer organisations, which are already widespread in other European countries, could cover up to a third of UK production and would negotiate on behalf of members.

David Heath made the announcement on a visit to the Isle of Wight Dairy Group, which has led the way in the industry following funding from Defra’s Rural Development Programme for England to set up an innovative farm cooperative.

The cooperative brings together 17 of the island’s dairy farmers to produce and market Isle of Wight branded milk to around 30 retailers across the Isle of Wight, including supermarkets and local shops.